Chris Cicchinelli wishes he knew how to speak more languages or at least paid more attention in his Spanish classes, because his company has started to expand into international markets.
Pure Romance Inc., an in-home party company that sells a premier line of relationship enhancement products, expanded into Puerto Rico last year and now has 750 consultants selling products there.
“I wish I would have taken more Rosetta Stone or more Spanish when I was in school,” says Cicchinelli, president.
Now that the company has successfully started its quest to break into international markets, it’s looking to open locations in Johannesburg, South Africa, Sydney, Australia, and Manila, Philippines, within the next year.
2010 was the company’s biggest year yet, seeing 40 percent growth, which resulted in revenue in excess of $120 million and 50 new employees.
“We’re growing in all of our Midwest markets and all throughout the United States,” Cicchinelli says. “We were also very fortunate that we started doing some international growth last year. We are really beefing up our infrastructure to continue our growth trajectory for 2011 into 2012.”
While the organization has been able to grow domestically, Cicchinelli has found international growth offers a few challenges he hasn’t had to face until now.
Here’s how Cicchinelli keeps his company on a rising growth curve.
Consider each decision carefully
It’s no secret that every company wants to see growth. However, not every company is fully prepared to take on the challenges that growth brings with it.
“Making new decisions for the company and what the right decisions are for the company and the growth aren’t always easy,” Cicchinelli says. “You have to be upfront with everybody. You have to be as honest as you can. As long as you are upfront, honest and have an open dialogue it will get you far.”
If growth is something you’re looking to achieve, it is imperative that you are ready to take on the challenges.
“You have to look at everything [in the company],” he says. “You have to look at what’s right for the company from a perspective of new product development if you’re looking at it from a manufacturing route. You have to ask yourself questions. How’s it going to affect my end consumer? How’s it going to affect my sales rep out there selling? How does my company internally get behind what we are out there doing? All of those factors are important before you make a decision. You have to also sit down with key individuals in your office and talk it through. It’s not a dictatorship, it’s a democracy. You have to sit and talk about things and how that will affect all aspects of your business.”
Looking over all aspects of your business and making sure your plans will work or at least have a good shot at working is a big time commitment.
“Time is definitely a challenge,” Cicchinelli says. “You’re constantly working in the business from 9 to 5 and working on the business after that. I’m working on the day-to-day pieces, making sure that the core competencies of our business are done during those hours and from 5 o’clock until maybe midnight we are working on new development and making sure we have all those pieces covered.”
Because growth takes so much time and effort, it is important for not only yourself but for your employees to be able to celebrate the successes you see along the way.
“There were points and times where we would just go from one project to the next project to the next project,” he says. “It was like, alright, great job, let’s shelve it. No celebration, no congratulations, it was just move on to that next thing. We run so fast all the time that I want to make sure that the culture of my company is always positive and celebrating victories, even the little things. Personally, I’m trying to make sure that I’m celebrating those internally and I’m celebrating those with our staff. Those are things I had to overcome as a leader and making sure that we did celebrate that stuff.”
Celebrating success may seem obvious, but it is a big factor in your employee’s moods and demeanors. You can’t skip over any victory, large or small.
“Life is really short and the people that are around you are very important,” Cicchinelli says. “You spend more time with them then you do sometimes with your own family as leaders. You want to make sure that you congratulate them and you continue to boost them, because it is the right thing to do for your culture and your company. Celebrate the little successes that you’re going to have along the way because sometimes when you grow, you can grow so fast that you forget about everything that you’ve done and all the things you should be proud of. As a society, sometimes we forget about that and we just go through the motions and we forget about all the things we have to be thankful for in life.”
Expand to foreign markets
Before you can expand to any new market, foreign or domestic, you have to research where you want to expand. You have to take the time to get to know that market and have an understanding of whether your company can compete there.
“You have to do the research to make sure that there is not a lot of competition for the product that you’re selling,” he says. “If you’re selling printers or if you’re selling cars or whatever, you need to do the research either online, in business magazines, newspapers or even people on the ground in that market. You have to use anything you can to help you make the right decision.”
Finding a good reason to break into a market is step one. Once you understand the opportunity in a market, you have to gain an understanding of the culture there.
“Culture has been the most important thing anywhere that I’m traveling,” he says. “We spend a lot of time understanding culture. How do we interact with them? How will they take these products? How do we make sure we don’t offend anybody when we are talking about sexual health or sexual relationships? Culture has been our biggest thing for us to overcome.”
To understand how the culture of a new market works, you have to take time to visit and gain firsthand experience.
“You have to absorb as much as you possibly can,” Cicchinelli says. “Spend as much time as you possibly can in those markets. That’s one of the things that I’ve been able to do is I’ve been able to spend a lot of time and really get to know the people better. You have to take the time to build a relationship and better understand each other.”
Build relationships with people in your organization that want to help your company grow. Also, find people who live in those markets who can help you. That can make a huge difference in your company’s success.
“You have to find some people you trust,” Cicchinelli says. “Find some people in your organization that have got your back and don’t mind putting the extra hours in. You also have to make sure you find somebody that wants to grow up in the company.
“Find somebody that is either an expert in those locations or is someone on the ground in those locations. We have a person who’s on the ground in South Africa and I have a person who’s on the ground in Australia who is really helping guide us through.”
Don’t underestimate the importance of having someone with knowledge of the market and your industry.
“You’ve got to meet with the people that know your industry the best or know what type of industry you’re in to help make some of these decisions with you,” he says. “You have to make sure that you’ve got someone who has experience with whatever your product category or whatever your product line is to direct you where to open up and what the best way to communicate with the people of that country is. Once you have that then you’re putting your plan together and you’re implementing.”
Reaching the implementation stage is a big accomplishment and once you’re there, you have to keep pushing forward without hesitation.
“Once you make a decision, go fully committed,” he says. “You can’t go into these places, especially in the foreign markets, and be 99 percent in. You have to be 110 percent in.”
Fill your company with strong people
Pure Romance’s growth hasn’t just been about finding the right markets to break in to. The company has more than 100 very strong employees that understand the business and help keep it moving forward.
“As you continue to grow, make sure that you have the right team around you and the right people around you,” Cicchinelli says. “Make sure that you’re not just throwing people into position as life rafts so you can actually get your nose above water. You want to make sure that you’re interviewing your people and making sure that you know who you have in your organization.”
Finding the right people involves making sure they have the skills and the attitude to fit within your company.
“You need to think about using things like Myers-Briggs or some sort of analysis when it comes to not only looking at someone’s skills and talents but also whether they are going to fit into your culture,” he says. “If your culture is fast-paced and these people aren’t going to survive in a fast-paced market you have to know that before you hire them.”
Pure Romance is also a believer in promoting from within. The company gives employees every opportunity to learn different areas of the business so they can be better prepared to move up the corporate ladder.
“Most people that have been promoted from within have shown … understanding that their job is to help others and to lift not just themselves but to lift others up,” he says. “The ones that have moved up have worked in multiple positions within the company. So they not only know accounting but they know operations. Those are the ones that have been very successful in the company because they know all aspects. They don’t know just their job, they know what their job is and how their job can affect other departments.”
Allowing employees to gain knowledge of other areas of the company will help encourage company interest and make for stronger employees.
“You’ve got to first tell people that you’re promoting from within,” Cicchinelli says. “I think some companies sometimes don’t think that they have the talent inside and they try to hire out. I’m a firm believer that cultivating a strong culture means that you have to promote from within. You have to make sure people know that there are opportunities inside the organization for them to continue to grow. Sometimes it’s good that those things come from the CEO and not just the HR person.”
You have to present these opportunities for your employees and ask if they are interested in other areas of the company.
