When Rick Pleczko thinks about the office space his company used to be in, he thinks about a college campus. He remembers open houses with barbeques on the front lawn, free beer, a DJ playing music and all his employees enjoying themselves.
Pleczko, co-founder, president and CEO of BBS Technologies, used to throw these parties as a way to thank current employees for hard work and to attract new employees looking to join the $30 million provider of systems management software.
“We have this interesting environment where, since we founded the company, we have been in three turn-of-the-century mansions in this bohemian neighborhood,” Pleczko says. “Everybody loves it here. It’s almost like a college campus-style environment.”
Over the past few years, the company has grown to new heights and in the process, outgrown its current headquarters. The challenge facing Pleczko and his team was to find a new place to conduct business that would keep that college-campus feel.
“Our big challenge was, ‘Gee, one of the unique things about our company and our culture that attracts folks is this campus-like environment,’” he says. “It wasn’t practical for us to add more houses in this space. It just couldn’t be done in the neighborhood. We knew we would have to move to a tower. Our problem was, how do you recreate that culture in a tower?”
Recreating the company culture was a big undertaking. It took collaboration from his 200 employees to find the right place.
“We talked to our employees,” Pleczko says. “Everybody wanted to be in the same neighborhood or close to it. So we were looking for something within a couple-mile radius of where we were. Then it was going to the staff and saying, ‘What features do you want in this new environment? We can’t replicate what we have entirely, but what do you want to do?’”
Pleczko set up a committee of a few employees to get feedback on the type of things they wanted.
“You have to figure out what the key criteria are to maintain and expand your existing culture and get those criteria from the folks that work for you,” he says. “Focus on the staff and get the information and the feedback from the staff. Then you need to engage a good, talented Realtor.”
Pleczko was fortunate. He found a space 1.5 miles away with 70,000 square feet across three floors of a tower with a spiral staircase connecting all floors.
“We have this environment with a spiral staircase and we’re building it out with almost a Google-like campus environment,” he says. “We set up recreation rooms with Xbox connects, foosball tables and table tennis. Software engineers tend to work long and odd hours, so they like that sort of environment. So we built a couple of playrooms on different floors where people can get together and socialize just like they would walking down to the local Starbucks. We were able to replicate to a high degree our culture inside of a tower.”
Not only did BBS recapture its culture in a new building, but the company took a big step forward in its growth by moving to a new headquarters.
“The environment that we had was perfect for when we were in the startup stage to about where we are now,” Pleczko says. “But we are now doing business with some very significant and very large corporate entities. When they came to visit us in those funky houses, they thought it was cute and it was like visiting an ad agency in a brownstone in Manhattan or something. We always looked like we were a fun startup.
“Now moving to this new environment, it gives the impression of we’re a $100 million company. It gives us significant credibility with the environment, the space, the décor, etc. But it still enables us to maintain that culture of innovative startup.”
HOW TO REACH: BBS Technologies, (713) 862-5250 or www.bbstech.com
Not only will BBS Technologies’ new headquarters building allow the company to continue to grow and keep its unique culture, it provides change within the organization.
“Change is good,” says Pleczko, co-founder, president and CEO. “It seems to refresh everybody’s morale and attitude and I think it acts as an inflection point for growth. I’ve been able to say, ‘We’re moving into a space that a $100 million company lives in and we’re going to be that $100 million company.’ It enables you to get some pretty good motivating messages out to your staff.”
A move like this takes time and a strategic plan. Pleczko had to understand his company’s growth pattern and plan accordingly.
“This is of great strategic importance, because if we didn’t move, our growth would be constrained,” he says. “We are planning to grow aggressively this year and that growth would not be enabled without this new building.”
Failing to realize that your company is outgrowing its current space can negatively impact the productivity of your employees.
“[Employees] become inefficient,” he says. “You have too many people in not enough square feet and they are bumping in to each other. Things like conference rooms end up being turned into offices. Folks become unproductive simply because of the noise and activity level all around them. If you don’t [expand], you will tend to see productivity go down.”
David Petratis has a long background and a strong history in building products. As the former chairman and CEO at Square D Co. and CEO of Schneider North America, he is no stranger to the demands and fluctuations of the construction industry. That experience has proven extremely valuable since Petratis took over as CEO of Quanex Building Products Corp. in 2008, right in the middle of one of the worst economies for any industry.
“I think the performance of Quanex in the worst building environment maybe ever says that we’ve got a lot going here,” says Petratis who now serves as chairman, president and CEO. “And today, even with construction flat on its back, we’re on a margin basis, more profitable than we’ve ever been, are growing and are debt free.”
The strong position Quanex now finds itself in didn’t happen overnight or by accident. Petratis and the 2,300 employees at the manufacturer of windows and doors have worked tirelessly to keep the company pushing forward during a period where if you rest, you don’t wake up. Here’s how Petratis rebounded Quanex from $585 million in 2009 revenue to $798 million in 2010.
Evaluate your business
As a new CEO to Quanex, it was vital that Petratis got a full understanding of the business and how it was operating.
“What we did from the day I hit the door through 2009, we revisited our strategic perspective and our strategic plan three times,” Petratis says. “In six months, we made some observations and then we did it again. In an 18-month period, we took three hard looks at our strategic plan, our markets, and we came to some pretty strong conclusions that has driven growth at Quanex Building Products in a market environment that remains the weakest in my lifetime.”
While the economy made it tough for companies operating in any market, the construction industry was hit particularly hard. Petratis wasn’t sitting still expecting the poor conditions to evaporate quickly.
“First of all, you had an unprecedented decline, especially in businesses related to construction, but you also had a big commodity slide,” he says. “I think, No. 1, when you’re in an economic slide, don’t assume that there’s light at the end of the tunnel. You need to take aggressive steps that ensure the continuity of the business. You cannot make assumptions that the market’s going to come back and life’s going to be good again. The companies that have made those mistakes are still struggling today. You have to create your own opportunities within the business portfolios that you have.”
