National (1572)

Thursday, 26 March 2009 20:00

Saving for saving’s sake

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Arkadi Kuhlmann is out to save the savers and convert the spenders. As founding CEO of online bank ING Direct, Kuhlmann and his organization are among the few current financial institutions whose previous practices are still getting great results. Kuhlmann and co-author Bruce Philp, a branding consultant who has worked extensively with ING Direct, recently released the new book “The Orange Code.” Kuhlmann shares some thoughts with Smart Business on the principles of the code and how ING succeeded in making saving a hip thing to do.

ING Direct began with the phrase, ‘We are not a bank.’ What traditional banking barriers were you were able to knock down?

It started with the idea that people really didn’t like their banks very much. They basically felt they were a necessity, but they charged a lot of fees and they do it in the way that suits the bank, not the customer. For us, we wanted to do things in a different way. Think of a bank as a retailer and not as a traditional bank with a branch, a counter and a lineup. So, not having any branches but instead dealing with electronics and cutting out paper, [these are] things that should save people time and should also save them money.

What advice can you give to help leaders convince their teams that a new company is different from the norm?

Mostly, leaders sell visions to their customers and to the marketplace to create a persona for the company. But at the end of the day, it’s the thousand, 10,000 or 100,000 touchpoints in the form of employees and staff that really make the business run. They basically have to internalize and believe that the vision is good and can be executed and will create success for them (personally) as well as for the company. Most leaders take the view that, ‘If you’re working for us, you automatically accept the mission and the vision.’ That’s probably a challenge that is underestimated by most leaders.

ING Direct made savings sound cool during a spend-first era. What’s the secret to selling a difficult concept?

From a marketer’s point of view, if you’re going to take something that’s not the current fad, you have to instead sell the value underneath, which is what we’re doing. It may not appear logical on the surface, but deep down it’s true and the consumer knows it.

If you were a farmer who put a windmill up behind his house to get the benefits of wind energy, he knows that it’s going to cost him more than fossil fuels. But deep down, the farmer knows that from a value perspective, it’s a never-ending source of energy and that somehow, we can find a way to make the economics work.

Why is the phrase, ‘We will constantly learn,’ an essential part of ‘The Orange Code’?

I think it’s a bit of refinement from what a lot of good, leading businesses already do. They’re focused on innovation and continuous improvement. The new twist that we have on it is that you can’t just improve at the margins. … It’s pretty clear that if you’re going to be a company that wants to constantly improve, you have to take nothing for granted and rethink the business from beginning to end every day.

Monday, 23 February 2009 19:00

Affordable wellness

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As a business owner, you take care of your company’s assets. You have insurance on your buildings and vehicles, warranties on your equipment and backup for all your critical files and data. But are you taking care of your most valuable asset: your employees?

In addition to a health care plan, many companies — both large and small — are implementing corporate wellness programs to encourage healthy choices and positively impact workplace culture.

But, as we all know, times are tough. In today’s economy, companies aren’t adding programs; they’re cutting them. With that in mind, can an effective wellness program be implemented during a difficult economy? According to Peter B. Maretz, a shareholder with Shea Stokes Roberts & Wagner, the answer is an unequivocal “yes.”

“With health costs spiraling out of control, wellness programs initially came into vogue as a means of a controlling those costs, but they also have the added benefit of decreasing absenteeism and increasing employee productivity,” says Maretz.

Smart Business spoke with Maretz about wellness programs and how they can benefit you, your employees and your company.

What is a corporate wellness program?

The exact makeup of wellness programs vary widely according to the needs and goals of the company and its employees. A successful program can be as simple as arranging sports teams, organizing walking classes or running clubs or hosting speakers on lifestyle improvement issues. Professionals may be brought in to assess employees for such things as cholesterol levels. Companies can sponsor behavior modification programs to assist employees at losing weight or quitting smoking, including rewarding success in these programs with modest incentives, including cash. Firms can also reward such things as visits to a primary care physician or submitting to a personal health assessment.

How should a company go about setting up a corporate wellness program?

First, one must be mindful of employee privacy issues, particularly the obligations arising under the Health Insurance Portability and Accountability Act (HIPAA). Under HIPAA, employment decisions cannot be based upon health conditions or characteristics, medical history, or existence or even perceived existence of a disability.

Programs such as personal health assessments or weight management assistance may raise HIPAA concerns. On the other hand, programs that reward based on participation in a wellness activity, such as incentivizing primary care visits or paying for a portion of health club memberships, do not. That being said, there are limitations on the amounts that can be contributed, the program must be available to all employees and accommodations must be made for employees who, due to their medical conditions, cannot participate.

One effective approach to limit HIPAA concerns is to retain an outside wellness program administrator. Such professionals can likely better tailor a program to effectively meet your goals but also serve as a repository for employee information, providing employers with aggregate data only — not data personal to any employee. This way, the company would not be exposed to a claim of improper use of an employee’s health information by showing this information was never disclosed to the company.

What other considerations does a company need to be aware of when implementing a wellness program?

Personal health assessments may also raise concerns under the Americans with Disabilities Act (ADA). Under the ADA, employers are limited in the inquiry that may be made related to any employee’s disability. There is an exception for voluntary wellness programs under the ADA, but the level of incentive may make the program so attractive as to no longer be considered voluntary.

Similarly, should an employer become aware of an employee’s disability by virtue of that employee’s participation in a wellness program, that employer may be deemed on notice of that condition, and then would be under an obligation to engage in a discourse to determine appropriate accommodations.

More elaborate wellness programs may also be subject to the Employee Retirement Income Security Act (ERISA), which covers programs established or maintained by employers for providing benefits, including medical care, to employees. If a wellness program is considered to be providing medical care, a company’s obligations under ERISA may be implicated. As with HIPAA, this concern is mitigated or eliminated by engaging an outside wellness program administrator.