“I think it’s asking your employees and asking if they’d like to learn other areas,” he says. “The more jobs that they understand or know in your office the better off you will be in the long run. Empowering employees gives them the ability to have as much love for the company as you do. They will be able to cross-train the different people in the different departments, they’ll be able to have a better understanding of the flow of the business and at the end of the day they will be able to educate your consumers or your sales force so you can increase your revenues and be more efficient. And they may see things that you as the CEO or business owner may not see.”
HOW TO REACH: Pure Romance, (866) 766-2623 or www.pureromance.com
The Cicchinelli File
Born: Naperville, Ill.
Education: Attended Mount Union College
You played football in college. What position did you play and what did you take away from that experience?
I played defensive back and it taught me how to be a team player and how each person’s role is very important to the success of the whole team. We won two Division III national titles there — ’96 and ’97.
Who are some people you admire most in business?
My mother, Patty Brisben. She’s a true entrepreneur, and one of those people that started something most people saw as taboo, and she’s been very passionate and laser-focused on what she is going to do. Another person would be Steve Jobs. I like the way he approaches things. He is very innovative and has put some good people around him. A.G. Lafley would be another. He was a Cincinnati guy and what he did for Procter & Gamble was amazing. I would want to figure out how he did what he did.
If you could do something dangerous one time without consequence, what would you do?
I would travel to the moon. I would do it just to say I’ve done it, but the other reason is to see how pretty Earth is from up there.
Louis D. Astorino and Louis P. Astorino solve problems within their business differently, but that makes them a good father and son team. Astorino, an architecture and engineering firm, has survived the down economy and found ways to expand its business by finding solutions to the problems.
“The last two years have been a challenge because of the economic crisis,” says Louis D. Astorino, chairman and CEO. “Overcoming that and trying to keep the organization together has been extremely challenging.”
Despite the economic roadblock, Astorino has continued to be recognized as one of the best firms in the area.
“We learned to work smarter and more efficiently with less staff even though we’re continuing to grow,” says Louis P. Astorino, senior principal. With more than 100 employees and revenue in excess of $33 million in 2010, Astorino keeps looking for opportunities to grow.
Smart Business spoke to the Astorinos about how they expand their business.
Look for growth.
Louis P. — You need to go where the growth areas are. You also need to have key people in those areas. It’s important that you find the right growth market and have a leader there that you can depend on and trust in their abilities to help you grow that market. You have to be cautious when you are expanding in terms of where you are looking to expand and who you are bringing on staff.
Louis D. — You’ve got to make sure your opportunities are solid, especially when you are moving out of your local area, and you’ve got to be cautious. Secondly, internally you’ve got to make sure you’ve got the right culture. You need people behind you who are looking to help you grow and to make your company a better company. One of the things you have to do is look at the risks and make sure your risks are as minimal as can be. And if you are taking a risk, make sure it’s for a long-term advantage.
It takes a lot of strategic thinking to find all the business opportunities that are available. You have to have a mentality to take a good look at everything because it could be a good business possibility.
Know your clients.
Louis P. — You have to find clients that want a good service and want the best value that can help their business. If you can find a way to help their business and your goals are aligned, that’s the best way to deliver the best product.
Louis D. — You’ve got to sit down and have extensive discussions with your clients. You’ve got to find out what’s on their minds. Find out what’s important to them rather than what’s important to us. Don’t use intuition. Find out what’s important and then solve that problem. We use something called the blue door theory. A client will have ideas for a building and say, ‘Do this, this and this.’ But the designer will be thinking in the back of his mind, ‘That’s not going to work. So I’m not going to draw that, I’m going to draw what I think works.’ If you go back to a client without his idea drawn and say, ‘Here are some other ideas.’ You’re basically slapping him in the face saying, ‘You don’t know what you’re talking about.’ Our expression is if a client wants a blue door, you better sure as hell draw a blue door. That’s the only way of showing him that the red door, the yellow door, or the green door is better.
Louis D. — Some periods of time schools are strong. Some periods of time housing is strong. Some periods of time sports are strong, but then it dies off. The way we deal with it is by participating in all of those market segments. You have to remain flexible. There’s more than one way to do something and you have to be flexible in your thinking.
Louis P. — You have to also be aware of trends in the marketplace. Be prepared to respond when new opportunities present themselves. You have to do enough research to know where the market is going and where the money is going to be spent. As the markets fluctuate you have to be able to react to that specific market segment.
HOW TO REACH: Astorino, (412) 765-1700 or www.astorino.com
Stan Hasselbusch always looks for the next way to keep his company growing and expanding its presence. L.B. Foster Co., a manufacturer, fabricator and distributor of products and services for the rail, construction, energy and utility markets, acquired Portec Rail Products last year as a way to improve its product line. Part of the company’s strategic growth plan is to grow through acquisition and Hasselbusch made good on that strategic goal.
“We looked at a half-dozen different companies,” says Hasselbusch, president and CEO. “We looked at companies that were primarily related to the rail industry, and we weren’t going to be foolish and we did a lot of due diligence. We were looking for something that was going to make a sizeable contribution to our organization.”
Portec Rail Products was a company that fit all those requirements. A $100 million company also based in Pittsburgh, Portec is one of L.B. Foster’s biggest acquisitions. Hasselbusch knew it was going to take a lot of hard work and time to integrate the organization, but it would help continue the growth of a company that saw revenue of $475 million in 2010. Here’s how he did it.
Plan your acquisition
Acquisitions can’t be taken lightly. They can allow your company to grow, offer new products or reach new customers. They are a crucial step in growth, and they need to be given the time and effort to be done right.
“You have to really do the due diligence and have patience,” Hasselbusch says. “Having patience is something that if you’re going to have a growth strategy, you’re just not going to grow for the sake of growing, you’ve got to have patience.”
Planning out the various stages of an acquisition will help you navigate through what is often a very long and difficult process.
“Plan for what you need to do,” he says. “Make sure you have a very strong strategic plan. It’s got to have how you’re going to go through an acquisition, your diligence plan, your integration plan and your plan going forward. There’s a lot of planning and then it’s following through with strong execution.”
Hasselbusch and his team referenced the plan and kept patient while looking at companies that were going to benefit them and fit well within their organization.
“We’re not going to step out of our wheelhouse,” he says. “We’re not going to go out and do something that’s not familiar to us. We are basically in three products. About 45 percent of our business is in rail, about 45 percent of our business is in construction products and about 7 or 8 percent is in tubular products. But really our focus is in the rail side of the business and in the construction side of the business. So when we go looking for acquisitions and growth in our company, that’s what we’re looking for.”
You want to look for companies that will be a good compliment to your existing business and help continue your growth.
“Our strategic objective in the railroad side of our business is to strive to become a premier distributor of products beneath the wheel,” he says. “[Portec] had a couple of products that really played into that very well. They had a large presence in what’s called friction management. Friction management is lubrication of the wheels and the rail to minimize friction and slows down the wear of the wheel and the rail. That’s an up-and-coming market.”
Having an understanding of your market is a big part of the planning process, as well. Hasselbusch knew what part of the rail market they wanted to expand upon, and Portec was the company that offered those products.
“You need to know the market you’re going to serve,” Hasselbusch says. “You have to understand the markets that you serve if you’re going to be successful in the first place. You need to be able to know what you can do internally from an organic standpoint or what needs to be looked at outside of your current organizational set up.”
Portec fit the plans Hasselbusch and the company had to move forward with for growth in the rail industry.
“Looking at Portec, it really looked fine,” he says. “We liked the size of it. We liked the fact that it does have a global presence or at least is a springboard to get into the global market. They do a lot in the service sector, which compliments what we’re doing. They have good research and development and engineering, which compliment some of our efforts very well. They have products that we can use in our bag of tricks of rail products and we liked their people.”
