Ride the lightning Featured

7:00pm EDT January 26, 2009

John Varel has started and grown 12 companies during his career. It hasn’t always been easy, and sometimes, he really had to fight his way to find growth. His most recent company is no exception. As founder, chairman and CEO of FusionStorm, a technology solutions provider, he successfully grew the company to $120 million in revenue in just five years. When the company took a hit and dropped to $12 million, he could have just given up. Venture capitalists and board members walked away, recommending he file for bankruptcy. Instead, he took the business back to nearly $500 million in revenue during the last six years, and despite the tough economy, Varel says that more growth is still attainable.

“You have to weather the pain,” he says. “If you want to be a leader, you really have got to do anything and everything that you’d ask one of your people to do, and do it in the worst of times.”

He says that there are basic tenets essential for growth that apply in all economic conditions — communication, collaboration and empowerment.

“We have to communicate more effectively,” Varel says. “We have to collaborate across groups and teams and practices. Then we have to remember that even though we all seem to think we can be all-knowing, we have to let the individual teams be empowered and let them make mistakes and move on and learn from them.”

Communicate

When Varel started one of his offices, the guy he hired had a bigger vision that required more people and money than Varel envisioned. Despite reservations, he agreed to let him have the resources to do the job his way.

“As soon as I said yes, I knew I made the wrong decision,” he says. “And then I never communicated it for three or four months.”

Now he has a budget in that office twice as large as it should be, and he realized that if he had just communicated the problem upfront, he could have avoided the issue altogether.

“Wherever I have failed in a simple act of trying to achieve success within a company or business, I can take it back to I wasn’t clear upfront what I expected from that individual,” he says.

The lesson is, if you want to grow your organization, you must learn to communicate.

“First, it starts with the leader of the company,” Varel says. “I don’t mean manager of the company. I mean leader. There are plenty of effective managers in the world, but none of them will be leaders. A leader ... is someone who would crawl across cut glass to get the goal that they need done. I have to have in my execution of being the CEO a very clear, simple, direct vision that I am passionate about and that I communicate that consistently and regularly and repetitively.”

For example, if he says his vision could be that he wants FusionStorm to be a $1 billion company by 2010. He says it’s an easy vision — there isn’t a word in there that somebody would-n’t understand. The problem comes with helping people see how they fit in to it. If someone runs just a $20 million division, he or she may worry that he or she can’t contribute to $1 billion. Varel says his role is to make people realize that even a $40,000 contribution gets the team closer to $1 billion than nothing at all.

“The simpler you make it, the better off you are,” he says. Start planning early and involve people. He and his team have a financial planning session in August or September every year for the following year.

“The first thing I lay out is, ‘What would have to be true for us to keep our exponential growth continuing?’” he says.

Sometimes people will say that they don’t think the company can continue at the current rate, but he reiterates that that’s not the question.

“I don’t want to hear the word ‘can’t,’” he says. “I said, ‘What would have to be true for us to keep that kind of growth going?’ It takes the people out of the mindset of being an incremental gain manager, which a lot of people have. I mean, anybody can hit whatever the industry average is that you’re in.”

Instead you have to communicate bigger goals to each other.

“What I’m looking for are people who answer that question in a constructive way,” Varel says. “Then it becomes a dialogue and the communication opens back up again. We as leaders have to ask the right open-ended questions that allow the individuals to think beyond the parameters of what is the norm. Otherwise, you will have the norm.”

Collaborate

When Varel was a child and his mother caught him fighting with his siblings, she didn’t just send him to his room or make him sit in timeout. Instead, he had to do the unbearable — stand there — often with a bloody nose — hugging his enemy sibling for 30 minutes.

Despite how much he hated it, it taught him to play nicely with others, and that’s a lesson that helps him today as he grows his company.

For example, Varel has an amazing employee who does the work of three people — and does it well. The problem is the person isn’t a team player and won’t communicate — he isn’t playing nice in the corporate sandbox, and it’s burning bridges with his co-workers.

That employee has to go because if you don’t take action, people will see you putting up with an ego for the sake of performance.

When other employees see this, it creates issues that prevent you from growing and moving forward.