What are the keys to a successful corporate wellness program?

To be sure, the potential benefits of carefully tailored workplace wellness are real, and likely sorely needed in these trying economic times. For such programs to be successful, companies must first carefully scrutinize what their employees’ needs are in this arena and make sure the program is crafted to best meet those needs. Make sure the results are verifiable and quantifiable. Finally, make the investment in both wellness and legal professionals to ensure the cost savings realized in the wellness program is not eaten up by employee claims.

PETER B. MARETZ is a shareholder with Shea Stokes Roberts & Wagner. He regularly advises businesses on all aspects of employment law. Reach him at or (619) 237-0909.

Monday, 23 February 2009 19:00

Strength through diversity

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Hiring employees with an eye toward diversity, whether it’s ethnic, gender or age-related, can help fuel excitement and creativity. For the long-term growth of a business, it’s beneficial to have employees who share the same core values, such as a passion for their chosen field, but who offer a variety of perspectives and can communicate with all types of customers.

After all, points out Melissa Pollard, senior vice president and group manager in Comerica’s Orange County Middle Market Banking Group, your customers will be from a diverse population. And you should be able to reflect the kind of customer that you have.

“Creating a culture that is welcoming of all, regardless of their race, sex or age, opens up a company’s opportunities,” she says. “Having a diverse work force allows you to better serve your clients’ needs.”

Smart Business spoke with Pollard about the virtues of diversity, what types of initiatives are most effective and how a company’s creativity can be enhanced by hiring a heterogeneous group of employees.

In what ways can companies benefit from having a diverse work force?

From my experience — having been in banking for 21 years — it seems as though, initially, diversity was the politically correct thing to do. We’ve come to find out, however, that not only is having a diverse work force the politically correct thing to do, it is also the smart thing to do financially. When you look at companies that rank high in terms of diversity metrics, they tend to outperform other companies financially.

What types of diversity initiatives are most effective?

Through all of our diversity initiatives we’re trying to empower our colleagues by strengthening their internal and external connectivity. Our focus internally is to attract, retain, mentor and promote our diverse colleagues within the bank. Externally, we want to champion the benefits of having a diverse work force and work with as diverse a client base as possible.

Periodically, we have internal events that provide educational programming and are designed to be a mentoring/ learning/connecting type of event for internal colleagues. Our external events, such as investment seminars, are designed for business development opportunities.

How should a company go about providing equal opportunity for leadership positions?

The key is to hire and develop talent with an eye towards diversity, provide mentors with similar backgrounds and then provide adequate training so new hires can be groomed to reach their goals. Almost half of the officers at our bank are women. Over the years, women have been well represented here, which gives us a unique advantage. When you have a well-balanced work force, there is less of a disparity between the sexes in leadership positions. When you combine all of our initiatives — women’s, African-American, Hispanic, Asian-Pacific — they represent the majority of our work force.

How can a company’s perspective and out-reach be broadened by having a diverse work force?

If you have a homogeneous work force, then everyone will be like-minded; when faced with decisions and questions, you will only get one answer. The benefit of having diversity is there are many different perspectives that can be shared and all of the different backgrounds will make your organization stronger.

Let’s say you have a dozen people in the room that share the same background and you pose a problem to them. You’re probably going to get the same type of feedback from each of them. But if you have a dozen people in the room and they are all representing different cultural backgrounds and various upbringings, you will likely get a dozen different responses. Creativity is enhanced and solutions can be customized and tailored to fit each client’s needs.

Speaking from a banking perspective, the clients and marketplace that we serve are diverse. We are trying to create a friendly business environment because we believe there is strength through diversity. Having individuals that represent a variety of different backgrounds makes us stronger.

MELISSA POLLARD is senior vice president and group manager in Orange County’s Middle Market Banking Group, and chair of the Western Market Women’s Initiative of Comerica Bank. Reach her at (714) 435-4406 or

Monday, 23 February 2009 19:00

Trust, but verify

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The playwright Oscar Wilde wrote, “A cynic knows the cost of everything and the value of nothing.” By nature, most successful business executives tend to be more optimists than cynical naysayers.

The leaders who are the best of the best, however, have an internal mechanism that allows them to dream, dare and do while simultaneously knowing to challenge and question. The good leaders probably possess a yet undiscovered gene that automatically flashes a yellow warning sign in the back of their heads reading “trust, but verify,” when they’re introduced to the unproven or unknown. Experience, judgment and wisdom are the tools needed to distinguish between dismissing an idea as flaky and accepting it at face value.

Case in point is the now infamous Bernard Madoff, the Ponzi-practitioner extraordinaire, who also had a bit of Houdini in him because he could touch a dollar and make it instantly disappear. His signature pièce de résistance was the vanishing act of putting other people’s dollars in his own pocket by using a sleight-of-hand maneuver, most likely in the form of a glib smile and nifty software program. The software produced a faux monthly statement that recapped the bogus previous 30 days’ perennial successful results. This led trusting investors to believe they could sleep soundly thinking that their money was not only safe but also growing exponentially.

This garden-variety swindler, who makes the Wild West bandit Jesse James look like a saint in comparison, certainly did not discriminate. Reportedly, he purloined more than $50 billion from supposedly savvy fund managers to unsuspecting charities with no doubt a few widows and orphans sprinkled in for good measure.

How could this have happened? First, people wanted to believe. Secondly, most of us have an innate desire to be associated with winners. However, eventually, we all learn the cold reality that if it is too good to be true, then more than likely, it is too good to be true. Worst of all, some professional “money managers” turned over unimaginably huge sums to this Ponzi artist without apparently doing their own due diligence, which is not only an ethical prerequisite but also an exercise demanded by common sense if not common law. Had the unsuspected subscribed to the principle of “trust, but verify,” this scheme would have failed. Instead, decades passed before the genie was out of the bottle, and it took the biggest stock market disaster since the Great Depression to defrock this con man.