Finding a company that matches up with your own is the most important part of an acquisition. The company you acquire has to be complimentary in the things they offer or make.
“You have to understand how they are going to compliment or strengthen your business,” he says. “You want to look for companies that would be accretive. You’re going to look around a lot. You have to ask yourself how the product will complement what you’re currently doing.”
It is also critical to find a company that has a similar culture. If cultures are too different, the acquisition will be extremely hard to make work.
“You have to look at the people,” Hasselbusch says. “You have to look at the people so when you buy an organization it’s going to come in and you can grow together. You can’t lose focus. One of the big things we are seeing during this integration is how the cultures match up.”
Communicate growth plans
Communication plays a big role in growth and especially in mergers and acquisitions. Hasselbusch constantly communicates the company’s plans for growth to his employees.
“We’ve always … expressed to them the importance to grow,” he says. “One of the areas of our strategic plan to grow is to grow through acquisition. They know that that’s always going on, that we’re looking at people. [Our employees] know that we are always looking for ways to grow the company. You have to communicate this all the time.”
During an acquisition process there are a lot of moving parts and a lot of variables that constantly need to be addressed. Communicating often is the only way to keep things going smoothly.
“You have to over communicate,” he says. “You have to make sure everyone in the company is aware of what’s going on.”
L.B. Foster has town hall meetings twice a year where everyone in the company gathers to hear what’s been going on in the organization. At the end of those meetings they have a Q&A session where employees can comment on what things have been happening throughout the year.
Integrating two companies together takes a lot of hard work and dedication. The process can’t be rushed. Nothing good will come out of an integration if it is forced or rushed.
“It’s very time consuming and you have to be prepared for that,” Hasselbusch says. “There’s just a lot of work to do and it doesn’t stop. It doesn’t stop in the diligence phase, it doesn’t stop as you go forward and you close and it doesn’t stop through the integration. It really steps up and you’ve got the deal down and you take a deep breath and it’s not over — it’s just starting.”
Patience and communication are extremely important while trying to successfully bring two companies together.
“Communicate on both sides with your company and theirs,” he says. “There’s a lot of hard work and a lot of patience that’s going to be required and you can’t over communicate. You’ve got to be prepared for that. If you’re going to do it and do it right, you’ve got to put the time in and it’s got to be quality time. It’s not going to start by itself.”
Nothing is more important than communicating and getting to know the company you have brought in.
“When you bring in a company that’s 20 percent of the size of your current organization, it can be a challenge,” he says. “You have to stress communication. You can’t overdo communication. You have to take the time and put forth the effort to get to know them. That’s the only way you can do it.
“You have to communicate with them and try to understand them and where they are coming from. You can’t spend enough time with the troops. You have to be out with them and press the flesh. That’s the ultimate communication. You have to do that a lot.”
Integrate your teams
When it comes time to integrate the newly acquired company into your own, you have to be willing to take time and plan how you want to make the process work.
“There’s got to be a very detailed integration process,” Hasselbusch says. “You’ve got to be able to nail that. If you lose that, you’re going to take a long time catching up.”
For Hasselbusch and his senior executive group, the first step of integration was visiting several of Portec’s facilities around the country and internationally to get a feel for the operations and people.
“It was very important for me and my senior executive group to spend some time visiting each one of those facilities because at the end of the day, it’s about the people,” he says. “You can have ideas and you can have approaches and you can have plans, but it’s about the people.”
Throughout all the hard work and planning that goes into an acquisition, you also have to create buy-in for the future of the two companies.
“The integration has been a lot of hard work, but there’s been a lot of buy-in on both sides and there’s been a lot of working together,” he says. “There are certain compromises that you have to deal with, and it’s a give-and-take process throughout. That’s the big thing — bringing people together for a common cause.”
Another aspect of compromising during an acquisition is finding the best practices between the two companies. It is very easy for the acquiring company to keep doing things how it always has. However, that won’t improve your company and it won’t help the integration process if you don’t consider all avenues.
“We’ve spent a lot of time trying to better understand their operations at their plants,” he says. “We really looked at this and we’ve told the people at Portec that we’re looking for best practices. It’s not our way. We’re going to look at you, we’re going to meet you, we’re going to try to understand you and we’re going to try to meld the best practices.”
It takes full understanding of each company in order to decide what practices can be improved and what practices to keep. It takes careful consideration on both sides.
“We’ve not gone into this integration like it’s our way or the highway. It’s looking at it from both sides. They do some things in engineering and research and development that we can benefit from. We do some things in operations that they can benefit from. You’ve got to dig in. You’ve got to really understand the cultures, you’ve got get to know the people, and better understand the products.”
The willingness and ability to keep your mind open and listen to what everyone involved in the process has to say will help you make the integration a better and quicker success. “You’ve got to go in there with your eyes wide open,” Hasselbusch says. “You have to open up and listen. We’re not saying that our way is the right way. Sometimes you’ll agree and sometimes you’ll disagree and all you can do is reach a middle ground. At the end of the day, at some point you’ve got to come on board and you have to move forward and you have to move forward together.”
HOW TO REACH: L.B. Foster Co., (412) 928-3505 or www.lbfoster.com
The Hasselbusch File
President and CEO
L.B. Foster Co.
Born: Cedar Rapids, Iowa
Education: Attended the University of Dubuque in Iowa. He went to work for L.B. Foster straight out of school. He started in 1972, and it’s the only place he has ever worked as a professional.
What was your very first job, and what did you learn from it?
I delivered newspapers. I took away from that experience how important people are.
Who is someone you admire in business?
Warren Buffett. I really like his approach. It’s a very wholesome and down to earth approach and he has been very successful. I find him very interesting.
If you could invite any three people to dinner, who would they be?
Babe Ruth, John Kennedy and Michael Jordan. My wife would have to be there, as well.
If your day is off to a bad start, how do you turn it around?
I go in my office, take a deep breath and start all over again. We are really fortunate here. There is a light attitude throughout and there is a lot of humor in the office. There are always going to be good and bad days and you just have to be tolerant and try to work through them...
Ravi Kathuria is president of Cohegic Corp., a management consulting and executive coaching firm that he founded in 2002. His objective is to make business leaders think about and implement ways to make their companies more coherent. That objective is what made Kathuria write his book, “The Coherent Company: The Struggle for the Next Level – A Business Parable.” The book follows a fictional senior sales executive, Trent Wertheimer, as he becomes CEO within a business intelligence company, Hintec. Trent quickly digs himself into a hole because he thinks he knows how to lead a company, but doesn’t. With the help of a mentor, Trent learns how to transform the company and himself by implementing the Cohegic method to give Hintec coherence and clarity. “The Coherent Company” is a look at leadership in practice as Trent implements the Cohegic method and tries to turn around the company in his new role as CEO.
What is the message of the book?
This book offers the road map for business transformation. Most business books focus on one aspect such as strategy, execution or work processes. Few business books tie them all together. This book connects mission, vision, philosophies, work processes, strategies, goals, roles and responsibilities, culture, execution and measurement.
What business problems are addressed in the book?
The primary reason that the book was written was because companies lack clarity and coherence. The issue that companies have is that they are not really crystallized in their business spirit. Their mission statements are not well-written and they have not crystallized very clearly their business model. When you look at a majority of mid-level companies, you’ll find that their mission statements and core philosophies are not crystal clear. Because they don’t have clarity around that, it creates a lot of confusion in the organization.
Companies get confused between mission and vision. They are confused about what vision should stand for. Companies have to connect their strategies, goals and visions together so that they drive clarity in the organization.
What makes the book different from other business books about leadership methods?
