Every company faces obstacles from time to time. But what if that obstacle comes in the form of government legislation that hinders your ability to do business?
That was the case for InfoCision Management Corp., a call center provider that specializes in political, Christian and nonprofit fundraising, as well as sales and customer care.
When the Federal Trade Commission passed legislation to form a National Do Not Call Registry in 2003, some industry opponents were predicting the death of telemarketing.
Though many companies did buckle under the new laws, InfoCision’s quick and well-planned response assured survival through the crisis. The company invested more than $2 million in regulatory compliance and was ready and waiting with a team of legal experts and the latest technology when the registry went into effect on Oct. 1, 2003.
These successful measures were quickly recognized by the Direct Marketing Association, the leading trade association of organizations using direct marketing tools and techniques. In 2003, it awarded InfoCision a Silver ECHO Award the company’s second since 2002. Known as the “Oscar of Direct Marketing,” this honor recognizes outstanding strategy and creativity in the industry.
A year later, new business began to pour in when other companies realized they couldn’t afford to take risks with FTC compliance. Sales grew by more than $10 million in 2004, and InfoCision created 271 jobs. The company was awarded its third ECHO Award that same year.
Since that time, President and CEO Carl Albright has continued to lead InfoCision to impressive growth. The company opened three new locations in Columbus, Dayton and Youngstown in 2005, and revenue rose to $140 million.
Last year, annual revenue increased to more than $154 million, and Albright brought on an additional 321 employees. The company now staffs more than 3,700 people at 13 locations throughout Ohio, Pennsylvania and West Virginia, and InfoCision recently became the second largest privately held teleservices provider in the country. It raises more money for nonprofit organizations over the phone than any other company.
With that growth has come a greater responsibility to create a culture in which employees can thrive. InfoCision matches each employee “communicator” a term used to distinguish its employees from the standard industry “agent” with the type of work that each person has the greatest interest in. The employees are then trained in every detail of their clients’ backgrounds and operations in order to increase overall performance.
In addition to performance, Albright also stresses the importance of health and wellness among his staff. InfoCision offers medical and dental insurance, 401(k), paid vacation, and periodic bonuses, and it has recently instituted a wellness program designed to encourage healthy lifestyles among team members.
The program offers contests and resources, including a free smoking cessation program, as well as annual health fairs that give employees the opportunity to get free health screenings. It also includes regular distribution of nutrition and weight loss education and information.
To take this commitment to employee health one step further, InfoCision has also installed on-site fitness centers and hired on-site physicians at many locations. The centers cost only a fraction of a typical health club membership, and the physician visits available to both employees and their family members run at a reduced co-pay rate.
In addition to his company’s dedication to employees, Albright also recognizes the need to serve the greater community. InfoCision is a member of the chambers of commerce and Better Business Bureaus in each of the 13 communities that house its call centers. Many of the company’s employees are involved in organizations such as The Salvation Army, American Heart Association, American Cancer Society and March of Dimes.
InfoCision has come a long way since its humble beginnings more than two decades ago. What was once a two-employee operation in 1982 has emerged as one of the leading inbound and outbound call centers in the country. With projected 2007 sales of $175 million, the company’s growth projection looks to continue its steady climb up and over whatever obstacles lie ahead.
InfoCision Management has received a Cascade Capital Business Growth Award every year since 2001.
HOW TO REACH: InfoCision Management Corp., (330) 668-1400 or www.infocision.com
In the supply industry, availability is everything. For every order or request — regardless of in-house stock — the answer must always be “yes” if a supplier hopes to grow and thrive.
At PartsSource LLC, a hospital replacement part supplier, A. Ray Dalton has turned this tenet into the company motto.
As the president and CEO of PartsSource, Dalton implemented two notable innovations last year to create a client-supplier relationship where, “The answer is yes.” First, Dalton introduced the Web-based application myPartsSource.com to help clients order and manage their parts purchases more efficiently.
In the past, customers had to call suppliers, place an order and wait for a call back regarding availability and pricing. Now, they only need to visit the online site to gather all the necessary information, almost instantaneously. In addition, the site allows clients to place and manage orders from suppliers other than PartsSource.
While the system provides obvious benefits to customers, it has paid off for PartsSource, as well. The company has significantly increased its revenue stream with four major hospital groups since the system’s introduction — a 236 percent increase from 2005 to 2006 — and projects a 214 percent increase in 2007.