How can executives learn from this debacle and translate the concept of “trust, but verify” into a safety net to protect the enterprise without dampening creativity and enthusiasm that could lead to the next great business success?

Every stockbroker must learn the Securities and Exchange Commission’s Rule 405, which is “know your customer.” This same requirement must apply to businesses. At a very minimum, have a sense of whom you are dealing with. Is it coming from a trusted peer or subordinate or the nephew of your brother-in-law’s barber? The best bets are made on those who have done it before and have done it successfully. Some call these habitual achievers “serial entrepreneurs,” but they also can be innovators who toil down the hall from you and constantly deliver on promises and concepts. Good leadership requires the discipline to hear out a proposal yet employ finely tuned instincts and cunning, sometimes indelicately referred to as the “smell test.”

Sniffing out the nuances of the real story to discover hyperbole or worse takes discipline and patience. Once the answers sort of make sense, move to phase two by doing some quick back-of-the-envelope calculations and research to determine if there is at least a snowball’s chance that whatever is being proposed won’t melt away as soon as your check clears the bank.

Finally, talk to others who may have tried something even remotely similar to what has been proposed. You’ll be amazed at what complete strangers and even tangential competitors will tell you when you simply pick up the phone and ask.

To build, grow and succeed, every organization needs a constant inflow of new ideas, be it products, services or a better way to skin that proverbial cat. Somewhere between an optimist and a cynic is a realist who always knows the difference between a quacking duck and a striped zebra.

MICHAEL FEUER co-founded OfficeMax in 1988. Starting with one store and $20,000 of his own money during a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling it for almost $1.5 billion in December 2003 to Boise Cascade Corp. Feuer is CEO of Max-Ventures, a retail venture capital/consulting firm, and co-founder and co-CEO of Max-Wellness, a new health care product retail chain concept that is launching in 2009. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. Reach him with comments at

Monday, 26 January 2009 19:00

Time to review

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Data centers are always in flux, constantly growing and expanding. New applications are added, band-aids are created to accommodate problems, hardware and software is implemented and removed. Because of this, businesses must perform regular assessments on their technologies.

When doing assessments, companies must ensure that trained professionals are involved. Performing assessments without trained engineers can create a false economy when implementing new solutions, according to Bruce Rosenberg, the director of enterprise servers and storage at Technology Integration Group (TIG).

“Time and time again, one saying comes to mind — ‘There’s never enough time to do the job right, but always time to redo it,’” Rosenberg says. “This is the reason not doing proper assessments creates a false economy.”

Smart Business spoke with Rosenberg about assessments, why they’re important and how to properly perform them.

What kinds of assessments should businesses be considering?

There are various types of assessments that resellers and integrators offer, including:


  • File system assessments. These look at the files on your servers and disk storage devices to determine the files’ ages, sizes, types (.doc, .pdf, .xls, etc.), last access dates, last modified dates, etc.



  • Network assessments. These identify IP addresses, equipment, subnets, routing, etc.



  • Virtualization assessment. This looks at your stand-alone Intel servers running Windows, LINUX or Solaris to determine your current environment in order to model a virtualized environment.



  • SAN assessment. This looks at the physical disk, tape and switches that create a storage area network to determine if best practices are being followed regarding data placement, zones on the switches, whether or not there are ‘hot spots’ being created by incorrect load balancing, etc.


Why are engineers important to assessments?

A trained engineer knows the software that aids in compiling the data used in assessments. Additionally, from years of experience in a variety of environments and familiarity with many vendors’ equipment, a trained engineer can sift through the mountain of data and produce a comprehensive, coherent and complete report.

If engineers aren’t involved, what problems or issues can arise?

Not using an experienced and trained engineer can result in not having the assessment tools collecting the correct data, or for that matter, you may not get the tool to collect data at all. Further, a skilled engineer pulls out the relevant data from the inconsequential. For an assessment to be effective, the data collection tools run for an extended period of time, from two to four weeks. That generates a lot of information and, without the know-how, you could be searching for a very long time to find what you’re looking for.

How is a false economy created, and what are the consequences of that?

A false economy is created when you think you’re saving money by skipping the assessment. Yes, there are upfront costs involved in having an assessment performed, but a lot of unplanned expenses can be incurred. Here are some examples:


  • A company misses price breaks and incentives by not ordering the correct quantities initially.



  • SLAs have been missed on projects.



  • Outside resources idled waiting for additional equipment.



  • Completing a project and having to redo it because it was sized incorrectly.



  • Poor performance on a mission critical application or database.



  • Overpurchasing equipment just to ‘be safe.’



  • Incorrectly sized equipment and not being able to gain additional budget.



  • Worst of all, missing a vital component of a disaster recovery plan only to be discovered when declaring a disaster.


Where can a company turn for assistance, and how do you select a good engineer?

A company can turn to the manufacturers of the equipment it currently has or intends to purchase from and ask for their recommendation of an experienced business partner. If the company already has a trusted IT partner, it will most likely be able to guide the company or be able to perform the required assessment itself. Bottom line, the best way to select good engineers is to judge them based on five criteria: experience, training, certifications, recommendations and presentation skills.

BRUCE ROSENBERG is the director of enterprise servers and storage at Technology Integration Group (TIG). Reach him at (813) 281-1980 x1805 or

Friday, 26 December 2008 19:00

Virtualization considerations

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With technology changing almost daily, and with business being conducted in a variety of ways in a host of places, it’s imperative that your company’s technologies are working for you.