It’s the fact that the book is presented in the backdrop of a very intense and realistic story. It shows leadership in the real world, leadership in practice as opposed to leadership in theory. Leadership in theory is very easy to talk about. Nobody is challenging you. Leadership in practice is very difficult. Your ego, your self-awareness, your inhibitions, your preferences, your tendencies, your habits, all comes into play. Overcoming all of that is a huge challenge and as a leader you have to really perform at a much higher level and you have to help the organization succeed in spite of yourself.
What would a new leader or entrepreneur take away versus what an experienced leader would take away from the book?
I think a new leader and an entrepreneur must understand that the core of their business is the most important. They must seek to drive very clear thinking in their business model and define why they are creating that business and that company. They have to ask, ‘Do I have clarity about what I am doing and why I am doing it?’ If they don’t have that, success will be a little harder.
Experienced leaders need to understand that clarity cannot exist just in their mind. Clarity has to exist in everyone in the organization and they have to make sure that that clarity is consistent and coherent.
If a leader cannot connect all those strategic aspects, a company cannot perform. The questions that the book raises are not easy questions to answer. Those questions are difficult and take time to answer. If companies can go through and ask themselves these questions, it will make a powerful impact.
HOW TO REACH: Ravi Kathuria, 281-403-0250, or www.cohegic.com
It’s not everyday that the founders of a company go around and make employees ice cream sundaes. However, that’s exactly what Bob and Marcie Zlotnik did for their employees at StarTex Power, an energy reseller. The co-founders got an ice cream cart and bought supplies for sundaes and served employees decadent treats at their desks.
The Zlotnik’s strive for StarTex Power to be one of the best energy service providers in the industry and to do that, they focus on a corporate culture that fosters employees who enjoy what they do and provide great customer service.
“One of our philosophies is that in order to be a superior customer service company, you have to have superior employees,” says Marcie Zlotnik, chairman and co-founder. “In order to have superior employees, you really have to have an environment that fosters a great working culture.”
By focusing on a corporate culture that gives back to employees and promises to deliver energy service without surprises, the company saw annual revenue of $407 million in 2010.
“When we started, we were focused on customer service,” says Bob Zlotnik, president, CEO and co-founder. “In our industry, there is a lot of competition. We decided to sell by doing people right.”
That business model has helped the company achieve rapid growth since being founded in 2004.
Here’s how the Zlotnik’s use a strong corporate culture to grow StarTex Power.
Define your culture
Privy to the fact that numerous energy resellers don’t tell their customers everything they need to know or everything that they are being charged for, Bob and Marcie decided that they would deliver exactly what they promised.
“Energy is a very complex product and there’s a lot of different ways you can present it and a lot of different ways you can sell it,” Bob says. “We’ve always taken the view that we weren’t going to surprise our customers. So when they entered into an agreement with us, they got what they thought they got. With some of our competitors, they didn’t necessarily get what they thought they were going to get.”
That focus on service translated into creating a corporate culture that employees found helpful to their jobs.
“The key is corporate culture,” Marcie says. “I think that’s really where it starts. If you don’t have a place where people want to come to work, where they want to do their best, your end product will not be the best. Without the best product, in the end you won’t be successful.”
Part of offering the best product is being able to deliver things to a customer that the customer actually values and things they can’t get anywhere else.
“We’ve always compared ourselves to Southwest Airlines,” Bob says. “They take a lot of pride in their corporate culture and how they treat their customers and employees. They are running a lot of ads about bags fly free, no change fees, and we started thinking, ‘We need to do some of those same things.’”
Offering products or services that the competition isn’t is a good start, but you have to make sure that your employees enjoy the work you have for them. If employees don’t think they are contributing to something worthwhile, they won’t do their best and your company will suffer.
“You want to make sure you have employees that have passion,” Marcie says. “It’s not about paying people the most amount of money. Certainly as a start-up you can’t do that. It’s about really caring about people. The more you trust people, the more they want to do well for you.”
You have to set an example and show that you value your employees at all levels.
“You need to understand that it’s not about you,” she says. “It’s really about the people and your employees. As you build your employees and you show them what success is, they want to do that. They want to follow the lead. You’ve got to do whatever it takes.”
As you develop employees and hire new ones from varying backgrounds, you have to make sure each and every employee understands the culture within the organization.
“When we see those employees coming from other companies, they’re very much trained to not go outside their department, to not talk to people that are more senior and we are really insistent about breaking down those types of barriers,” she says. “That creates inefficiency. If you want to go talk to a senior manager with a good idea, go, don’t stop, do it.”
Defining your corporate culture is critical for success. You have to show employees that your company cares about them.
“People have to feel that their ideas are welcome, that they can have a long-term track to success and that they are truly part of the company,” Marcie says.
Creating a corporate culture that empowers employees and contributes positively to your company will only work if you put in the effort to make it work.
“It’s really the ideas and the time and effort that’s put in that people appreciate,” Bob says. “It’s really not the money. Marcie and her group in HR, a lot of what they do is the thought and effort that I think people appreciate.”
Thought and effort can go a long way toward building a strong team and developing the results you want to see in your company.
“To me it’s the little things that you do,” Marcie says. “It took a lot of hard work to not just develop a corporate culture, but to feed it and make sure it continues.”
Once you find a culture that works best for your company and your employees, you have to work continuously to keep it.
“The key is when you try to create that culture, you can’t back down from it,” Bob says. “For instance, there was some debate on whether to have a TV in the break room, but the promise was made, so we have a TV set being installed in the break room.”
Part of keeping a corporate culture alive is making sure that it stays consistent with everything your company does.
“You know when you walk in the office and the culture feels different,” Marcie says. “You can’t get away from it. It’s about being vigilant.”
Bob and Marcie give their employees much more than just a TV to watch. They implemented an employee stock-option program to give employees a bigger incentive to do well. They also make the work environment fun and rewarding by putting on different competitions, activities and programs.
“Most people say when they walk in the office that it looks so much fun and so lively,” Marcie says. “When we were smaller, we had a company scavenger hunt. When we hit a certain mark we put a $100 bill on everybody’s desk. Just outside of my office we have a wall and…when employees have been here for six months…I ask that they take a star and they decorate it to reflect their personality. It shows how we are all individuals that make up the company.”
From personalized decorations to scavenger hunts, ice cream parties, and various friendly competitions, the employees at StarTex Power work hard and play hard.
“You’ve got to be flexible,” Marcie says. “The way that Bob and I came out of work and the work environment that we were raised in is not going to work with today’s group. If you’re not flexible, you’re going to wake up one day and realize, ‘Why are we not communicating with our employees?’”
To keep in touch with their employees and to make sure that everyone in the company is staying happy, StarTex Power administers surveys and does research to gauge what employees are feeling.
“It turns out that the Gen Y group is a different group,” Marcie says. “I read any article I can find on Gen Y and from what I have researched, I found out Gen Y likes team competition and peer recognition. So what we have done is tailored our rewards. That’s how we determine the different things that we do by researching. You don’t know what you don’t know unless you seek guidance from those that do know.”
You have to make use of the resources available to you today. Read articles about other businesses and their practices and look online to see what experts are saying about corporate culture and today’s work environment.
“There was a recent Fortune magazine that talked about the best places to work,” she says. “I pulled that and read every one of them to see what new ideas there are. You have to read. Read about best-places-to-work companies and see what they are doing.
“If you don’t ask, you’re never going to find out. Don’t be afraid to ask, throw things out there. There is so much information and so many companies that are on the forefront of a strong corporate culture that you don’t have to reinvent the wheel. But it certainly is about reading and you’ve got to embrace it.”
That research and application of their findings has given StarTex Power recognition and won them awards for being one of the best places to work.