Creating opportunities in a weak market and an economy as poor as it has been is not an easy task. You have to be aggressive and make sure you’re evaluating your entire business.
“We took aggressive steps to free up cash on our balance sheet,” Petratis says. “We challenged the inventory on our balance sheets and in our factories and took them to historic lows and kept them there. That has generated cash, No. 1, to survive, but No. 2, to go redeploy in things that are growing. We have right-sized ourselves to the new business reality. We had a scale and infrastructure that was built to produce 2.2 million homes; today, we struggle to get above 600,000. Some major restructuring had to occur. We eliminated nonvalue-added activities. We made investments in the skills of our people. You have to give people hope that we’re going to make it through this, but also give them new skills to be able to compete. We have invested more … in the business than we made during the up cycle.”
Evaluating your business and restructuring areas that need it is a critical element at any point of a cycle.
“We looked at our portfolio in a BCG Matrix,” he says. (Editor’s note: A Boston Consulting Group Matrix looks primarily at market share and market growth). “Where did we make money? Where did we lose money? Where are our opportunities for future growth? What are the businesses that we’ve got to get out of? What are our stars, cash cows, dogs and dilemmas? You look at your business and try to emphasize and invest in those businesses that have opportunity or are generating large amounts of cash and you get out of the ones that don’t.
“The other thing that we did was went through a review of our customer profitability and looked for opportunities for price realization. You’ve got profitable customers and unprofitable customers. You’ve got to think about that in terms of just standalone profitability and then you’ve got to think about it in terms of cost to serve. There are customers that are more expensive, take more customer touch and that’s got to go into the analysis. Have a dialogue with your business leaders and your salespeople and ask, ‘What’s our cost to serve?’ A customer that has a low margin and has a high maintenance cost are the first ones that you take action on. It’s critical with a triple underline to know where you make money within your product portfolio.”
Whether the economy is forcing hardships on your company or you’re simply having a tough year, communication within your business is the most important thing a CEO has to do.
“We stepped up our communications aggressively, especially versus my predecessor who operated in a better economic time,” he says. “We cut a quarterly video. There’s a camera crew that comes in and we cut a 20-minute message every quarter. Employees get a letter from me every three-day holiday and I do site visits. You also have to put on your customer ears and get out and visit customers. We’ve done surveys to understand our ability to deliver and our understanding of the voice of the customer.”
Petratis also stressed the importance of safety among his employees and communicated how safety could help improve the business as a whole.
“As a new guy coming in, I have pushed the hell out of safety awareness,” he says. “To me, this is Maslow’s Hierarchy of Needs. If I can get our employees to believe that I care about their safety and health, I am awarded by our employees the opportunity for them to self-actualize into things like customer satisfaction and continuous improvement of our business. In a down environment, if you fail to communicate, if you fail to invest along that hierarchy of needs, I think you’ll lose your work force. We’ve certainly done the things that we’ve needed to do in terms of our cost structure, but we’ve provided extra attention to the people that are still with us.”
If leaders don’t take the initiative to get out in front of their staff and tell them the good and the bad, the company will lose direction and purpose.
“I would say to those CEOs who are not aggressively communicating where they want to go and what are the tough issues that face the business, they probably own the business or should be looking over their shoulder for the next guy who’s going to come in and replace them,” Petratis says. “Think about any human dimension. When things are uncertain because of economic crisis, family crisis, people want to know, ‘Where am I going? Help me understand the risk and uncertainties.’ People understand that times will be tough. You can’t run from them. You have to communicate and you have to do that in a variety of manners. You’ve got to do it in person, you’ve got to do it in writing, you’ve got to do it through media communications and then you’ve got to go back and do it all over again.”
Throughout Petratis’ business career, he’s been in front of the people that he’s led every quarter since 1986.
“That level of communication has rewarded me and the people I’ve worked with with excellent performance and you’ve got to double down when it’s tough,” he says. “You communicate in the good times and it’s like putting money in your checking account. You’re building in the confidence of your work force so when times are bad, you’re believable. They know who you are, you’ve made an investment and now you can make a withdrawal when you’ve got to do something tough.”
Adapt to changes
During a down economy you have to be looking for ways your company can change and adapt to keep pushing forward.
“I think anytime you’re going through a change effort you have to establish proof of the need,” Petratis says. “This is why we need to do this. This is why it will be good for customers, shareholders and employees. Once you’ve satisfied that criteria, there will be resistance. You’ve got to check for that resistance. There are people that can’t make change. For those people that can’t buy in to where you think you want to go and you give them the chance to air their opinions, they need to move into new positions or on to new companies. I think it’s one of the tougher things for managers and leaders to make that call.
“You’ve got to make sure you’ve got the talent around you to take you where you want to go and they’ve got to believe in it. If you don’t have the talent, if you’ve got people in the wrong position, you’re not going to be able to get people where you want to go. You’ve got to have the courage to help them get to where they can contribute the best.”
Through a project Quanex coined ‘Project Nexus,’ the company reshaped its sales force and is serving a broader customer base with its total portfolio.
“We had resistance when we started Project Nexus,” he says. “First of all, we socialized where we wanted to go. I believed when we first launched Project Nexus in January 2010 that we would have resistance, but I didn’t make organizational changes. I didn’t just blow up the organization day one. I let the idea percolate. I got people around it, and we sold it. Then I changed the organization. It was six or seven months after we began to share the data, share the opportunity, help our organization understand that if we didn’t go out and create prosperity, prosperity wasn’t going to come knocking at our door. We still had resistance and we continue to fight that.”
Change is an ongoing process and in the same way that people change, companies change. It’s critical that you communicate that fact.