One way many companies are accomplishing this is through virtualization, the concept of sharing the resources of a single technology across multiple environments. While virtualization is a great, if not vital, process to implement, it is often done incorrectly.

“The problem with jumping into a virtualization solution is that you may not get the total package your business needs and deserves,” says Larry Gross, a business development executive at Technology Integration Group (TIG). “Virtualization is a change that needs to include all considerations, starting with applications then covering servers, networking and storage, as well as backup and disaster recovery. One of the industry’s new and exciting ways to address this end-to-end or data center virtualization consideration focus is Cisco new switch level virtualization that allows you to manage and scale your virtualization infrastructure from the core.

“The key is to purchase exactly what you need, not what a technology provider is trying to sell you,” he says.

Smart Business spoke with Gross about how to find a virtualization solution that is right for you, without buying components you don’t need.

What should a company look for in a technology provider?

A technology provider has to be focused on your needs, not the manufacturer’s needs. Technology providers have to understand exactly what you’re looking for and why. If they’re not asking those questions, they probably don’t have your best interests at heart. Also, a provider should stay technically trained on all products and services, be up on all the certifications for the applications, servers, networking and storage that will be architected in the virtualization infrastructure, and be able to identify the exact practices that will benefit you and your company. A virtualization solution is never just one piece. Your technology provider should touch everything, from data centers to applications to networks to storage.

What parts of virtualization should be focused on first?

In virtualization, most people are concerned with processor speed and dual core versus quad core. But, the No. 1 area of concern when you virtualize is input/output (I/O). The No. 2 area of concern is RAM, and No. 3 is storage. This sometimes surprises people, but even in a virtualized world, when you look at servers and the utilization of processors, it is extremely low utilization due to proper load balancing and the ability to share resources in a virtual cluster.

How can a total virtualization solution benefit business?

A total solution allows you to downsize, consolidate and increase availability, all with little to no downtime. One thing that really opens eyes is when you realize you can avoid a crashed or sluggish server. With certain virtualization tools, you can identify what server is your top priority, then, when that server reaches a peak that you set, resources are taken off that server and spread out over other lower utilization hosts. Then, your main server is focused on handling the peak. When the peak is done, everything moves back to the way it was. This way, you have multiple VMs (virtual machines) just waiting for these types of peaks and requests. By spreading out resources, you work more efficiently without down time. With VMware, tools like DRS, V-Motion and Storage V-Motion that allow you to implement HA across applications are the keys to a total solution.

If a company wants a total solution, will it have to scrap everything and start from scratch?

In many cases, once we identify the requirement for virtualizing an environment, we are able to use existing servers, storage and other infrastructure. It’s a matter of just adding I/O, RAM and storage in most cases. A good technology provider will help you improve and upgrade what you already have.

What are the consequences of not having a total solution?

Not many companies are going to take 100 percent advantage of 100 percent of a total solution all of the time. Your technology provider should help you understand your environment and then make recommendations. Then, you need to decide exactly what you need and when you need it. You don’t have to implement a total solution in phase one.

It is also important to know not to move a bad physical environment to a virtual environment. It’s like when you move to a new house. Do you take broken appliances or old things that don’t work for you? No, you trash what you don’t need and start with a fresh working environment. By cleaning and tuning your servers and storage and getting rid of old files and bad techniques first, you’ll have a clear picture of what virtualization can do for you, and you’ll be able to alleviate any other pain that’s been bringing your technologies down. The impact will vary, but a total virtualization solution will make all your systems work to peak performance, which will only enhance business.

LARRY GROSS is a business development executive at Technology Integration Group (TIG). Reach him at (858) 566-1900 x4510 or

Friday, 26 December 2008 19:00

Synergy hunter

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They say one man’s trash is another man’s treasure. So as big players in the orthopedics device industry, such as Johnson & Johnson, migrated away from rehabilitation and regeneration products, like knee braces, in favor of higher margin surgical implants, Les Cross, president and CEO of DJO Inc., swooped in and acquired the unwanted divisions.

Don’t look now, but Cross has built a pretty substantial business from the accumulated discards. In the past few years, DJO, which had 2007 sales of $492 million, has more than doubled its size and product offerings, primarily through picking through those unwanted pieces via mergers and acquisitions.

“A lot of the big companies view these products as low end,” Cross says. “The industry has been highly fragmented, with many entrepreneurial inventors choosing to move on after developing a couple of products. It’s not a very exciting industry, growing about 3 to 5 percent a year. All of these factors have made M&A a desirable growth strategy.”

But quick expansion by a midtier company through acquisitions can be risky, especially when you factor in DJO’s major merger in November 2007 with $450 million ReAble Therapeutics Inc. After all, without effective assimilation of newly acquired businesses, CEOs can quickly accumulate corporate debt while losing customers, revenue and sometimes even their jobs. But with five transactions under his belt, Cross has learned how to buy companies without breaking them by executing effective M&A assimilation plans that capitalize on all the possible synergies resulting from the deal. His process begins with figuring out what his company can do with the acquisition, handling the personnel transition and then maximizing the cost reductions that can come from bringing businesses together.

Understand what you’re getting into

Before making an acquisition, Cross says it’s critical for CEOs to honestly evaluate their management team’s ability to handle an acquisition and take on the extra work. Few companies have the luxury of a dedicated assimilation team, similar to the one at General Electric, and inexperienced, overtaxed managers will often neglect their day-to-day business responsibilities and fall victim to Cross’ assimilation failure scenario.

“Honestly evaluate your team because most CEOs don’t have capable managers just waiting on the bench,” he says. “Either strengthen your team or find consultants you trust to help with the assimilation.”