“When you do that, you start getting third-party validation,” she says. “In an industry with so many competitors, people are kind of looking for that. By being a Better Business Bureau Pinnacle award winner, by being a J.D. Power award winner, it really gives the customer the feeling that, ‘Hey, I may not of heard of this company’s name, but they have a great reputation and they do right by their customers and their employees.’”
Make employees comfortable
No matter how effective your corporate culture is at providing your employees with an enjoyable work environment, a CEO must make a commitment to get to know his or her employees and make sure they are getting what they need.
“You have to listen,” Marcie says. “You have to develop a relationship where people feel comfortable telling you the good and the bad, where there’s open communication and where you’re flexible.”
It’s easy to overlook the impact that a conversation with an employee can have. You have to connect with your employees.
“It’s being a person,” she says. “It’s being able to walk around the office and saying hello to people. Know as many people’s names as you can.”
You have to be visible and available to employees in order to create a relationship and make them feel comfortable coming to you.
“It’s going and pulling up a chair next to them and sitting down and talking with them,” she says. “I don’t think people see us coming down the hall and say, ‘Oh my God, the bosses are coming.’ If they have something to say they are comfortable talking.”
If you can open up to employees and speak with them on a personal level, it can make a huge difference in the work environment.
“You’re not any better than they are and you’re not any worse than they are, you’re just like they are,” Bob says. “Don’t expect things from them that you don’t expect from yourself. I show them that I’m a nice guy and I think that they believe that I have concern for them and if people view that you’re concerned about them, I think they feel open that you’ll try to help them.”
Getting to know your employees also means getting to know their jobs and what it is they do to help the business.
“The other thing is that we know their business, we know what they are doing,” Marcie says. “If you can go by somebody’s desk and see what they’re doing and be able to say, ‘Hey, have you tried this?’ You get a lot of respect out of that. Bob and I are here to make our employees look good. It’s not about me winning. I’d rather turn around and make it feel like they won. That’s how you develop a good corporate culture.”
HOW TO REACH: StarTex Power, 713-357-2800, or www.startexpower.com
The Zlotnik File
Co-founder, president and CEO
Co-founder and Chairman
Born: Marcie – Montreal, Quebec; Bob – El Campo, Texas
Education: Both attended the University of Texas at Austin. They both received BA’s in accounting and Bob has an MBA in finance.
What was your first job and what did it teach you?
Bob – My first job was working for my dad at a family business. I cleaned the bathrooms and mopped the floors. I learned that there was a lot of benefit to owning your own business but there is also a whole lot of hard work. And I knew that I didn’t want to spend my life cleaning the commode.
Marcie – My first job was as a day camp counselor. I took away from that that you can do an average job but you don’t get anything out of it. You don’t have to sign up to be the coordinator of the play or a swim counselor, but that’s how you get the passion is by doing those other things.
What is the best business advice you have ever received?
Marcie – You’ve got to know your business.
Bob – Even when things are going bad, you have to stick to your principles.
What is your favorite or most fun event that you have done for your employees?
Marcie – My favorite was the scavenger hunt. I didn’t tell people what we were doing. I told them to bring jackets, bathing suits and I even told them we were going to a concert one day so they wouldn’t catch on. We got limos to take them around the city to do a scavenger hunt. All the departments were mixed up and people had so much fun.
Bob – My favorite was serving the ice cream because I think it took the employees by surprise to see us making sundaes.
In the early ’90s, Neil Hoynes and some college buddies wanted to tour the country following the Grateful Dead. To do it, they needed money, and that discussion sparked what would become Ripple Junction, a manufacturer and licensee of apparel.
“We discussed different options to pay for it like veggie burritos, grilled cheese and then T-shirts came up,” says Hoynes, founder and president. “We figured that T-shirts would be best, and we did the math on it, and the goal was to sell 15 T-shirts at every show to pay our way around for the summer.”
They sold all 80 shirts they brought to that first show, and from there, the company took off. Today, Ripple Junction is a leader in its industry and employs more than 40 people.
Smart Business spoke to Hoynes about how he grew Ripple Junction from the ground up.
How do you find the niche that your company serves best?
You’ve got to be able to adapt, and you’ve got to be able to adjust quickly to things that aren’t working and change them. If you don’t feel like you’ve found your niche, you’ve got to keep trying new things.
Also, finding something that generates cash flow while you’re looking for that niche is really important. That cash will let you live on for another day so you can find that one thing that you’re going to do and do well.
What challenges did you face growing from an entrepreneurial business to the next level?
The first thing is policies. When you’re a small company, you don’t have a lot of them. You try to balance policies and procedures without having too many of them because you don’t want to become bureaucratic. You also need to have standard operating procedures for everybody who’s doing any repetitive task or any sort of job. That’s the kind of stuff you have to get ironed out, and you’ve got to have a way to do it that everybody knows how to do.
It’s also determining specializations. As you grow, you’re going to need to start hiring specific individuals to take ownership of what you identify as a key success. If it’s a key success factor, there has to be somebody that owns it so they can really drive it forward. When somebody’s in charge of something and it’s not a natural part of their job, if it’s a small thing, that’s OK. If it’s a big thing and it’s crucial to your company’s success, you’ve got to have somebody that owns that and can drive on that.
How do you plan and hire for growth?
As you grow you start seeing the gaps that just kind of naturally present themselves. You start realizing that this isn’t happening, this isn’t getting done and you ask yourself, ‘Can we get this done with the people we have?’ When you’re growing, the answer is usually no.
You have to go out and hire somebody to do that specific thing. The quicker you can identify that gap and fill it, the better off you are.
More important than the timing is making sure it’s the right person. We’ve done the snap-hire before and it almost never works out. It’s better to be thorough and find the right person who is comfortable in your environment and also you’re comfortable with them. You spend more time upfront, but then a year later, you’re not filling the position again.
How do you find new hires and areas where your company can grow?
You have to hire people that round you out. You don’t want a bunch of people that have the same skill sets. I’m always trying to hire people that can shore up my short-comings or shore up someone else’s short-comings. You have to look to find that person that will complement other skill sets.
That’s my big thing is trying to chart the strategy of where we’re going looking at what our business is right now and then identifying how we are going to keep growing.
You look at who you’re selling to now and then look at that customer and find out what their needs are. Find out if there is an opportunity for a new product that nobody’s selling them or if there’s a new way to do things. Then try to put the pieces together and create a great product for them.
HOW TO REACH: Ripple Junction, (513) 559-3900 or www.ripplejunction.com
When Tom Keckeis took over as chairman, president and CEO of Messer Construction Co. last year, he took on a six-month initiative to visit with some of the construction company’s customers. With more than 30 years in the company, Keckeis knew the ins and outs of the business but wanted to gauge customer’s reactions to how Messer had been doing. So he went to Nashville, Knoxville and Indianapolis and met with CEOs and owners with whom Messer had worked.
“I looked at myself and said, ‘Where’s my biggest void?’” Keckeis says. “I grew up in the organization, I understand our culture, I understand our people, and I understand our building process. Where I haven’t been is been the face of Messer out in front and I haven’t been out talking to the customers, so I tried to lead with that.”
What he learned from those conversations was that customers were impressed with the company and, specifically, the culture of Messer. The culture and the quality of its more than 800 employees has been the driving force behind the $530 million company’s success.
Here’s how Keckeis continues to build Messer by listening to customers and focusing on culture.
Find your strengths
When Keckeis set out to meet with customers, he had one main thing in mind: Listen for what he didn’t know about the company and then get to work on understanding it.
“I spent a lot of time really focusing externally listening to our customers,” Keckeis says. “I thought it was a very good experience for me. What I heard was some of what I expected. I talked about our technology and all the technical tools that we use and they all said, ‘Yeah, that’s important.’ But they always came back to, ‘Your people are really what’s different.’ The culture of our company really is a little bit unique and it came out in those six months of listening to the customer.”