“You see it in sports all the time,” he says. “There’s always this maverick basketball or football player who’s got such a strong ego that he’s the reason the team is successful. There in lies a cancer for collaboration. Nobody wants to work with him then ... they don’t want to play nice in the same sandbox. Sorry. This is the sandbox we’re in, and we all have to play nice.”

In order to nurture more collaboration in your organization, you have to first get to know your people.

“Start off, No. 1, by being involved in every meeting and session you could as a listener because you don’t know who your people are,” Varel says. “You don’t know who the ego-maniacs are. You don’t know who the individuals are who will be ‘me’ versus ‘team.’ You don’t know who has personal agendas. You don’t know the personal phobias.”

Part of getting to know people happens outside of the conference room though. Varel calls each of his 400 employees to wish them a happy birthday, but he also asks them other questions, like how are things going, what they see right, what they see wrong, why they like working at FusionStorm and about their family.

“Ask the open-ended questions, and then shut up and listen because your leaders will come to the surface,” he says.

The next step to fostering collaboration is to recognize the laws of nature.

“When you have two individuals, you have two different ideas already,” Varel says.

With this issue, remind people that their differences are OK, but they need to work past them. Varel has a statement on the wall that reads, “You can disagree emphatically in this meeting, but when you get out of this room, you agree with one another emphatically on execution.” For that to actually happen, watch how people respond both verbally and physically.

“If someone shrugs their shoulders or nods their head, you know they’re not 100 percent on board,” Varel says. “Then you ask, ‘Are you sure? What else is bothering you?’ That’s all you can do.”

While he’s been burned before, at least asking these questions on the front end creates more buy-in and collaboration later.

“Open discussions prior to that are acceptable, but after that, they’ve got to be agreeing and having each other’s backs, so to speak,” he says. “Otherwise, empowerment will fail.”

Empower

Varel doesn’t live in San Francisco. He doesn’t live in California. He doesn’t even live in the continental United States. Instead, he has a home in Maui, and every other week, he visits a different FusionStorm office.

The fact that he doesn’t have to watch over the shoulders of all his people is a testament to how much he trusts them to get their jobs done themselves, and that empowerment is the third ingredient to successful growth.

“The first word that comes to mind is the word ‘trust,’” Varel says. “You said you were going to do it, you said you can do it, you said you will do it, so I trust you. But if you stumble, I can be your worst enemy or your strongest supporter, depending how you stumble, and if you fail because of that, then we’re both mutually responsible.”

If you want to have that same attitude, you first have to throw your employees a line.

“I give them enough rope that they’re either going to show their true colors and hang themselves, or they’re going to execute beyond my wildest expectations,” Varel says.

He says that another major part of empowerment is to keep your mouth closed and your ears wide open.

“Secondly, I’m listening while they tell me what their plan is,” he says. “Most managers want their ideas heard. They’re intelligent people — they’ve grown through the ranks. Young or old, they have some basis for believing that they are right in what they want to say, and then I let them talk that through.”

While he doesn’t always do everything that his people suggest, he says that allowing them to present their ideas helps them feel that they can contribute to your vision.

“After they’ve had the opportunity to execute on their own plans and see them succeed or fail, they grow stronger as a manager and/or leader and have earned the right for that empowerment,” Varel says.

But it all comes back to the first two parts that Varel has hit on.

“It’s in not doing the first two — communicating or collaborating across groups, they’re going to fail at empowerment,” he says. “They can’t operate within their own island. They’ve got to have the first two down in my opinion.”

Lastly, he says that as the leader, you have to be careful that while you sit in on meetings, you don’t dominate the meetings. By empowering his people instead of micro-managing them, it has created a culture that people want to be in, and numbers talk — FusionStorm’s turnover is less than 5 percent, which is about one-third of the industry average.

“I could very easily sit in and spend my day sitting in on all of these calls, but then we wouldn’t be a company that’s growing at 70 percent annual compounded growth,” Varel says. “We wouldn’t have gotten out of that fire we were in in 2002 to grow from ($12 million) to a half a billion [dollars]. If I were micro-managing, I wouldn’t have had any leaders that were capable of doing anything because I would be doing it all. You can’t scale that way.”

HOW TO REACH: FusionStorm, (415) 623-2626 or www.fusionstorm.com