Next, CEOs should set a straightforward assimilation plan and timetable and then monitor the results. Cross writes a one-page strategic plan, because brevity makes it easier to communicate the plan’s goals and track the results. Then, he meets with his executive team each Monday to keep his finger on the pulse of DJO. He also spends a great deal of time communicating.

“The CEO’s job is to structure and consistently deliver the message outlining the priorities and the goals during the assimilation period,” he says. “Also remember that you need to communicate with all the stakeholders. Good communication creates line-of-sight between the CEO’s goals and the employees, which keeps everyone focused on the outcome.”

No matter how much experience and expertise a CEO might possess in executing post-M&A assimilation plans, even the most finely crafted strategies don’t always go as expected. Since the merger with ReAble, both DJO’s president and vice president of sales have resigned, causing Cross to wear multiple hats while searching for replacements. He says honesty is the best way for CEOs to deal with bumps in the assimilation road before setting a course correction.

“We wouldn’t buy a company unless we could see a clear path of what we were going to do with it, but we also make some assumptions in the process that may not be correct,” Cross says. “When that happens, face the truth, because you’ve got to know what’s truly happening. If you’re falling behind your timetable and there’s a flaw in the assimilation plan, admit it and then set a course correction with urgency. Do it today.”

Take charge of the personnel transition

“Assuming the due diligence has been done correctly, I believe most mergers fail for one of two reasons: either the cultures of the merging companies fight each other, or everyone focuses on systems integration and they forget how to run the business,” Cross says. “Beginning with day one following an acquisition, you have to protect the quality of the product and the service first.”

Cross breaks out post-M&A synergistic opportunities into two categories: cost-saving opportunities and increased revenue opportunities. He uses different strategies to exploit each opportunity, while simultaneously minimizing the top two perils he credits with producing assimilation failures. In some cases, he gets a bonus, because the strategy results in long-term cost savings and market share gains.

Take his post-acquisition human capital strategy as an example. Cross favors terminating most of the people in the acquired company because downsizing achieves cost reductions and eliminates the risk of clashing cultures. But he doesn’t release the staff immediately, so customer relationships and revenue streams are not only preserved but also expanded through sales of enhanced product lines.

“The key is to protect the customer base, so aside from the sales force, everything else pretty much goes away,” Cross says. “When you try to bring the cultures together, everyone ends up working in silos, and there’s a lot of resistance and internal competition. The risk to the strategy is in the planning, because the business must continue during the transition period.”

Many CEOs fear telling acquired employees they’re going to be laid off because productivity, morale and customer relationships may suffer during the critical transition period. Cross advocates open dialogues with the soon-to-be released workers and gives them plenty of notice about when their positions will be eliminated.

“I use an open, honest and fair approach with the people who are part of the acquired company,” Cross says. “They normally remain on the payroll for one year and know that at the end of that time their positions will be eliminated. My experience is that people respond well when they are treated fairly. While they may be sad that they’re leaving, they have plenty of time to adjust.”

Cross offers retention bonuses to workers who stay through the transition period as well as severance packages, because the incentive plans assure that most of the staff will remain in their roles and the business will run smoothly. In addition, retaining the work force of the acquired company for a year gives DJO’s management team the necessary time to transition operational functions so they don’t get derailed by Cross’ second reason for assimilation failure: focusing on systems integration and forgetting how to run the business.

Cross advocates one exception to his policy of terminating all acquired workers: He keeps the acquired company’s sales force. Building increased revenue through cross-selling opportunities and driving sales force productivity is the goal behind every DJO acquisition. To optimize the marketplace synergies and retain market share and customers, Cross says it’s vital to retain the sales force. But leading salespeople is often like herding cats, so Cross creates a marketing and retention strategy aimed at the sales team as part of his assimilation plan.

“You have to quickly win the hearts and minds of the inherited sales force, so they stay focused on the customers,” Cross says. “It can be tricky because sometimes the merger results in reduced sales territories, since you’re adding more sales staff. To get them on board with the changes, it’s important to emphasize the upside. For example, we’ve given our salespeople a continuous flow of new products, so they have a lot more stuff to sell. This industry is only growing 3 to 5 percent per year, but we’ve been able to translate that into double-digit compounded growth, and that’s a reason to stay.”

Cross counts on his VP of sales to do most of the heavy lifting when it comes to winning the hearts and minds of the salespeople, but he also crafts and delivers personal messages to the group because their retention and performance dramatically impact the return from the acquisition investment.

“In the past, I don’t think I personally invested myself enough in the process from the beginning,” Cross says. “As a result, I think our sales force and our customers were more confused about the transition than they needed to be.”

Take advantage of cost reductions

Besides the savings from a reduction in head count, Cross assumes he will find manufacturing cost-saving synergies because he relocates the acquired company’s manufacturing process to DJO’s plant in Mexico. But he doesn’t necessarily assume that DJO’s manufacturing process is superior. The goal is to improve or maintain product quality by adopting the best manufacturing process, even if the decision doesn’t result in immediate cost savings.

“We are Toyota junkies, so we believe in lean manufacturing, and we have one of the top 10 manufacturing plants in North America,” Cross says. “If we believe we have a better way to manufacture the acquired product, we’ll shut down the other plant and begin manufacturing the product in Mexico immediately. If we find the other company has a unique manufacturing method, we’ll build up inventory while the DJO operations team works to transition the process. Our goal is better, cheaper and faster — but it has to be better.”

Cross allows his operations team to make the manufacturing process assessment and the recommendation, and even if he can’t garner all the anticipated savings immediately, he says DJO’s continuous improvement process will eventually ferret out manufacturing process savings.

Manufacturing synergies are easy to spot according to Cross, while savings from cost of goods synergies are harder to predict. Often supplies are secured through long-term fixed price contracts, and current inventories must be depleted before new pricing can be secured using greater expenditures as a negotiating tool.