Because customers were impressed by the culture, Keckeis knew he had to continue to make that a prominent part of the company. When stepping into a CEO role, it is important to reach out to customers and understand what it is they like or don’t like about your business.
“You have to make sure you spend time talking to your customers and make sure you listen to them and make sure you deliver on that,” he says. “You gain a lot of knowledge by listening to the customer. You can’t just go in and say, ‘Tell me what you think.’ You have to tell them what you think is important and what you’re investing in and then let them react to it.”
Keckeis had the advantage of knowing the business well before he was put in charge as CEO and had an area he wanted to focus on. That’s not always the case if a CEO is new to the company. There are some similarities and many differences to how a CEO would look to drive his company based on where they are coming from.
“[Where to start] would vary based on where the person is coming from and what they are stepping into,” Keckeis says. “It would be a totally different concept if you were coming in from the outside. You would need to understand the strengths and weaknesses of the company and the people inside the company as well as know the outside. You kind of have a double whammy there. I had the advantage of growing from the inside. I understand the strengths of the organization. The difficulty would be if I would be blinded by that, thinking that everything we’re doing is great. You’ve got to be careful with that.
“Each person would have to attack this differently,” he says. “You would say, ‘What do I know and what don’t I know?’ You need to understand your business development and how you’re selling the work and what’s valuable to your customers. You’ve got to understand that. Then you have to look at the way you’re delivering that value and whether you really are delivering it.”
Build a unique culture
Messer’s value is in the way it does business every day, and that’s a direct result of its culture and the employees that make it all possible. Messer is an employee-owned company and customers liked how the employees embrace that aspect.
“That ownership mentality came across when I talked to the customers,” Keckeis says. “They realized that our people are out there thinking about the long term — and they are — because their futures are tied to the long-term benefit of this company. Everybody has the ability to have the same ownership as myself or anybody else. If you stay here long enough in the company, you get so many shares of stock every year, and it builds up over time.”
Having an ESOP has turned Messer into what it is today, and there are numerous reasons a company would want to go down that path.
“If you’re a company that’s getting ready to go through a succession, you want to sell the company or move out, there are some real advantages,” Keckeis says. “It really is about succession planning. If you’ve got a strong leadership team that is carrying the day and they are interested in taking on that role and responsibility of owning a company, there are some real tax advantages for the person that wants to sell the company and there are tax advantages for the people that are buying the company.”
An ESOP, if it’s 100 percent owned by the employees through an S corporation structure, allows you to be tax exempt from federal tax. Taxes would be due when retirements are paid out. An ESOP can also be a big help to forming a stronger culture and can also help boost morale and job performance for the employees who have ownership. Customers liked that about Messer.
“To have an opportunity to own a piece of the pie and be able to set your own futures based on what you do every day is huge for morale because you can take the charge with it,” he says. “It leaves your company intact and leaves your employees intact to be able to carry on the day, and there’s a lot of pride there.”
An ESOP isn’t for everyone, but once employees understand it and realize the potential it has, it can be very beneficial.
“People that start with our company, we sell the ESOP and tell them what it means, but until they get in here, it usually takes about five or six years before they build up an account and realize that everything they do helps drive the bottom line and start to feel that,” Keckeis says. “I think people that would be buying the company would realize, ‘Wow, I’m going to own a certain percentage of this company and my future is tied to what I do every day.’ Not everybody would be into that, but the people that are leading the company surely would be.”
Messer’s employees are very in tune with the company and realize what their actions can make or break. Keckeis empowers his employees and makes sure what they do every day translates into the results that the customer wants.
“I think you’ve got to make sure that what [employees] do on a daily basis ties together with your metrics,” he says. “You’ve got to make sure that you measure the right things and publicly say what you’re measuring and how you’re doing on it. Make sure the things that you measure tie directly to what you want to be successful on. You have to allow employees to see those metrics on a regular basis.”
Allowing employees to see how their efforts play a direct result in driving what customers are looking for will help performance. It is crucial that you are making sure the right metrics are being measured.
“You have to ask yourself if you are measuring the right things that drive value for your customers and are they things that people can feel on a daily basis?” Keckeis says. “Finding a way to connect the things that you measure with what people pay attention to is very important and as a CEO you’ve got to pay attention to those things.”
Making sure you’re doing what customers have expressed interest in is critical, but you also want to make sure that what you’re doing is helpful to your culture and your employees.
“You also want it to be something that ties to what the employees do every day so they can see that what they are doing affects that metric,” he says. “You have to make sure what you’re measuring is going to drive performance.”
Empowering employees is a big part of increasing morale and making corporate culture stronger within your company. Keeping culture at the forefront of your business and making sure you have people who believe in the company is crucial.
“Your culture will beat everything else if you’ve got people that care and want the company to grow,” Keckeis says. “Empowerment and culture is critical if you want to be different in any industry. You have to focus a lot on your culture. You have to communicate with your people regularly about your bottom line, your finances, what you’re doing. You have to get them involved in all of that and get input back from them.”
You have to make sure that you pay attention to your employees in order to keep corporate culture strong.
“You have to listen to your employees first,” he says. “You need to focus on your people and you need to care about your people … that are doing the work on a day-to-day basis.”
Communicating with more than 800 employees can be a tough task, but it is vital to keeping the culture united. Messer has a group of 108 senior managers who act as a system of communication from the executives to the employees.
“We created a system of responsibility to make that communication,” Keckeis says. “I obviously cannot talk to 800 people. We created the senior management position that is the voice and the direction for the company directly. They share that and drive it out to the rest of the organization.
“You’ve got to have a leadership team that you trust and you’ve got to be able to communicate and then you’ve got to be able to have a way that the word gets out. If you’re a small enough company and you’re just in Cincinnati, you can pull everybody together and talk to them regularly. In our case, we can’t do that. You’ve got to create a way where the leaders of the company are identified and are helping drive that and listening to the employees.”
It can be very easy to get tied up with numerous daily tasks and other things on your agenda, but if customers find your culture helpful to how you do business, you have keep track of it and you have to care for your employees.
“Caring is a tough thing,” he says. “It isn’t looking down on them, it is actually feeling every day what they feel so that you can understand that. It’s easy for a CEO to step back and say, ‘Well, I’ve got different problems and I’ve got different issues that I’ve got to deal with. They’ve got to worry about their own problems.’ If you do that you’re going to be in trouble.
“You really do need to understand that what’s driving you isn’t you at the top, it’s the group of people that are there doing the work every day,” he says. “If you can figure out how to stay in tune with that and help nurture it and be attentive to it, I think you’ll be successful no matter what the business. You’ve got to know that they go home and they have kids and they have families and the way you’re treating them makes a big difference. You need to inform them, you need to communicate with them, and you need to make them feel like they are empowered. That’s what you have to create. We spend a lot to create the culture. It isn’t something you just go out and get.”
HOW TO REACH: Messer Construction Co., (513) 242-1541 or www.messer.com
The Keckeis File
Chairman, president and CEO
Messer Construction Co.
Education: Attended the University of Cincinnati, degree in civil engineering. He went to work at Messer straight out of school.
What was your first job, and what did you take away from it?
My very first job was working for a flooring contractor. I was 15 when I started. I was a laborer, cleaning up and helping scrap and lay floors. The one thing I got out of it was the person I worked for was a true craftsman. That instilled in me a lot of respect for what a craftsperson brings to the job.
What has been the hardest part about being a CEO?
Being disconnected at times, yet still wanting to drive the organization in a direction and how do you make that connection. I feel one step removed from where I was.
What has been the best part about being a CEO?
Seeing the growth of the people. The people who have stepped into my role and other roles and watching them grow has been fun and inspiring.
What is the best business advice you’ve ever received?