“You’ve got to continue to communicate that goal, why it’s important we make that change,” Petratis says. “It goes back to your communications and it goes back to your vision and you’ve got to reinforce those things. Nobody likes change. I would just assume to have things the way they were in 2005 when we were building 2.2 million home starts. I wish it never would have changed from that, but it did. You’ve got to change with it, or you die.”
Change seems daunting to most companies, but oftentimes, change brings out the best in employees, leaders and the company.
“Another element to this is that you’ve got to help educate people in the change process,” Petratis says. “Give them new tools and skills. As you change things you create problems and a work force that has a solid toolbox of problem-solving tools manages through those changes more effectively. I don’t give them 20/20 vision; I give them direction. They’ve got to apply the problem-solving tools and get us to where we need to be as a company and as an organization.”
When companies undergo change, it can be very stressful to all involved. Make sure that you celebrate any successes change brings.
“The other thing you have to do in the change process is punch up your wins,” he says. “We created a lot of change with Project Nexus. In our fiscal 2010, our engineered products business grew by 12 percent and our aluminum business grew by 25 percent in a market that was negative. We could have hunkered down and not changed anything and we would have had more pain because the market wasn’t going to give it to us. You’ve got to punch up your wins and help people see there are benefits to taking on new challenges.”
HOW TO REACH: Quanex Building Products Corp., (713) 961-4600 or www.quanex.com
The Petratis File
Born: Council Bluffs, Iowa
Education: University of Northern Iowa, production management; MBA, Pepperdine University
What was your first job and what did you learn from that experience?
I’ve had a lot of jobs. My first job was mowing grass, shoveling snow and detasseling corn. I’ve pumped gas. I’ve worked in an ice cream factory where I bagged ice. My big break that changed my life was getting a job in an electrical supply house when I was 18. I learned how to work. I learned how to be accountable and responsible. I learned how to listen to customers both internal and external.
What’s the best business advice that you’ve ever received?
Take care of your employees and your customers and everything else will take care of itself.
Who is someone that you admire most in business?
I have a mentor named Charlie Denny he was the chairman and CEO of Square D Co. He played a big influence in my life. Jerre Stead is the chairman and CEO of IHS. Those guys are different types of leaders, but I benefited from my exposure to both of them.
What traits do you think a good leader needs?
I think you have to have honesty, respect, courage, tenacity and resiliency. You also have to be a servant leader.
If you weren’t a CEO, what would be your dream job?
I would be a cattle rancher and farmer. I’ve already got the farm part. I like being around equipment and being around animals and working on the land. I’ll have it someday.
Hospitals nationwide are being pressured and, in some cases, forced to adapt to changing demands in the health care industry. Rising expectations in the quality of delivering care, the cost structure of health care and a looming shortage of personnel are just a few issues hospitals are looking for solutions to. Dr. Cary Gutbezahl, president and CEO of Compass Clinical Consulting, specializes in hospital consultation. His firm helps hospitals solve these issues by improving efficiencies.
Smart Business spoke to Dr. Gutbezahl about how hospitals are streamlining their operations to combat health care issues.
What are the most pressing issues facing hospitals today?
Hospitals are facing a couple of important challenges. One is rising expectations for the processes and results of delivering care. That means things related to improving patient safety, reducing the occurrences of undesirable events and reducing hospital readmissions.
The other pressure is the cost structure of health care. The way it has been funded has generated some pretty significant overhead costs and investment in technology that have made health care costs rise to the point where they are pretty much unsustainable both for private-sector insurance as well as for public insurance.
The third challenge which is looming on the horizon is shortage of personnel. In the future, with rising demand for health care services and the aging of the existing population, there is going to be a severe imbalance between supply and demand.
How are hospitals looking to solve some of these issues?
The challenges give hospitals a number of opportunities to make some changes both in their traditional scope of operation as well as expanding their scope of operation.
One of the areas that hospitals have had incentives to work on, but many hospitals haven’t addressed is the issue of how to manage hospital care expeditiously in order to minimize the amount of time and expenses that are provided for a patient.
A number of hospitals have patients stay a number of hours in the emergency department. They are sitting in the emergency department waiting for an inpatient bed, but in the meantime, they are not getting the physician consultation and diagnostic tests that you would normally get as an inpatient. One way that hospitals can accelerate care is to make sure patients either get to a bed quickly, or that the care process begins while the patient is in the emergency department so there aren’t hours waiting for things to happen.
They also have to recognize when a patient’s care can be safely transitioned to an outpatient setting. Some hospitals are identifying and working with the physicians and nurses to say this patient can get the rest of their care as an outpatient with home health care or with outpatient rehabilitation therapies.
What is the main focus of hospitals right now?
Right now there are two things that hospitals should be focusing on and they are related. One is called throughput. That is increasing the capacity of the existing facilities, meaning both space and people, by redesigning the way patients flow through the health care delivery system so that they move more quickly.
That means people sitting in the emergency room for less time so that the existing beds in the emergency room can accommodate more patients. It means moving patients through the inpatient side quicker so the hospital doesn’t need to build additional beds in order to house people for inpatient care. If hospitals have to build more beds, then the costs are going to rise. The only way to try and keep the cost of health care down is going to be to work on these through put issues throughout the hospitals. The ORs, the inpatient beds, critical care units, emergency department, all areas of the hospital where there are backups in terms of patient flow.
The second thing is looking at how we redesign the delivering of health care services so it becomes more efficient. One technique that’s being used on the outpatient side in a number of large multispecialty medical groups is the idea of group appointments. You have a number of patients who have similar kinds of clinical problems. Instead of meeting with each of them one by one … a number of these organizations are scheduling group meetings for patients who have [the same diseases].