Secondly, Dalton and his team have created an alliance of suppliers to ensure the availability of any product in the hospital replacement part industry. Aptly dubbed the National PartsSource Alliance, this vendor-partner network allows the company to meet customer demands even when parts are unavailable in-house.
In those cases, PartsSource contacts one of 6,500 vendors on the open market to secure the best pricing options for customers. The company then contacts the customer within two hours to relay product and pricing information.
Despite these recent innovations, Dalton doesn’t dismiss old-fashioned methods of bolstering inventory. He has continued to stock his warehouse with high-demand products, such as batteries and bulbs, to accommodate long-term demand. In an industry where availability matters, it’s never a bad idea to have a few extra parts lying around.
HOW TO REACH: PartsSource LLC, (330) 562-9900 or www.mypartssource.com
For many college students, classroom lessons lack substantial application in the real world. However, at Baldwin-Wallace College, innovative thinking is allowing undergraduates to use their newfound knowledge outside the lecture halls.
Under the guidance of Peter Rea, Burton D. Morgan Chair in Entrepreneurial Studies, the college’s Center for Innovation and Growth allows passionate students to apply their talents to regional economic development.
“Course work is foundational,” Rea says. “Ultimately, you have to learn innovation by doing it.”
The idea for the center emerged in 2005, when Rea and other faculty members created a speaker series highlighting the fundamentals of strong business leadership. The series’ success spurred an umbrella organization whose goal was to foster innovation and growth campuswide and beyond.
Founded in March 2006, CIG has since participated in numerous projects designed to cultivate economic prosperity in Northeast Ohio.
“The region’s in need of talent that’s innovative,” Rea says. “[It] needs some help in taking on projects surrounding economic development.”
In one endeavor, students and faculty are helping seven communities consolidate their fire and emergency medical services into one efficient and cost-effective fire district.
For students whose interests lie beyond the realm of municipal development, the center also oversees the Baldwin-Wallace College Business Clinic. With the assistance of executive volunteers, students help entrepreneurs and small businesses design more than 100 business plans each year.
In addition to his work at the college, Rea has facilitated international partnerships between B-W, as well as other universities, and corporations in countries including China, Japan, Germany, England and Brazil.
“[Innovation will] determine the prosperity of the country, community or company,” Rea says, citing one of the conclusions of the World Economic Forum of 2006. “There is now a global hunt on for innovators.”
HOW TO REACH: Baldwin-Wallace College, (440) 826-2900 or www.bw.edu
Finding a good executive can be like finding a needle in a haystack.
Just ask Caroline W. Nahas, managing director of Korn/Ferry International’s Southern California office.
“The best executives people who can really make a difference are tough to find,” says Nahas, whose office posted 2007 revenue of $23.2 million.
But that doesn’t mean the task is impossible.
While managing the 60 employees at the executive recruitment firm’s Southern California office, Nahas has picked up a few helpful tricks, including expanding your initial search outside of your industry to others that yield the kind of executives you’re interested in.
Smart Business spoke with Nahas about how to gain clarity about the position you’re trying to fill and how to approach an outstanding potential candidate.
Q. What should every executive know before trying to recruit someone to his or her leadership team?
First, they need to have clarity about the role for which they’re recruiting, both in terms of the content of the role but also the expectations for that role and the person fulfilling it.
Secondarily, they need to be prepared to give a scenario analysis in an honest way of why the opening exists and what the potential is given outstanding performance for the future.
Q. How do you gain that clarity about the role?
A healthy exercise, whether you’re using a search firm or not, is to actually sit down and document the responsibilities and the context of the position: The position is responsible for X, peer positions would be X, Y, and the position reports to the CEO.
So again, they know what the role is, but also what is the role in the context of the whole company and how does it fit? And then a description of the actual content of the role from the standpoint of the metrics: How large is it? Is it a transforming role?
Think about the role and responsibilities and the context in which it’s positioned. The next part would be what are the requirements needed in terms of a profile of an individual. What skills does a person have to bring to be successful in this role?
Q. How does gaining that clarity help an executive fill a role?
It just makes you cogent about what you’re discussing and projecting out to the marketplace. If you thought, ‘It’s just like everything else,’ once you document and you really think about something, then you’re able to better articulate that to individuals with whom you’re meeting.
It also really forces you to really sit down and say, ‘What is really most important here, and what are we really trying to accomplish?’ Lastly, whatever we’re trying to accomplish, ‘How does that help form the kind of person we’re seeking?’