Treat others the way you want to be treated. Put yourself in someone else’s shoes. When you ask people to do things you want to be able to make sure you would do them yourself.
If you could do something dangerous one time without consequences, what would you do and why?
I have always wanted to be a pilot and fly a plane or maybe skydive. I always wanted to be able to feel that freedom.
Eric Graf, president and CEO of Ritzman Pharmacies Inc., had to make the tough decision to close a store and combine two others because of the economy. However, Graf didn’t turn his back on those employees and found ways to retain them for when good times returned.
Graf, who leads 160 employees at the pharmaceutical company, understands sacrifices have to be made in business. He also knows that when times are tough you have to be strong and resilient.
“Like everyone else, we had to look at our business units and look where there was profitability and where there was not and where we could make better use of that,” Graf says. “Fortunately, we had some positive solutions to those challenges.”
Graf says the process wasn’t easy, but his decisions paid off in the end.
Smart Business spoke to Graf about how to handle the good and the bad in business.
How did you keep morale up as you were eliminating stores?
We were very cognizant of the impact to our employee morale within the company. Fortunately, as we downsized, we also knew that we had this startup, cold-start opportunity in a new location. So we bit the bullet and retained all those associates from the closed business unit from December until April when we opened the new business unit. That was huge in speaking to our people. You try to be upfront. You try to be present and not sitting way in the back so that you’re available and putting your face on things. You have to express things to them one on one rather than through memos. You have to make sure you have a presence with the associates.
What is important to keep in mind during tough times?
You have to stay with your core beliefs, your vision, mission and your core values. You try to live those as best you can. Those values serve you well in positive times when you’re asking for more because you’re short-staffed because growth is coming faster than you can keep up with. But it also serves you well in the negative times when you are making adjustments that can impact you negatively.
How do you keep employees informed about what’s going on within the company?
One of the things we do … is we publish our financial information throughout the organization. Everybody sees our revenue, our cost of goods, all of our top-line issues compared to budget, compared to prior year — they see those on a weekly basis. When it came time to close that store, there was no mystery. Everybody had seen the sales taking a dive and had seen that how could the store become financially viable. When they see that trend compared to other trends or other stores, they realize that something needs to happen there. That openness with financial information is very critical and people knowing and understanding why you’re making the decisions that you’re making is important.
What helped you recover from tough times?
It’s always key, especially as times get tighter and tougher, that you have strong vendor relationships. A vendor relationship is very much a two-way interaction. Whether it’s a good day or a bad day … you need to negotiate smart, not just strong. I recently read a quote from Indira Gandi that said, ‘Old leadership used to be about muscles and new leadership is about people and relationships.’ So while you’re striving to get a good cost and a fair deal, you need to be bringing value to them in terms of what you’re seeing in the marketplace. You need to be giving them feedback to improve themselves.
When you started seeing success again, how did you maintain it?
You have to build on that foundation. You have a heritage of different key strengths and that goes back to your mission, vision and core values. You look at the reasons for success and it comes down to your associates and how you serve your customers and what your priorities are there and how you deploy your assets.
Even though things are a little tougher, you have to look for those people who can get out there and find more opportunity and develop more business for you instead of pulling back on that.
HOW TO REACH: Ritzman Pharmacies Inc., (330) 335-2318 or www.ritzmanrx.com
Chris Ryan, president of Geo-Solutions Inc. has been experiencing a problem all businesses would like to have. His soil and groundwater construction solutions company has been experiencing rapid growth. Growth is what every business wants to achieve, but with growth comes a lot of added responsibilities.
“We have experienced some very rapid growth,” says Ryan whose company saw revenue of $18 million in 2010. “The biggest [challenge] has been trying to manage growth and get personnel into the company.”
The company’s rapid expansion over the past few years has kept Ryan looking for ways to continue the success.
Smart Business spoke to Ryan about how he manages to keep up with the growth his company has seen.
How do you plan for growth?
You have to take stock of your resources in every level that you need to achieve the types of work that you’re planning to do. You have to determine where your weaknesses are and fill those weaknesses before you try and do the work.
You have to have good communication within your company and with your senior people. You have to determine what your needs are and plan ahead before you’re in a crunch of having to do something.
How do you grow within a niche market?
We’ve set our vision in a certain niche market, which is the treatment of soil and groundwater. Anything that’s in that niche, we will take on.
Your niche has to match the expertise of the key people in your company. Anybody who is looking to get into a business or grow a business needs to determine what it is that distinguishes them from the majority of the competition. That will improve your chances of making a dent in the marketplace.
The businesses that do well in our market are the ones that identify what they’re good at and perform it well and gain reputations to get people to come back over and over again.
Do you hire before you grow in anticipation of it or after growth?
The first scenario is obviously preferable that you’ve planned properly and you’re prepared. We have done a certain amount of that and I have certainly experienced the second scenario where you’re completely out of people, and it’s really not a good situation. Everybody becomes busy, that’s for sure.
We had that situation a few years ago and what really scared me was if anybody had any major issue like an illness to themselves or their family or anything that would put somebody out of the mix for an extended period of time, it would have been a disaster for us.
How do you prepare yourself or guard against that?
You have to try and foresee what is happening in your marketplace. You have to make some kind of judgment as to what the level of business will be.
What do you look for when you’re hiring people?
You have to find what’s important in terms of skills and education for the person you’re trying to hire. Then you have to try and find a person that matches those requirements. With companies like ours and others that are in a niche market, all those similar companies are competing for the same people.
How do you attract those people and beat the competition?
The best way is to be the leader in your business or to be the market leader. If you do that, you become the place that people want to work, because they want to work for the best company. That would be number one, but obviously competitive pay and opportunity to participate in ownership and all those benefits are very important to attracting people to a job as well.
What are some other struggles of rapid growth?
As you grow rapidly you’re constantly changing your profile with your lending institution. You have to maintain good relationships with your bank and keep them well advised of what’s going on. It’s really about maintaining good communication.
HOW TO REACH: Geo-Solutions Inc., (724) 335-7273 or www.geo-solutions.com
Jack Ouellette knows that he is fortunate to be in charge of a company with rich history and he takes pride in celebrating that fact. In 2010, American Textile Co. celebrated 85 years of business. The company made a day out of it. Employees at the Pittsburgh facility brought their families and they enjoyed food, costumes and false store fronts that would have been in vogue in 1925. While celebrating where you came from is certainly important, looking forward is critical, as well. Ouellette, CEO of the 325-employee company, knows that he has to keep his eye on the future in order to stay in business for another 85 years and beyond.
In 2005, Ouellette saw that the company was becoming too one-dimensional. So he did what any CEO would do: He looked for ways to expand the business and break out of a stagnant slump by focusing on the company’s core competencies.
“We have intentionally been looking to grow the business,” Ouellette says. “We did that by looking around and asking ourselves, ‘What products are similar to the ones that we currently are involved in?’ It’s using all of the same skills that we have in basic mattress covers and pillow covers to make these items. We felt that there was a tremendous tie-in and a high correlation between those items and sleeping pillows.”
Here’s how Ouellette expanded into a new market by utilizing existing competencies and more than tripled revenue between 2007 and today.
Do the research
Making the decision to create a new product or enter a new market can make or break you. It can’t be taken lightly or done too quickly before knowing how and if you can do it.
“You have to make certain that you’re doing your homework upfront,” Ouellette says. “When we were first trying to determine what products we wanted to expand into, we checked with our customers to find out if some of the items we were looking at would have enough room for a new supplier. When we went to the retailers and said we’re interested in getting into the pillow business, they welcomed that idea. They said the industry does need another supplier.”
In American Textile’s case, the company had good products and an audience buying them. The company wanted to expand its business of making mattress and pillowcases by manufacturing something that wouldn’t require a huge change in the company, and pillows were a perfect fit.