HOW TO REACH: Compass Clinical Consulting, (513) 241-0142 or www.compass-clinical.com
Stuart Aitken admits that he has an eclectic background in business. He has tried his hand at making a fortune in Silicon Valley, he’s been a vice president of marketing for the grocery chain Safeway, and he was chief marketing officer for the arts and crafts store Michaels. His background is what brought him to dunnhumbyUSA, a consumer data analytics company.
In 2009, Aitken was hired by dunnhumbyUSA as COO and was promoted to CEO of the $245 million company a year later. His experience with consumer data made him the logical choice to lead the company after former CEO Simon Hay was promoted to lead the London operations.
“If you look at my background, there is a lot of IT and a lot of loyalty marketing in my background largely with the work I did at Safeway for 10 years and the work I did at Michaels,” Aitken says. “For me, this was the perfect fit of bringing my technology background with my marketing background to a company that fundamentally believes in the data and the customer, and for me, I had admired dunnhumby for many years. In fact, I recall trying to emulate some of what they were doing. This was a fantastic opportunity to join a company I feel is on the forefront of customer understanding and customer behavior.”
Aitken has helped to further dunnhumbyUSA’s focus on customer loyalty and retention all while growing operations to better serve its clients. Here’s how he helps dunnhumbyUSA and clients like Coca-Cola, Procter & Gamble, Kroger Co. and Macy’s succeed through a focus on the loyal consumer.
Focus on customer retention
Everyone in business knows that gaining loyal customers and having a high customer retention rate is extremely valuable. However, not many companies aim to please loyal customers.
“We have a fundamental belief that companies, regardless of who you are from a company perspective, and it can be any organization, has a monomaniacal focus on the customer and understanding the customer and not just any customer, but loyal customers,” Aitken says. “We fundamentally believe that you have to focus on loyal shoppers to be successful. It sounds like a principle that most companies would adopt and adhere to. But what we’ve found is that very, very few do. You talk to companies and the vast majority of companies talk about bringing in new customers, new clients, etc. versus saying, ‘Who are my loyal customers, what’s my headroom with those customers and how do I reward those customers for being loyal to me, my retail organization and my brand?’ Whether you’re a (consumer packaged goods company) or a retailer, very few companies think about customers in that way. It’s a different philosophy and that’s what makes it successful.”
Not only does dunnhumbyUSA advise its clients to focus on loyal customers, but it also adheres to those same principles.
“Our business model is very different, too,” he says. “We are exclusive with the retailers we work with. Because we work with Kroger, we will not work with other grocers in the U.S. Because we work with Macy’s, we will not work with other department stores in the U.S. We are exclusive and therefore it means we’re trusted. We’re not like any of the other big consulting firms who can help with strategy with competing retailers. For us, we just do not go there.”
Aitken realizes that by focusing more on existing and loyal customers, companies are limiting the number of clients, but there’s a reason this method works.
“What’s interesting to me is that there are many, many white papers out there and educational institutions produce it all the time, that it costs X times more to bring in a new customer than it does to retain an existing customer,” he says. “It’s likely something like six or 10 times more. But very few companies do that and focus on that and I liken it to a bucket of customers. Most companies are focusing on trying to find another faucet to fill that bucket of customers and very, very few are focused on plugging the hole that is in the bucket.
“You would need to win 12 new customers on average, we’ve found, to replace one loyal shopper. What we’ve also found is that with loyal shoppers the headroom with them, even with your most loyal shopper, you’ll likely have a 50 percent share of wallet, which gives you enormous headroom with those customers.”
Weigh your options
Without full understanding of your customers, companies miss out on vital ways to reach core customers that can provide more revenue than new customers.
“The other thing with us is we believe in behavioral data,” Aitken says. “Attitudinal data is very helpful and insightful, but what people say and what people do are two very different things. Understanding behavior through data is what we do so well. Where the rubber really hits the road is taking that data, taking those insights and giving them to the decision-makers and disseminating all of that knowledge and insight to the decision-makers across the business such that we put the customer at the heart of all business decisions. So when people are making even the smallest decision, they’re doing it with the customer in mind and with the loyal customer at the heart of those decisions.”
Even with data to back up the logic of focusing on loyal customers, some companies continue to reach for new consumers. The leaders of those companies need to examine the pros and cons of their customer base.
“I would ask those individuals to create a list of all those activities you’re doing to bring in new customers and create a list of all those activities you’re doing to retain existing customers and your loyal customers,” Aitken says. “Compare those lists and those costs and the return that you’re getting on those two lists. At the bottom of those two lists write down the percent of revenue and profit you are getting from those two customers or segments. Then ask yourself is that where I should be investing my time, my energy, based off of what that ratio looks like. Nine times out of 10, you’ll find the ratio is swayed enormously toward bringing in new customers.”
When companies put an emphasis on going after new customers, they are rewarding behavior that a company wouldn’t want from its own customers; they are advocating that customers leave and join a better company.
“Just think about any cable company or satellite company and the ads on TV saying, ‘Join now for the next 12 months and here’s an incredible deal for you,’” he says. “Then you’ve got somebody sitting watching that same ad who’s likely been loyal to that brand for six years or eight years, never moved and they’re basically being slapped in the face and would be better off moving to a different provider than staying with the existing provider. That’s a great example of not rewarding the behavior you seek but rewarding a behavior that is detrimental to your loyal customers.”
Aitken has continued dunnhumbyUSA’s practice-what-we-preach approach. The strategy has worked for the business and for clients of the firm.
“We’re telling our clients to reward the behavior you seek and make sure you go after your loyal customers,” he says. “In the same way, we need to do the same. We’re putting great talent on existing clients versus putting them on recruiting additional clients. Let’s put our great talent where it matters. Let’s make an impact on those businesses and the growth will come from that. That has been a big key.”
Change your thinking
When things are going well in business, companies tend to keep doing more of the same. However, it’s the companies that challenge the status quo that find ways to continue growing and overcome adversity.