You can also use those documents as a marketing tool to potential candidates. If someone is interested in the opportunity, then you can send it to that person and say, ‘Here is a description of the company. Here’s a description of the business that we’re discussing. Here’s a description of the role. Here are the criteria that we think are critical for this person’s success.’
Q. How do you approach a potential candidate?
I would get as much information about them as possible so that you’re armed. You may not project that information to them immediately, but you’re armed with the information to kind of shape the conversation you have initially with them.
I would call them up directly and say, ‘I have heard outstanding things about you. I know you have had an outstanding career at X company, but we have something pretty special here. I’m the CEO of this company. I would love to just get to know you.’
Get them into a conversation or a meeting, and take it from there.
Q. Once you get their attention, how do you gauge chemistry between potential hires and existing staff?
One is to do the interview and have some behavioral questions to ask that would indicate what kinds of cultures in which the person has been most successful: ‘Give me an example of where you ended up being completely wrong on a decision, and what you communicated to your staff regarding that decision.’ Do those cultures match up with who you are as a culture?
Two is to do extensive referencing. Ask the people with whom you’re referencing to not just describe the person but to describe the culture in which they were operating without giving them any leads. Have the person describe the culture and ask probing questions about that culture. See if you see any matches or some hot buttons.
The third is to do a psychological assessment.
None of these things are the deciding factor alone. All combined, do you see any trends either on the positive that match up, or do you see any hot spots that could be problematic that might not surface necessarily in an interview.
HOW TO REACH: Korn/Ferry International, Southern California office, (310) 552-1834 or www.kornferry.com
When Cary McMillan and his peers were choosing a name for their corporate and business tax consulting firm, they wanted something that conveyed a collegial atmosphere of interdependence.
“True Partners Consulting we picked that name on purpose because we want to be partners with our clients, we want to be partners with our people, we want our people to be partners with each other,” the founding partner and CEO says.
To facilitate that culture, McMillan has grown the 175-employee firm organically, bringing in new hires one at a time. The practice has allowed him to mold employees into active participants within the collaborative environment and has helped boost revenue from $8 million in 2006 to $23 million in 2007.
Smart Business spoke with McMillan about how to target the best candidates to fuel successful organic growth.
Q. What is the benefit of organic growth?
While it’s a lot faster to grow through acquisition, I think it’s more effective to grow organically if you can.
Building a culture of collegiality, interdependence, quality, trust all the words that sound good on paper is hard to do, but it’s a lot easier to do if you bring these people in one at a time. If you bring people in, you get a chance multiple times to reinforce the values and vision of the company.
You get to do it when you’re recruiting them, you get to do it when they come here one on one with them, and they get to participate in the building of the culture.
Q. How do you find the best employees to facilitate organic growth?
You have to make sure that the home front is secure. The most important part in recruiting is to make sure that you’re creating the right culture, the right environment, the right atmosphere with the people that you already have.
The best way to find the best employees is to have a group of employees that already work for you being your real disciples out there, and when you send your people out to help recruit, really the best example of what you’re looking for is who you already have.
Q. Where do you look for these employees?
We would love to get everybody right out of their university degree, so people that have master’s in accounting, master’s in tax or people with law degrees, that’s who we recruit out of college. Some of them come here as interns to get work experience before they graduate, and we’re very fortunate in that virtually every intern that we’ve brought in has come back as a full-time employee after graduation. Some we bring in directly as they’re graduating from college.
The inexperienced people are people that we get to teach. It’s the most organic of the organic growth. We hire people, and we teach them about our culture, our values, our vision, our beliefs, and they’re not bringing a lot of baggage with them.
Q. What is a common recruiting mistake?
People, when they recruit, they tend to try to find people who look like themselves similar backgrounds, similar experiences, similar demographics even. I think the most important thing to remember is that the success of America is more dependent upon diversity and the integration of immigrants into our society than any other country in the world.
When you go on campus, you have to have an extremely open mind, to look at candidates who perhaps don’t have the same background as you and, in fact, in some respects, their backgrounds may be difficult for you to relate to. They might actually be from a foreign country themselves, or they don’t speak English as their primary language, or they didn’t participate in the same activities you did in college.
Q. How do you make sure you’re targeting the best graduates?
The most important thing is to spend time on campus with the staff and the faculty. Help teach classes, help give presentations in front of the honors societies, pitch in the schools are always looking for firms to help support the activities to make the students’ and the faculty’s life more interesting on campus.