“For us, the question became what product do you want to get involved in?” Ouellette says. “We are in the textile business and we make things that protect mattresses and pillows. The one thing that we required of ourselves was we didn’t want to write a plan that saw ourselves making batteries for automobiles two years from now. We wanted to make certain that whatever we did we utilized our existing core competencies the best we could.
“I would suggest that any company that wants to grow should look around and ask themselves, ‘What are similar types of products that can be manufactured or distributed?’ You have to look at who the competition is and understand what the market looks like. Is the market ready for another manufacturer or distributor of those products? You also have to be honest with yourself and ask whether you’re just going to be me-too or will you be able to provide some innovation in that category that will differentiate you from the competition?”
Build your plans
Entering a new market, whether it’s a new product or a new geography, takes time and careful planning in order to do it successfully. You must be willing to listen to the advice of your team members.
“When it comes to identifying a new area in which to grow, you have to trust your executive management,” Ouellette says. “When they are giving their expert opinion on where to go, you have to believe in them. People who have been in a leadership position for a long time, I think their real expertise comes in being the experts in what has happened in the past, but that may not be the path to the future. To be able to listen to and not have all the answers on where you want to go in the future and trust those people who might have a better vision of the future is really critical.”
Because of a big pillow company going out of business, there was plenty of room for American Textile to come in and pick up the slack.
“When we first had an opportunity to ship some pillows in 2005, we knew that there would be some good growth opportunities — or assumed that there would and that turned out to be true,” Ouellette says. “An important ingredient in identifying when and how you want to grow is making sure you talk to your customers. Identifying an area that might suit your competencies is only really good if the customers are ready for another company to come into that market.”
Once it is clear that you can expand into a new market, planning must be the next priority. You have to have the ability to plan for further out than just your initial launch.
“I think the biggest thing is to have a strategic plan,” Ouellette says. “You generally plan for just one year and you have to force yourself to look out further than that, like three years. To look out any further than that is difficult to really come up with good, solid ideas. I would advise actually following that strategic plan and making certain that there’s the right group of people. Once you have that plan, you have to make certain that everybody in the company knows what your goals are.”
Once a strategic plan is in place, it is to your advantage to continue to follow and update that plan. If you create it and never look at it again, there is little point to it.
“I know a lot of people talk about strategic planning. I think there’s a couple of ways a company can go,” Ouellette says. “One is to have a plan and just (put) it away. The other, which I highly recommend, is having a plan and really working it every single month. It requires an individual in the company to have responsibility for that plan and have responsibility for making certain that everybody’s working toward it. Finding the time to work on the longer-term strategy takes a lot of discipline.”
Communicate and monitor your plan
Strategic plans can get complex and will help guide your company for a long time. It is very important that the CEO be out in front communicating the direction of the company and how that plan is coming along.
“A strategic plan can be kind of complicated, because it touches all of the company and it goes out for an extended period of time,” Ouellette says. “The thing that we did was boil it down into a very concise statement. Ours is called ‘Focus on five.’ The five means the five letters in focus and each of those letters means something. The F stands for ‘first to market.’ The O stands for ‘optimizing sales.’ The C is ‘channel expansion.’ The U stands for ‘us or the employees’ and the S stands for ‘systems and processes.’ Every month, we have an event where we pull the company together and we call it a ‘Focus on five’ meeting. The first thing we do is to have one of the sponsors of each of those initiatives talk about what they have been doing in that area. It’s that constant reinforcement. With our planning team we have quarterly updates where we get in a room and spend two hours going over the strategic plan.”
When your plan takes effect, you have to continue to monitor the growth you are seeing. Check your growth against your plan and communicate the results as you go.
“In the long term, you have to absolutely set goals,” Ouellette says. “You have to make sure people understand those goals, and you have to make certain that you’re tracking those goals on at least a quarterly basis. That shows everybody a commitment to it and makes certain that everybody is making a contribution to that plan on a regular basis. Otherwise it’s kind of like college where you go to the classes but the only time you study is for the final. We don’t want that. We want people studying for the final every single month.”
When new initiatives are created it is easy to forget about other areas of your business. It is important to keep tabs on the core areas of your organization.
“You should also make certain that you don’t take your eye off of the core business,” Ouellette says. “Oftentimes because something is new and exciting in the developmental stages, a lot of the resources that you apply to your core business can be siphoned off to go to the new venture. Growing another product line is not an additional duty for the people who are involved in your core business. You have to keep that core business funded properly and the proper attention on it. You have to make the investment in people and in resources to fund that new business.”
A big reason that Ouellette and American Textile have been successful is because they stuck to what they were good at, but they have also been innovative in how they improved upon their core competencies. Having people who can foster innovation is important to be able to continue to grow your company.
“Innovation plays a significant part in our company,” Ouellette says. “We were once told by a major retailer in this country that ‘new’ sells, and it does, provided that ‘new’ makes sense to the customer. Having a group of people responsible for product development is a major ingredient in being able to grow. If you come out with a product that’s just the same as everybody else’s, it becomes a commodity and a price war. When you come out with a product that is new and different, that’s what the retailers are looking for and that’s what the consumers are looking for. Have a group of people who are trying to develop ideas based upon where trends are going, what the consumer is doing, how people live today and how that differs from how they lived last year. If you can find products that can solve their problems or fit their newer lifestyle, that’s a way you have an opportunity to grow more rapidly.”
It’s very difficult to just create innovation out of thin air. You have to work at it and create a culture that will support innovation within your organization.
“You really need to create and invest in developing an innovative culture,” Ouellette says. “When most people think of Pittsburgh, they think of steel. We tried to get people from Pittsburgh who knew the textile industry, but unfortunately, most of the people who know textiles are located in the southeastern part of the country. You can either try to move the talent to where you are, or you can move where you are the talent. The latter has really worked for us. The major catalyst is getting the experienced people in the industry.”
Having people that understand your industry in and out is crucial for growth. If you are unable to properly understand your market you will lose to the competition. You have to be willing to do what it takes to get the right people.
“The first dollar spent on the right talent is so critical,” Ouellette says. “If you don’t have the right people who are charged with the responsibility and know how to execute the plan, not just have the desire but the know-how, that makes all the difference in the world. You’ve got to get the right talent and you’ve got to pay for that talent. They have to have all the right experience and background, not just 80 percent of it. You’ve got to have the whole thing in our opinion.”
HOW TO REACH: American Textile Co., (412) 948-1020 or www.americantextile.com
The Ouellette file
American Textile Co.
Born: Springfield, Mass.
Education: Bachelor of science degree from West Point; MBA from Duquesne University
What was the first job you had out of college, and what did you learn from it?
My first job after college was second lieutenant of the United States Army. I was a fire direction officer. I was responsible for computing the data required to fire 155 millimeter artillery weapons. I learned the importance of how to manage a small team, and I’ve found that those same skills for managing a small team apply to larger organizations. It’s all about people.
Did you see any action?
I was a pilot in Vietnam for one year between 1970 and 1971. I flew an army reconnaissance plane on the Cambodian border for six months, and then I flew a twin-engine transport plane for the last six months all over Vietnam, Cambodia and Thailand.
What is the best business advice you’ve ever received?
It is taking care of the people whom you work with. You have to always be aware of that.
If you could invite any three people to dinner, whom would you invite and why?
I would invite Dwight D. Eisenhower because it would be fascinating to hear about the Normandy invasion. I would love to invite [George] Herbert Walker Bush to dinner because I think he had one of the most interesting resumes of any president. And I would like to invite Arnold Palmer to dinner. Not only was he a tremendous golfer, but he had the ability to excite people and motivate people and anybody with those types of skills would be worth talking to.