“I feel we challenge the status quo and some of the myths in business,” Aitken says. “Whenever we hear, ‘That’s how we’ve always done it.’ That is a key red flag to say, ‘Well, is that the right way to do it? Is that good for customers?’ It’s always easier to do it the same way. If you want to fundamentally change the trajectory of your organization, if you want to truly start focusing on the customer and you know in your heart that you haven’t in the past, then you have to challenge all norms and beliefs. I think it was Darwin who said it’s only those who change and evolve who will survive. If you stick with your norms, are you changing and will you survive?”
Numbers don’t lie, and if you find that a change in your business operations will help your company survive, you have to commit to that change.
“In a downturn economy, that’s when companies realize they need to do something different,” he says. “They need a different strategy and a different perspective on things. When things are going incredibly well very few companies go, ‘Well maybe I need to change strategy or think about the future.’ So in a downturn that’s when you see companies going, ‘OK now I need to change and what does that change look like.’ Don’t get me wrong. We’ve had a couple of clients who were flying high and said, ‘Listen, we want to continue to fly high and in order to do so we need to look beyond the next two years and where our growth is going to come from in the future.’ Those are tremendously forward-looking individuals and organizations.”
Whether your company needs to consider a change or not, it is important that the change you implement doesn’t stray too far from what made the company successful.
“You can never forget what made you successful in the first place,” he says. “Make sure as you grow that your principles and your values never change. It’s always good to go back and double check that when you look at your strategies and your growth plans for the future that they very much have your core principles that made you successful in the first place still in place and the values that you look for from employees still in place.”
Oftentimes the hardest thing for leaders to grasp is that doing right by customers will ultimately prove successful for the business. You have to understand that what’s right for the business isn’t always good for customers.
“Results help drive customer satisfaction enormously,” Aitken says. “What’s interesting is when you challenge, when you push back, typically your satisfaction scores go down because you’re not doing exactly what the client wants but you’re doing what you believe is right for customers. Those two things don’t always align and you have to be courageous when you see those results. Are you doing the right thing for the client or are you doing the right thing for the customers? If you’re doing the right thing for the customers then the results will come and the satisfaction scores will turn.”
HOW TO REACH: dunnhumbyUSA, (513) 632-1020 or www.dunnhumby.com/us/
The Aitken File
Born: South Africa. He considers himself Scottish because he grew up in Scotland after moving there when he was 10.
Education: BA in information management, Queen Margaret College, Edinburgh; Masters, University of Strathclyde in Glasgow
What was your first job, and what did you take away from that experience?
I bent metal for gutters on industrial buildings. Because it was such a manual-labor-type job, I look back at how hard those guys work and what they put their bodies through for little pay and that drove me to make sure I got a further education to get the best job I could.
I was also paid to play rugby. I was a young man playing rugby and from a leadership standpoint that taught me about teamwork and that no person can do a job by themselves.
My position was flanker/wing forward. I played from when I was 6 until I was 34. In the process, I had a disc removed from my back, I broke my neck, I’ve broken multiple fingers and it is something that will be with me forever. I truly love the game. I was the youngest rugby captain of my team in Scotland. At age 19, they voted me as captain, so I was telling 20-, 30- and 40-year-old men what to do. I love the sport and love the camaraderie. It’s a very unique sport that relies on teamwork and team spirit and trust and all those things I love as part of business.
What’s something you miss from Scotland that you wish you had in Cincinnati?
Aside from friends and family, my answer would be haggis and fish and chips. However, Cincinnati has tremendous curry houses.
Ron Seide used to work for Cisco Systems in its wireless network business unit making products for manufacturers of data collection. What he did was part of a relatively small niche market, and as a result, Cisco put less and less focus on it until ultimately deciding to stop that line of business.
Seide and some colleagues saw this as an opportunity and formed Summit Data Communications Inc., a Wi-Fi solutions company.
“Something that was relatively small for Cisco was actually quite substantial for an independent company,” says Seide, president of Summit Data Communications. “As a result we were able to convince customers that worked with Cisco to work with former Cisco employees who were looking to bring to market a successor product to what Cisco was doing.”
Smart Business spoke to Seide about how Summit Data Communications has exploited a niche and is looking to continue expanding its reach.
Find a niche. It’s good to find a niche and fill it, but it’s even better to create a niche and fill it. It all comes from having an understanding of the market you want to serve. You have to understand the markets that you want to serve and then create a unique set of products or services that you can then hold up as being your very own niche.
It’s really no secret. It’s really talking to customers. Between myself and our sales staff and technical staff, we have a very permeable membrane in the organization where information constantly flows back and forth between ourselves and our customers, ourselves and our partners, ourselves and our supply chain. It really is about openness and willingness to speak with external parties on a very regular basis and that will help you understand what the market is all about. No amount of reading, no amount of studying or looking at reports really gives you that sort of rich, deep set of knowledge of the marketplace than just being in constant contact with external parties.
Grow organically. The initial start of the company was an incremental step from what Cisco was doing, but having then established that beach head, we have now expanded that into new technology and new markets. It’s those new technologies and those new markets that will fuel our growth going forward.
This technology is used in bar code scanning, factories, warehouses, distribution centers and big box retailers, all of which are supply chain applications. One driver of growth for us is the increasing automation of organizations’ supply chains. The bar code becomes an increasingly integral part of an organization as they try to gain efficiency.
At ball games and concerts, tickets are now being scanned commonly by handheld computers with bar code readers on them. That’s just one example of how bar code readers and handheld computers, which use our radio module are being found in new applications and therefore new growth opportunities for the industry and new growth opportunities for us.
In terms of identifying new growth opportunities, oftentimes your set of products and services that works in one market may play well in other markets. It’s a great way to gather low-hanging fruit and build incremental revenue. It doesn’t necessarily require new products or new capabilities; it just requires the willingness to move out of your comfort zone.