Then you’re very likely to develop a good relationship with the placement department, with some of the key faculty, with some of the professional honorary societies. Those organizations and people can really get you in touch with the best students, and you get a chance to interact with them in a more informal way than the kind of high-stress, one-on-one interview.
If you just think you’re going to go down to some school and somebody’s just going to give you the secret handshake and tell you, ‘Here are the top five students. Go get ’em,’ you’re crazy, because it doesn’t work that way.
For those that put in the effort, you get the reward.
HOW TO REACH: True Partners Consulting, (312) 235-3300 or www.tpctax.com
Back in 1983, when Jeff Katke founded Metagenics Inc., the visionary entrepreneur liked to call the shots.
“I’m a founder and an entrepreneur, so I tend to have a pretty intense style and focus,” he says.
A lot has changed in the past 25 years, though. For one thing, the manufacturer and distributor of medical foods and nutritional supplements now has 750 employees globally and reported 2007 revenue of $172 million. In the process, Katke, who serves as chairman and CEO, now aspires to have a much more collaborative process.
That transition hasn’t always been easy. Katke says that his intensity can occasionally get in the way of effective cooperation among his leadership team, so to quell these lapses, Katke engages in a daily affirmation process to stretch his comfort zone and stress positive thinking.
Smart Business spoke with Katke about how to meditate on improvement and how to show restraint in the board-room.
Think positive. I do a personal effectiveness meditation every morning, where I’ve written down a series of issues that I’m working on to improve, and I review those mentally in a sort of affirmation format to program my subconscious mind to work in harmony with my conscious mind to try to achieve those goals.
In essence, our subconscious mind operates or keeps our conscious mind operating in what’s called our comfort zone. We tend to want to stay in our comfort zone. So if you don’t decide to get out of your comfort zone, and if you don’t program your subconscious mind to be comfortable with a new goal that’s outside your comfort zone, your subconscious is always working on keeping you where you are.
By programming through affirmation what your goals are for improvement, you basically create a new comfort zone. For example, if my problem is that I get too intense with people and it frightens them and then they don’t feel comfortable communicating with me, I might have an affirmation that says, ‘I listen intently to other people, and I’m very sensitive to their feelings,’ so they feel that I listen to them.
I might use that as an affirmation, and then that affirmation will literally cause my subconscious mind to establish that as my comfort zone, and then when I have a tendency to go to that intense place and be very directive, my mind will say, ‘Well, just wait a minute now. Why don’t you let that person talk a little more, and why don’t you ask questions, and why don’t you be quiet for a little while [and] see if we can’t come up with a better solution?’
I have a whole list of these things. I refine them and write new ones, and I read them at morning and at night every day, and I meditate on them so that I get this feeling of what it would be like if that was actually the way it was.
Focus on the big picture. A vision has to be a bigger purpose than the immediate focus of the business.
For example, in my business, we R&D, manufacture and sell nutritional supplements and medical foods. We could be in the business of selling pills and powder for profit, but if you have a vision that is a bigger vision our vision is to improve health of people with chronic illness and help them improve their quality of life then when you’re making your product, your whole decision-making process is different.
If you’re making pills for profit, the quality of the product is important, but it’s not that important. As long as they’re popular and the public will buy them, they’re good enough. Whereas, if you’re focusing on an actual illness issue, you have to have the very best ingredients.
At the end of the day, in a capitalistic society, the company is paid for the value it provides. If you provide higher value, you should be able to be paid more for it. So it translates into improved sales growth and improved profitability.
Communicate your higher purpose. I take patient examples that we get of people who have had great results with our product and I continually tell the staff about these successes. I say to them, ‘I want you to remember that you were the one that helped this person get better, and you should take pride in that. Whatever your job is here, what it really is, is it’s improving people’s health. You should share in our joy for what we’re achieving and accomplishing because we’re affecting millions of people’s lives.’
People like a job that has more meaning than just the mundane work. It’s motivating for them. It makes them fired up. It makes them want to be better and want to improve.
Don’t dominate the conversation. When you’re getting into debates, if someone engages, it’s important that you allow the debate to play out and that you don’t just overpower the person and say, ‘I’m the CEO, and this is how we’re going to do it.’