“Cost of goods synergies are tricky to forecast,” Cross says. “I would discount your estimates. In other words, if you planned on $10 million in savings, I’d expect more like $7 million to $8 million.”

The result of this careful process at DJO has brought substantial growth. After the company charged to $492 million in sales in 2007, its recent merger helped grow it again in ’08, as it pushed past $733 million in its first three quarters, with a realistic shot at $1 billion. That success makes DJO an industry leader within the orthopedic device marketplace, a $6.7 billion industry based on 2006 estimates.

Going through all the steps can be a bit tedious at times, but Cross has learned that sticking with it is worth it — and a successful destination requires that you take measured paces.

“I think, in some cases, I pushed change too quickly with the ReAble merger, and I’ve learned from that and taken responsibility for the mistakes,” Cross says. “But I’ve learned that being a CEO is a marathon, not a sprint. So I remain calm and take a long-term view to get through the assimilation process.”

HOW TO REACH: DJO Inc., (760) 727-1280 or

Tuesday, 25 November 2008 19:00

Keep income flowing

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In today’s uncertain economic times, having a consistent, stable and secure source of revenue could mean the difference between sink and swim.

But, it’s difficult to predict how the market will affect a company’s clients and customers. A customer that’s consistently given you great business could be here today, gone tomorrow. According to Georgia Vasilion, director, public sector, Technology Integration Group (TIG), one way to establish secure, reliable returns is through public sector contracts — selling your goods and services to federal government, state and local agencies, and education institutions.

“Public sector contracts can provide your business with a host of new client possibilities,” says Vasilion. “It should be noted, however, that these contracts require a substantial investment of time and resources, from finding the contract and agency that’s right for you, to drafting the request for proposal (RFP) response, to actually following through with the contract deliverables.”

Smart Business spoke with Vasilion about public sector contracts, how to find them and why they can be so valuable.

What is involved in public sector contracts?

Public sector contracts are generally divided into three main categories: federal government, state and local government, and education. With any of these, the agency will put out an RFP that your company can respond to. Most RFPs are long and detailed, so they require a lot of time and internal resources to digest. And, a public sector contract is not a quick fix, either. Sometimes it can take months or years to complete the process. If you want to get into a public sector business, you have to have buy-in from your entire organization, from management to sales reps who may have relationships with the agency you’re pursuing. To that end, it’s always best to focus on an agency that you do have some knowledge of or experience with. Look at the big picture and how your business will be impacted from top to bottom if you do win the contract. If you can’t fully perform against the contract, don’t pursue it, no matter how good it looks.

How can companies find public sector contracts?

There is a multitude of ways. Perhaps the best way is to visit ( This Web site features a host of open opportunities, and it’s easy to search for one that will best align with your company’s core competencies and business strategies. Again, these RFPs tend to be hundreds of pages long, so make sure you’ve got plenty of time to wade through it all. Other ways to find public sector contracts are relationship-driven. As stated, your sales reps often have associations or connections with different agencies. They can be great resources to find out what business opportunities may be on the horizon. Also, mine your manufacturers for possible opportunities. They may be working on an RFP with the agencies’ end users, and need a partner to submit the bid proposal.

What should companies look out for when pursuing public sector contracts?

Even if you’re going after a federal contract, there are usually state and local considerations to keep in mind. While state and local agencies have their own rules and regulations, such as needing a physical location or business license, these can be worthwhile contracts to pursue as well.

One of the most overlooked requirements in an RFP is the absolute necessity of following directions. RFPs will be very specific. There will be direction of what type of paper and font to use, and how many copies and how they want them bound. In short, agencies receive hundreds of proposals — they are looking for any reason to throw yours out. If you can’t follow simple instructions, the agency’s evaluation team will assume you will not be able to deliver on the specifics of the contract.

Finally, you have to have a strong infrastructure. From putting the proposal together and securing the contract to actually following through on it, you’d better be able to deliver to expectations. Most contracts require that you set up some kind of reporting system, and will require you to meet delivery and customer service expectations. If you win a public sector contract and don’t have the infrastructure to make it work, not only will you lose that contract, but it’ll be pretty doubtful you’ll win another one in the future.

If you’re confident your company can handle the contract, what benefits and ROI can you expect?

Bottom line, a public sector contract can help get you into a constant revenue stream. You’ll be able to hit your numbers and keep your business moving forward, even in a tough economy. Having these contracts gives you peace of mind, knowing what will be coming in and going out in the future. Over time, these contracts will allow you to increase margins, which is not an easy task in today’s market. And, these contracts get you more involved with the agency you’re working with, so you’ll become more familiar with who that agency is and what it does, and you’ll be a known entity, thus giving you a better opportunity to shape and win future contracts.

GEORGIA VASILION is the director, public sector, for Technology Integration Group (TIG). Reach her at (310) 320-4934 x4962 or

Sunday, 26 October 2008 20:00

Purchasing power

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It’s a foregone conclusion that your company and its employees need technology to conduct day-to-day business. Yet many companies don’t have a technology purchasing management solution in place, and some have probably never examined their technology purchasing and maintenance processes.

Companies spend a lot of money on technology devices and the consumables for those devices, yet, many times, purchases are made with no rhyme or reason, and thousands of dollars are wasted. Different departments manage different devices, devices are procured from various vendors, rental and maintenance costs are not identified or measured, and devices and their components are misused and underutilized. Thus, more and more companies are looking at consolidated purchasing solutions.

“The key is to understand your company’s total environment, simplify your technology purchases and save money,” says Becky Connolly, the director of computer and imaging supplies and accessories at Technology Integration Group (TIG). “Therefore, it only makes sense to partner with one supplier who can be your one-stop resource for all technology needs.”