Brand your business. Following our customers and responding to our customers requirements caused us to indentify a whole new class of devices that we could access and a class of devices that had requirements for our unique set of capabilities.
When we started out, we were targeting all of our marketing and sales efforts on the parties that were directly one step up stream from us. You have to build up a brand. What we did was with each Summit radio that we sell that comes along with a software application, which runs with the device. On that software application is the Summit name, the Summit logo and a variety of different ways to identify to the end user that the device contains a Summit radio.
By doing that we are able to build a pull-through demand. You can establish a preference amongst the customers of your customers. It sets up an entrance into other markets because you have a brand and others don’t. It’s not enough to have a unique set of capabilities. Beyond that you have to also make it known who the provider of that unique set of capabilities is, not just to your direct customers but to customers down stream from your customers.
HOW TO REACH: Summit Data Communications Inc., (330) 434-7929 or www.summitdatacom.com
Gary Schaffer wakes up in France most days out of the year even though Inmedius Inc., a provider of enterprise software solutions, is based in Pittsburgh. The president and CEO of the global company likes being centrally located.
In the mornings he speaks with India and in the evenings he calls the West Coast and his daytime hours are busy contacting everywhere in between.
“Our largest challenge is having a moderately growing company and a company that is worldwide and the challenge is dealing with the virtualization of our work force,” Schaffer says. “How do you keep everybody communicating and in sync with each other when you have offices around the world?”
It’s a challenge that Schaffer and his 75 employees are always looking to solve and improve within the company.
Smart Business spoke to Schaffer about how he keeps his global business in sync.
Synchronize processes. The more highly distributed you are, the more business process driven you have to be. If we’re all in an office together and we’ve got a business challenge, we can just lean over the cubicle and say something to our colleague. If you’re on the other side of the world and something has to get done, you have to have an agreed upon process that you all agree beforehand is going to happen.
As a small business you don’t necessarily want all the overhead of huge business processes. As a distributed small business, you have to have those processes in place. That’s another challenge. How do you deal with a small business that has the needs of a large business business process?
The first thing you have to do before you put a new process in place is agree on the process. Then monitor the process and document the process in either a task list or check list.
Make sure someone owns it. What I’ve found over the years is that without direct ownership by somebody, not by a group of people but by somebody, these things do not work well. You need to be able to hold one person responsible and one person needs to be empowered to make sure the process works properly.
Promote strong employees. Inmedius is really a niche software services business, so we don’t have a big pool of competitors we can pull from or necessarily people who understand or know our domain before they come to our company. We are actively promoting people in our company into different roles to take up more management roles. We had somebody that was in a finance role and was just moved to the director of operations. That’s because someone that was in finance over the years will understand our business, understand our products, understand our services, and understand our customers.
You need to sit down and systematically do ‘what if’s.’ What if we move Bob, who is a great performer in production, into a sales assistant role? What would that look like? What advantage would that give us? What disadvantage would that give us?
Some of these may be very unnatural. When you talk about product innovation, one strategy is to take all your assets, all your products that you own and say, ‘What would it be if we mixed this product with this product? What would that give us?’ Unless you do that systematically, you’re never going to come to those conclusions. You have to do them with people and roles too. You have to line up all your people and line up all your roles and say, ‘What would that look like with this person in that role?
Find the right people. Personality profiling is a must. That’s how you know what the best way to manage that person is. You have to also get a very good understanding of what work environments people work best in. You have to go beyond just skills.
Those other areas are as important, or more important, than the skills. Somebody could be a fantastic programmer but not a team player and they are on a team programming project and that’s not going to work out.
Somebody may be a great programmer but doesn’t like interacting with customers. So we better make sure we get them in the right role because if the role is to lead the programming group and be contacted by customers, the person is going to fail. You have to look at whether they need a structured environment or an unstructured environment. Different parts of your business have different needs.
HOW TO REACH: Inmedius Inc., (412) 459-0310 or www.inmedius.com
Audrey Dunning is CEO of Summa, an IT consulting and software engineering firm. Dunning and the folks at Summa are helping companies cut through the hype and understand how they can identify real opportunities for accelerating the business value for their business with cloud applications.
“That’s our role as a consulting and integrating firm,” Dunning says of the $14 million company. “Cloud computing is really a way for companies to add new capabilities, increase capacity, essentially on demand, without needing to invest in new infrastructure, training new people, and licensing new software.”
Cloud computing is being used more and more and it’s companies like Summa that help others better understand how it can be utilized to it’s best and fullest potential. “It’s clearly one of the fastest growth opportunities that we’re seeing in the business,” she says. “Some see it as a seismic shift in IT and others just sort of see it as a next-step evolution.”
Generally, cloud computing is a subscription-based pay-as-you-use versus more traditional models of acquiring IT computing resources. People tend to think of cloud computing as covering three areas. “Software as a Service (SaaS) is one,” Dunning says. “There’s also the notion of Infrastructure as a Service (IaaS). That’s an aspect of cloud computing about getting access to compute cycles. The third area of cloud is Platform as a Service (PaaS). Platform as a Service is probably the newest notion of cloud that’s really hot right now for 2011.”
Whatever area of cloud you may be considering or already using, it is important to have someone help you make sense of it all. Summa uses the cloud application readiness assessment offering.
“That allows us to work with an organization, help them evaluate whether [cloud] fits and the intersection of the business value of a cloud solution with technology within their company,” she says. “It looks at the economic drivers for leveraging cloud in their environment. It helps educate them on the different cloud types and associated services that might be out there. We help them take a look at the real opportunities in their organization and where they can take advantage of it. We help them rank the different potential initiatives and which might have the nearest-term business benefits.”
Cloud computing is everywhere right now and gaining a solid understanding of it and where you can use it moving forward is what will set your company apart.