Having said that, it’s not a democracy. After someone’s made their point, just say, ‘You know what? I’ve really heard what you said, and there are a lot of good points in what you’re doing and in what you’ve suggested, but I think for now, in this circumstance, we’re going to follow this course.’ There’s nothing wrong with that, as long as you’ve given a person a chance to express themselves and you respect what they say.
HOW TO REACH: Metagenics Inc., (800) 692-9400 or www.metagenics.com
“We thought we had a very strong candidate,” he says. “The financials looked really good. (But) once we were finally permitted to go and visit some of the people down below, we were very unimpressed. There was not nearly the strong motivating attitude that we would have expected, that we saw from the leadership team. You couldn’t feel that at all when you walked through and talked to people on the floor. It was pretty obvious that (the leadership team) was dressing it up for sale and that they didn’t really have strong operational expertise.”
After that encounter, Livonius and his team passed on the opportunity and focused their attention toward other prospects.
He says you can’t acquire every promising lead that presents itself. A successful merger or acquisition requires considerable due diligence on the front end, combined with the discipline to step away if certain warning signs present themselves. Though you’ll inevitably pass on many opportunities working within the framework — Livonius says he passes on approximately two to three such opportunities every month — your company will reap the benefits when you eventually jump on the right opportunity.
In April, for example, Livonius added Resources On Call to Nursefinders’ family of eight existing brands. The allied staffing company specializes in staffing imaging and medical laboratory technologists, a growing industry segment with plenty of untapped market share. Despite this obvious draw, Livonius didn’t hastily jump on this opportunity either. Instead, he approached it with the same, calculated methodology that has boosted the 1,039-employee company’s combined revenue from $224 million in 2005 to $418 million in 2007.
Here’s how Livonius weeds out the pretenders to acquire the best prospects in the industry.
Follow the signs
Livonius didn’t happen upon Resources On Call by chance. The company was one of a handful of opportunities that would expand Nursefinders’ ability to tap into the growing allied staffing industry, which includes every health care professional except doctors and nurses.
“The need is so great that we can add a second brand, and we’re not going to overlap anything,” he says.
What separated Resources On Call from the other allied staffing providers were certain characteristics shared by all great acquisitions. Livonius says there are four key attributes in all, including financial dynamics, business concentration, turnover rates and senior management tenure.
The first sign to look for when vetting potential acquisitions is a positive financial dynamic within various indicators, such as growth rates, revenue, gross margins and expenses.
“The trends for these are key indicators when you compare them to the industry,” Livonius says. “If the industry’s growing at 10 percent and this company’s growing at 15, that’s a very good sign. Obviously, the reverse would not [be a good sign.] If margins are lower than the average in the industry or if expenses are higher, those are all very key factors to look at.”
Livonius says it’s also important to compare these indicators historically. Has the company’s revenue grown at a steady pace for the past five years, or has it increased dramatically one year but fell the other four years?
“That’s often a warning sign,” he says. “They’ll say we had a one-time write-down for insurance or a lawsuit or a one-time problem with our health insurance. Oftentimes, these are appropriate adjustments. But they really need to be investigated to determine if they really are part of the ongoing cost of business, but they put them into a one-time cost instead of appropriately spreading them over the course of the business so that they really are a normal cost.”
The second sign of a great acquisition is what Livonius refers to as concentration of business.
“(Business) needs to be spread across a large customer base where there are multiple years of sales to those clients,” he says. “This indicates that their client retention is high.”
On the flip side, Livonius says to be wary of companies that receive a bulk of their business from one or two clients.
“One of the warning signs would be more than 20 percent of your business concentrated into one client or more than 50 percent in the top five to 10,” he says. “That’s a warning sign that says perhaps you’ve got one really good contract that’s driving a lot of profitability, and you need to understand what the certainty of getting that contract again and again and again as opposed to getting a lot of different contracts that have a lot of tenure.”
The third sign you should be on the lookout for is low turnover rates. While it’s certainly important to include key executives in this assessment, Livonius says you should also look at the front-line employees.
“Oftentimes, people say, ‘How long has the senior management been in place?’” he says. “That’s important, but what’s really important is, ‘Do you have a 50 percent turnover of the people who are actually in the desk working and filling out the orders, or do you have 10 percent?’ It depends on the industry, but for example, if we saw turnover rates in excess of 30 percent a year, we’d think there’s a real problem there.”
Finally, the last sign of a great acquisition is a management staff that intends to serve through and after the acquisition.