Smart Business spoke with Connolly about how purchasing consolidation can help you cut costs, leverage your purchasing power and improve the bottom line.

How do you know if consolidation is right for your business?

Consolidation is right for all businesses, no matter how big or small. You need to look at your technology vendor as a partner instead of as a supplier. If you buy a computer from one company, why would you buy the peripherals from a different company? If you buy a printer from one company, why would you go elsewhere to contract service or buy the consumables from yet another company? Why not stop employees from renegade spending. Having one supplier to outfit your company with everything it needs makes sense and this consolidation will gain your company access to better purchasing power and will save money.

Consolidation allows you to leverage this purchasing power, giving you better prices on equipment and supplies, a full understanding of what you are spending — and why — and an entire big-picture view of your corporate environment. This shows you exactly what your spend is, so that instead of variable spending, you can approach spending with accurate fixed costs and savings.

Where do companies usually waste the most?

Companies often start off with small systems and continue to add pieces over the years as business grows. This usually leads to machines and technologies that end up underutilized or not used at all. If you ask some companies how many printers they have, for instance, they may not have a clue. Why pay for something that does nothing but collect dust?

With regard to printing, research from Gartner Inc., an information technology research and advisory company, shows that printing costs are 1 to 3 percent of a company’s gross revenue. Thus, despite all the talk about moving towards a ‘paperless world,’ companies are still printing everything. So a print management solution is a recommended part of any consolidation plan.

What is a print management solution, and how would a company implement one?

A print management solution is a key part of a consolidation plan. You and your chosen technology partner should work together to determine exactly what printing devices you need and why and when you’re going to get them. As part of this process you should consider a print management solution.

The first step in a print management solution is to identify where your biggest printing problems are, and then do what is necessary to eliminate those pain points. Your technology partner will conduct a comprehensive assessment to identify just how much you are spending — and wasting — on printing, including costs for devices, cartridges, toner and maintenance. Then, recommendations are made to help you find the solution that’s best for you. There are many ways to improve printing efficiencies. Sometimes, it’s as simple as a balance deployment plan, moving your current devices into areas where they will be better utilized. Another easy improvement is streamlining printer locations, reducing document flow or switching from costly inkjet printers to laser devices.

Usually, it will take time to change a company’s printing culture. The net result, however, will be increased productivity, less waste, less maintenance, streamlined supplies purchasing and lower overall costs.

Is there often resistance from employees when you make changes?

Most people are resistant to change, whether it be that they can no longer purchase their own supplies, that they now have to go down the hall to access a printer, or that certain software will no longer be used. When implementing a technology consolidation plan, you can’t just expect employees to adjust with no questions asked. Meet with each decision maker and each department to get feedback and buy-in from everyone. If employees understand what you’re trying to accomplish and can see the benefits that will come from a consolidation solution, they’ll be more likely to embrace the change.

BECKY CONNOLLY is the director of computer and imaging supplies and accessories at Technology Integration Group (TIG). Reach her at (800) 858-0549 x4100 or

Sunday, 26 October 2008 20:00

Outside the<BR>bankers box

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When George W. Haligowski was offeredthe opportunity to serve as CEO ofImperial Capital Bancorp Inc. in 1992, itcame with a catch: The board wanted a 100percent return on its investment.

There was also the slight problem of thecompany having $100 million of its $400million in assets impaired, potential FDICaction was looming, and it was in the middle of the savings and loan crisis.

Haligowski knew he couldn’t control themacro events going on at the time, so theasking price seemed too high. He countered by offering a 50 percent return inthree years. If he failed to hit the numbers,the board could fire him. The board agreed.Haligowski was a crafty risk-taker, as thatgamble with the board paid off for bothparties. Following an IPO in 1996, hebought out the owners, giving them the 100percent return they originally requested,and then he set to work to turn the organization around.

To move forward, the chairman, president and CEO identified a niche opportunity, supported that niche and maintained patience throughout the process.

“The company was trying to be a lot ofthings to a lot of different people,”Haligowski says. “I think it just took afresh assessment from an outsider, andmy first thought was, ‘There’s no way wecan do all these things well. It’s a gambleto put all your eggs in one basket, butsometimes you just have to do it.’”

Find a niche

Haligowski says he had a competitiveadvantage entering the CEO role as abusiness manager with significant salesexperience, because he viewed opportunities through the eyes of a marketer,not a banker. After making initial overhead reductions of 35 to 40 percent andeliminating the thrift’s commercialbanking services, resources weresparse. Generating new revenue was theonly road to growth and profitability,but the larger competition was formidable. After assessing the competition,Haligowski found a weakness in theenemy’s front line, and simultaneously,the bank’s niche market and a newgrowth strategy were born.

“Nobody has a crystal ball,” Haligowskisays. “I completed a thorough opportunity analysis by being involved in the marketplace and not sitting behind the desk.The bank had limited resources, and wecouldn’t really compete against the bigger commercial banks. It was a classicDavid versus Goliath situation.”

He identified an underserved market inthe commercial lending space, writingloans for real estate entrepreneurs, andhe saw an opportunity to exploit theniche through better sales techniques.

Haligowski concluded that many banking industry lending officers were reallyorder takers in disguise, and they wereleaving midsized commercial loanopportunities on the table. He took a riskand dedicated 25 percent of the bank’sresources toward the niche lending market composed of entrepreneurial ventures, such as multifamily real estate andconstruction loans ranging from$250,000 to $7 million. He attacked themarket with financially motivated salesrepresentatives, who outmuscled andouthustled the competition.

“To exploit a niche, you survey theadvancing army and look for breachesin the line,” Haligowski says. “Thenyou test the market to see if it’s receptive to your pricing and service. Whenyou see that it’s yielding, you want topower into the market and run as fastas you can. Timing is critical when youhave limited resources. We’re a smallcommercial bank; our advantage isthat we can move quickly. We’re like aPT boat: We can zig and zag becausewe are nimble and we can turn on adime, but we’re not an aircraft carrier,so we can’t survive the Battle ofMidway.”