“Starting with a pilot somewhere is something we advocate a lot to take a look at what are the candidates,” Dunning says. “Pick a place to get started and then work through a pilot application. Something we advocate a lot to organizations is transitioning to new technologies in an incremental way versus a big bang approach.”
There is a lot of information available so you’ve got to take that into account and make sure you know what area of cloud you want to start using.
“There is a lot of hype around the cloud right now and a lot of product vendors and technology vendors are seeking ways to rebrand their solutions with cloud in the name,” Dunning says. “You have to be a bit careful of the vendor hype. You have to educate yourself and really understand your organization. Take a look at where it might make sense to get started based on the needs of your organization and priorities and your readiness to adopt a new solution. And obviously work with a provider who can help give you good advice in that process. You have to get educated about the space and what it is and what it isn’t and where would be a good place to get started.
“There’s all sorts of research and statistics out there that say large percentages of organizations are going to be shifting to this model. I think at this point it’s become something to not really avoid, you have to have an eye to it. You have to look at where you can get started and get your feet wet.”
HOW TO REACH: Summa, (412) 258-3300 or www.summa-tech.com
While cloud computing is stirring up a lot of interest, Software as a Service is still largely the model that most companies are utilizing.
“Salesforce.com is an example,” Dunning says. “Salesforce.com is a pretty popular application for customer relationship management and sales force automation. The Software as a Service model is basically a way to deliver functionality to many customers at once through a service versus installing that software on premises.
“Some of the advantages of that to businesses are it increases their agility and the ability to bring up new functionality and new applications quickly. It has the promise of reducing their costs.”
Summa got involved in that particular part of the cloud computing space. It acquired a company last summer.
“We acquired a local firm called Harvest Gold,” she says. “They were an existing Salesforce.com business partner, so their experience was more along the lines of helping organizations with their sales business processes. As more companies and larger enterprises are looking to the SaaS model for deploying application functionality, Summa was involved with Harvest Gold as a partner. We saw an opportunity to bring Harvest Gold into the firm as a way to really represent an end-to-end solution from the business through the IT organization. It helped to fuel our growth.”
The ultimate life challenge for most leaders is how to balance home and work — especially with today’s demanding travel schedules. While we are chasing urgent business goals, we often lose sight of the truly important priorities of family, faith, and friendship.
Are we doomed to workaholism as we labor to ensure our company’s success? Or, the flipside: will we never advance in our corporate world if we put family first? I don’t think so.
After many, many years at this, I conclude: There is no such thing as work-life balance — and that’s OK. We live in a constant state of imbalance. Life and work events necessitate elasticity in our time and attention toward each. The key is to know where you are on the continuum of imbalance and to be proactive in managing through it.
On the work side, you may face weathering the largest economic downturn in our lifetimes, managing through a merger or acquisition, developing a proposal that might double your company’s size, supporting the leadership of the nonprofit board you sit on, or managing through a difficult time. Each of these demands extra hours, conference calls, and endless days. These are all but guaranteed to impinge on your personal or family time.
Similarly, on the “life” side, you may face the sudden or prolonged illness or death of a parent or child, helping your teenager navigate a difficult time, or supporting a close friend who has encountered a tragedy. Each can demand a sudden or prolonged time away, such that you need others to cover for you. You also need to honor less-urgent but highly important things like your son’s little league championship or your daughter’s dance recital, or a long-planned family vacation, regardless of conflicting business demands.
These tugs and pulls define the ebb and flow of our lives — and that’s a good thing. It will always be this way. The key is to have strategies to deal with it successfully:
Take care of your physical and spiritual health. Commit to sleeping, eating healthy, and exercising. You must be healthy, both physically and emotionally, to be at the top of your game. If you don’t take care of your body, then where will you live?
Get ahead of your schedule by prioritizing your time. It’s one thing to manage tugs and pulls, but it’s another to be the caboose getting whipped around because you’ve lost control of your schedule. Work closely with your assistant or teammates to ensure everyone is aligned on where your time should be spent.
Know who your A-Team is at work. Tell them about both the business priorities and your personal commitments. Enroll key people who can help you seamlessly cover work needs when your attention must be elsewhere.
On the home front, recognize your unsung heroes. Devote special attention to your spouse/partner/parent who sets the tone for how your children and others understand the demands of your job and your absence from events. Recognize the huge impact your work challenges have on your unsung heroes, and how hard they work to help hold everything together. You cannot thank them enough.
Remember that what we sow, we reap. So, model your support of others when their work-life imbalance shifts unexpectedly. In doing so, you are demonstrating how others can help you do the same. Because you bring passion to both your work and life, and bring your A-game to the table every day in all that you do, you will inevitably emphasize one over the other at times, thereby living fully into your work-life imbalance. But that’s a good thing. Just know its happening and plan accordingly.
Leslie W. Braksick, is co-founder of CLG Inc. and author of Preparing CEOs for Success: What I Wish I Knew (2010) and Unlock Behavior, Unleash Profits (2007). Braksick advises top executives, their leadership teams and boards of directors on issues of strategy execution, leadership effectiveness and organizational performance. She can be reached at email@example.com.
When Daniel Moore became president and CEO of Cyberonics Inc., a medical device company focused on epilepsy and other debilitating neurological disorders, in 2007, he faced a company that wasn’t growing and had several issues in need of fixing.
“The company had lost more than $50 million in each of the two prior years and owed $132.5 million dollars,” Moore says. “The first problem was a financial problem and the long-term viability of the business. The first job was to turn that around. Had we not done that, the company would have been out of business in 18 months.”
Cyberonics was forced to do layoffs to stay in business and dropped from nearly 600 employees to 430. Since then, Moore has emphasized a unified vision and a strong, open culture to get the now 530-employee company, which saw fiscal 2011 revenue of $190 million, back on track.