“It’s key to know what they want to do as part of this transaction,” he says. “It’s obviously better if they want to stay, and you think they’re good, but oftentimes, the situation is that the management is leaving after a transaction, and they’re planning on selling and retiring. What is the backup plan? Do they have a successor in place? Has that successor been in place long enough? Are you going to have to bring somebody else in?”
Just as important as gauging key executives’ future plans is looking at their history of employment.
“One of the key signs is that if there was a management team that was brought in in the last 12 to 20 months and then they’re ready to sell the company,” Livonius says. “Oftentimes, that means that that was probably a transition management team or a turnaround management team that was brought in to cut costs and get the company ready for sale. It’s a warning sign if they cut too much in order to get their price better because their profits are a little bit better. When I take over, will I have to add back expenses that they cut out? Or will I have to restructure some contract they might have put in play?”
Acquire what you know
When Livonius was conducting acquisitions at his old job in the ’90s, a long-time mentor offered the following advice: “You need to feel equally comfortable going to dinner or being stuck in an elevator with the management team.”
“It’s an appropriate saying because during the good times and bad times, you really want to be comfortable working with the management team that you’re acquiring,” Livonius says.
The easiest way to ensure that level of comfort is to seek a company with a culture similar to your own.
“It starts with, do you want to buy a company that is similar in culture to your company or not?” Livonius says. “If you do, it’s a lot easier. If you’re culturally mismatched, if someone is highly autocratic or authoritarian and you’re more participative as a management team and you’re more open, you’re more communicative, it’s probably not a very good idea to acquire the company.”
When asked what attracted him to Resources On Call, Livonius points to the cultural similarities above all else.
“There are 10 other companies out there that we could have acquired besides ROC, but in our mind, ROC had the best match to our culture.”
He didn’t come to that understanding over the course of two or three meetings. The process requires numerous visits by every one of your key executives.
“You’ve got to know them well enough through several encounters to have that feeling,” Livonius says. “Have members of your team be present or have separate meetings with management and then compare notes. On my team, my CFO or another VP of operations will all be involved in assessing the culture by interviewing different people. We don’t always do it as a group; we sometimes do it individually and see if we get the same answers, and then come back and compare notes.”
Bringing your direct reports into the process will provide new insight that you may have missed during your own encounters. Livonius also suggests referencing outside parties for additional perspective.
“The way I think you understand the company’s culture is also through references that you can rely on that are independent of the transaction, such as a former employee or colleagues in the industry,” he says.
In most cases, these interactions will take place within your or the potential acquisition’s workplace. Livonius says that it shouldn’t be limited to these settings, though.
“Over the course of those meetings, some are social,” he says. “You go to dinner; find out what the rest of their family is like and what the rest of their lifestyle is like.”
Such interaction is a great way to gain a deeper familiarity with another leadership team. He says there’s no substitute for face-to-face interaction in a variety of settings. If nothing else, it provides a more intimate understanding than any psychology test can provide.
“(Some companies) actually have psychological testers come in and actually do some testing of the type of individual that this person is,” he says. “I’ve really never done that. I think it’s better to assess them through the interviews that you do during the due diligence process.”
And as you try to understand them, one of the most important things to look for is their understanding of their own company.
“The last thing when you interview a culture is do the management and the leadership ... talk about their team in enough detail that they really understand what’s going on all over the business,” Livonius says. “Do they talk about them in a way that is positive about the people that are below them?”
That promising company that Livonius and his team eventually passed on lacked this understanding. If you value your employees and maintain an interest in the day-to-day operations of your company, you should only acquire a management team with the same cultural philosophy.
“Obviously, most people are going to say great things about the people below them,” Livonius says. “Can they describe their team in detail? Can they talk about somebody that’s two or three layers down as an example? When you’re starting to tell them about the business, ask questions like, ‘Well, tell me about an example of a person in your organization that blah, blah, blah, and it’s got to be three layers down.’ If they can do that, then that tells us a lot about the culture.”
HOW TO REACH: Nursefinders Inc., (800) 445-0459 or www.nursefinders.com
In James H. Gilmore’s opinion, much of the world is fake.
In today’s marketplace, he says consumers traverse “an increasingly unreal world, where parents are buying birthday parties at arcade outlets, you’ve got the Geek Squad costume guys repairing computers and people are taking vacations at Atlantis or a theme park in Orlando.”