Support the niche

With a new niche focus, Haligowskithen worked to change the company’sstructure and culture in order to support loan origination activities, loanservicing and the unique lending needsof the entrepreneurial borrower.

As part of the cultural shift,Haligowski made the bank’s managersowners by giving them stock in thecompany. He also empowered thecompany’s loan officers by givingthem creative license to structureloans in nontraditional ways to meetthe needs of borrowers who are oftenrepositioning a property. The notion ofentrepreneurs working with entrepreneurs was a hit in the market, and thebank grabbed market share from itslarger, less flexible competitors.

“I consider my managers to be mypartners, not my subordinates,”Haligowski says. “I think an ownershipstructure is preferable for an entrepreneurial culture because you can pushpeople differently when they have astake in the outcome.”

Giving key managers ownership andproviding the bank’s sales staff withincentives has enabled ICB to achievehigh rates of organic growth whileavoiding the need to take on largeamounts of debt from acquisitions.Not only has this driven the company’sstock price and dividend, but it’s setthe bank apart from its larger commercial peers, who often rely on mergers and acquisitions as a growth strategy.

In 2000, ICB re-entered the commercial banking arena. The 2002 acquisition of Asahi Bank of California provided ICB with the operating systemsit needed to operate commercially, soit could subsequently offer commercial borrowers a complete package of banking services. Asahi didn’t have branches, so the acquisition gave ICB the opportunity to increase revenue, without adding brick-and-mortar overhead. Haligowski stayedwith his successful niche market strategy and expandedeastward, eventually opening 19 new loan originationoffices across the country.

ICB made another acquisition in 2002, launching itsentertainment finance division. The division providesbanking, advisory and collection services to the entertainment industry. The division follows suit with Haligowski’sniche market strategy, because its focus is financing independent films, some of which scored home runs at the boxoffice, like “My Big Fat Greek Wedding” and “Monster.”

Aside from their strategic value, Haligowski made theacquisitions when the price was right. When he shops foracquisitions, Haligowski is first and foremost a bargainhunter. He says it’s important to look at acquisitions carefully before moving forward, and he always asks if he personally would pay two to three times the book value for abusiness.

“There has to be a really compelling reason to make anacquisition, like you’re getting a really good deal or you’readding to your core competencies,” he says. “Otherwise,you’re just diluting shareholder value. I’ve never reallyunderstood paying for good will. I don’t understand how itworks.”

Be patient

Given the recent trends in the banking industry,Haligowski and his team may need those Midway-like battle survival skills. Over the last four years, other banks followed ICB into the midsize commercial lending space,some offering lower rates and less stringent lending qualifications. Then the bottom fell out of the market completely, and demand dropped by nearly 75 percent. Whencompetitors launch a niche market invasion, Haligowskisays the best survival tactic is often to hunker downbecause competitors aren’t often dedicated to the spacelong term, and then commence a hybrid marketing strategy to protect some of your market share.

“It’s a misnomer that being a niche player limits growth,”Haligowski says. “You select a niche market because it’ssignificantly underpenetrated and because you have a limited share of the available market. So you can mitigate riskand continue to grow by expanding your share.”

Despite having opport unities to increase market sharethrough better execution, Haligowski says that the last 12months have been challenging and that the underservedcommercial loan market all but evaporated during 2007.He says that just as timing is vital when gaining an initialfoothold in a niche market, it’s equally important whenwaiting out a down period.

“You don’t want to go surfing when the surf isn’t up,”Haligowski says. “You have to right-size your resourcesand wait for the next wave of opportunity. The otherchoice you have is to meet the price competition head-onby writing some loans at lower rates, and then outsourcethe risk to a third party. I think a hybrid solution is thebest answer, because you’ve got your entire structurededicated to the niche market, and it will eventuallyreturn.”

Under his hybrid solution, Haligowski has continued topush his sales team toward increased market share in thecommercial loan market, and then selectively meets pricing competition while carefully scrutinizing the split of thebank’s loan portfolio. In addition, he incentivizes his salesteam toward cross-selling by selling existing borrowersancillary banking services.

During the recent difficult times, Haligowski hasremained close to the bank’s employees. He provides thema monthly status report, and he personally visits customers to thank them for their business and also visitstroubled properties the bank has financed. Haligowskicautions CEOs not to overreact to market changes and tostay the course if they want to be successful in niche markets.

“We have our entire company and the culture set to support the commercial loan market,” Haligowski says. “It’s ahighly fragile system built on trust, so to undermine thatwould destroy the very underpinnings that make the entirething work. You have to spend more time in the field during difficult times and let people know you are committedto staying the course. You have to support people andmanage their perceptions when things are tough becausethat’s when they need reassurance the most.”

Although the bank has suspended its dividend for theremainder of 2008, it has remained profitable thus far. Asa demonstration of his confidence and his penchant for risk-taking, Haligowski purchased more than 100,000 ICBshares on the open market so far this year, making him thebank’s largest individual, noninstitutional shareholder.Since buying the company and repositioning it as an entrepreneurial niche player, he has grown the bank’s assets to$3.6 billion last year, up from $3.4 billion in 2006.

“I think you just have to make a judgment about the bestway to go,” Haligowski says. “You can get everybodyinvolved in the decision, but the only way the employeeswill follow a leader is if you are clear in your position.Sometimes, you just have to take a gamble and set a strategy, but don’t take it lightly, because if you’re wrong, youcan lose your job.”

HOW TO REACH: Imperial Capital Bancorp Inc., (888) 551-4852 or