“You have to start with the vision,” Moore says. “What do you want this to become? Before I came into the company there were several members of the board who were new board members and we ensured that … we all shared the same vision.”
The company had been going in another direction which had led to some of the company’s challenges. It shifted gears and focused on epilepsy as a business. It was important for them to all be on the same page.
“The alignment has to be there at the top first,” he says. “I have been in situations where the board is not in alignment and if the board doesn’t have alignment, then the senior team is allowed to not have alignment and that trickles down throughout the organization. If you have the alignment and you share a common vision for what it is you’re going to do, that allows you to layout a plan in order to get to success.”
Communication during this process is crucial for alignment throughout the organization to occur.
“Once you have alignment on here’s what we’re going to do, the second part of that … is saying what you’re not going to do,” he says. “If you do those two things, say what it is you’re going to do and then what it is that you’re not going to do … I think you’re on your way.”
During turnarounds and periods of change there is often opposition to that change. It was vital to Cyberonics’ turnaround to allow for constructive debate and a culture that stressed that importance.
“You want to have a culture where people are free to express their thoughts,” Moore says. “You want to have a culture where that debate is encouraged.”
Constructive and spirited debates are often a good thing. You have to understand that your idea or direction isn’t always the best or right way to go.
“You have to ensure that you have an environment for which [constructive debate] can happen and opportunities for it to happen,” Moore says.
It is up to the CEO to make sure the culture of constructive debate reaches everyone in the company.
“Speak to the benefits with sincerity, letting them know you believe we will be best if we utilize the intellectual capacity of all of our team members and help each other grow and develop by learning through sharing ideas,” he says. “If you don’t believe that openness and constructive debate are good and you have all the answers, there is a bigger issue and you’re that issue.”
You have to demonstrate the culture you want to see within your company and ensure it’s happening.
“Don’t put people down in discussion,” Moore says. “Acknowledge their input and let them know when you agree and they’ve changed your position and let them know when they haven’t and why.”
Whenever possible, show your employees they can change your mind.
“When you can show real world examples people see that you are willing to not have the final say in every matter and that you, as CEO, are not always right. It gives them confidence for future interactions.”
HOW TO REACH: Cyberonics Inc., (800) 332-1375 or http://us.cyberonics.com/en
To create a strong culture and one that directly affects the growth and performance of your company, you need strong employees.
“Get good people on the team and they will really make things good overall,” says Daniel Moore, CEO of Cyberonics. “It’s about that team coming together with their individual functions and putting it all together into the broader team.”
To get the most out of your employees, you need to make sure they are being challenged enough in their roles and have an opportunity to grow as the company does.
“To grow and develop people, you need to be honest with people as to where they are and you need to be honest with people as to where you see them being able to go,” he says. “We hold people largely accountable for taking control of their development plan. We create an environment where they can grow and develop, but they need to be the point person in their growth and development.”
Employees will only be able to grow if your company is behind them in that growth.
“You want to ensure you have an environment where people can get a variety of challenges. You want to provide that environment that allows for growth and development and you want to make sure people understand that it’s their responsibility to be in charge of their development.”
John Owens founded Cohesion Business Technology, a technology services firm, to provide organizations with high-impact business technology solutions to support their core business objectives. The president and CEO is always on the lookout for people who can help make his business a better one and continue the fast-pace growth Cohesion has seen in the past few years.
“For us, strong teams built with the right people are always the biggest challenge,” Owens says. “As a company and as a team being in the people business, we really have been focusing on trying to excel with making great hires and building great teams of people.”
That constant search for improvement has helped the 200-employee company see annual revenue of $20 million.
Smart Business spoke with Owens about how he keeps his company growing and prospering.
What have been factors behind your growth, and how do you keep up with it?
A majority of growth that we have had over the years has been organic growth and a lot of it comes off of client demand. As we begin to pick up new clients and new services, we expand our team based on those needs.
You should find great people when you can and expand the team to prepare for that growth. There is a lot of ramp up time and a lot of processes that need to be in place and a strong team is definitely going to help you achieve that goal. I don’t think you can get there without having the right people and the right management team in place. It is critical that you have the right team built in order to scale the company.
How do you attract the right people to your company?
It goes back to your core values. Look at those as the pillars of your company and what you look at to determine if someone is going to be a fit with your organization. They could be a very senior person with many years of experience or a junior-level person, if those core values aren’t there, then it’s just not going to work.
How do you adapt your growth to changes in your market?
A lot of it is doing research. You have to keep a pulse on the market. It’s critical to understand that what you did two or three years ago isn’t going to necessarily work. You’ve got to be open for change and be in touch with the market. That comes with experience. After you beat your head up against the wall so many times and the route that you’re taking becomes less and less effective, you learn that you have to be open to different options and flexible to different options that might not be ideal, but effective. We all want to have the winning idea or winning solution, but you become more experienced and more humbled and end up going with what works for you and what’s best for the business.
What are some mistakes businesses often make during growth?
There is more than one solution to a problem and having an open mind and being willing to hear a different perspective and different viewpoint to solve that problem is what I would recommend. An open mind is key. A lot of times you go at a problem with a solution and you’re kind of closed off to some other alternatives to that solution. I think utilizing your employees and your consultants to solve a problem, whether it’s a certain business process or technical problem, you need to reach out and hear all the different alternatives and solutions that the people who are actually out in the field and out doing can suggest.
What are some things that could hinder the growth of a company?
Cash flow is one of the big ones. I think you have to keep your eye on the cash flow and the revenue generated. Some of the non-tangibles are communication and culture. Culture is so huge and so often the culture is overlooked in how critical it is. I think that’s one thing that can really sneak up on you and have a negative impact is not having a strong culture.
HOW TO REACH: Cohesion Business Technology, (513) 587-7700 or www.cohesion.com