The idea of authenticity or lack thereof in business shouldn’t be dismissed as an abstract, existential exercise. In fact, Gilmore, co-founder of consulting firm Strategic Horizons LLP, says that the concept is the new business imperative. In a world increasingly filled with staged experiences, consumers are now making decisions based on how real they perceive a given product or service to be.
This isn’t a recent revelation for Gilmore. Together with business partner B. Joseph Pine II, he first introduced the concept in 1999 in the perennial bestseller “The Experience Economy: Work Is Theatre & Every Business a Stage.” It’s only with the release of their most recent book, “Authenticity: What Consumers Really Want,” that the idea has been thoroughly articulated for the masses, and people are taking notice. TIME magazine recently named the notion of authenticity in business as one of “10 Ideas That Are Changing the World.”
So what does this mean for your business? Potentially everything, Gilmore says.
“In order to be perceived as authentic or real, businesses need to learn how to take specific steps that can be best described as rendering authenticity gaining the perception of being real,” he says.
To begin, simply ask yourself, “Where are we most fake?” Citing Dave & Buster’s as an example, Gilmore points to the restaurant and arcade’s ticket redemption center.
“You get all these points on your card, and you go upstairs to redeem it for cheap (prizes) made in China,” he says. “I’d much rather take my company to an outing where points go to some cause in Cleveland, some inner city reading program kind of thing than one where everybody wins points that go toward some cheap, Nerf-ball thing.”
The process of evaluating authenticity can be challenging, especially when each individual’s perception of real or fake can be different. Gilmore says that you need to embrace this fact. Instead of stubbornly sticking to patterns of mass production, mass marketing and mass distribution, he suggests taking a more customized approach.
“You go to NikeID and design your own shoes,” he says. “M&Ms are letting you now print customized M&Ms with words on it.”
Gilmore isn’t suggesting that you completely change your business model to accommodate the unique needs of each individual consumer. Instead, look for aspects of your business in which customer customization is possible.
“(The) dimensions of your business where traditionally you relied on a few smart people in a cubicle or office to decide, let customers themselves design and customize it,” he says.
As you make these changes, don’t brand yourself as authentic, live it.
“You should not, should not, should not self-proclaim your own authenticity,” Gilmore says. “Don’t say you’re authentic. Be authentic. If I were to meet you the first time face to face and shake your hand and say, ‘I want to let you know right off the bat how very authentic I am,’ you’d look at me like, ‘What are you crazy?’”
On the flip side, Gilmore says that acknowledging your own inauthenticity can actually make you appear more real.
“In some ways, it’s really helpful to know you’re absolutely fake and contrived,” he says. “It’s almost easier than people saying, ‘Based on our history, we’re the original company in this category. We’ve been here since 18-whatever.’
“Sometimes, that’s a disservice because you think you’re the authentic one when you’re just as manmade as anybody else. You’re just older.”
A winning streak
TIME magazine recently labeled authors James H. Gilmore and B. Joseph Pine II “legendary business consultants” in an article citing the duo’s book “Authenticity: What Consumers Really Want.”
It is one of several books written or edited by the pair, who founded Strategic Horizons LLP, and continues their streak of offering advice for leaders to join the “Experience Economy.”
The pair’s previous books include:
“Pine & Gilmore’s Field Guide for the Experience Economy,” which offers 10 traveling tools to help business leaders explore their economic landscape. The book provides real-world learning and offers key models and exercises to help the reader evaluate and extract best principles from experiences throughout the Experience Economy.
“The Experience Economy: Work is Theatre & Every Business a Stage,” which asserts that providing goods and services is no longer enough. Pine and Gilmore say that in today’s economy, businesses must stage experiences for each individual customer, orchestrating memorable events that engage them in a personal way. The book offers examples of how the reader can direct employees to perform on the business stage and encourages leaders to look beyond traditional factors in pricing and charge customers for the time they spend with the business.
“Markets of One,” a collection of articles from the Harvard Business Review, which was edited by the pair. The 10 articles chronicle the evolution of business competition from mass markets to markets of one.
“Mass Customization: The New Frontier in Business Competition,” which makes a case that mass production is the cause of America’s declining competitiveness and argues for a new model of mass customization. The book outlines the strategies required to develop, produce, market and deliver customized goods and shows readers how to analyze their industries to determine whether a shift to mass customization would work for them.
HOW TO REACH: Strategic Horizons LLP, (330) 995-4680 or www.strategichorizons.com
More than two decades ago, Richard Hauck and Joseph Saccone were working at a chic rooftop restaurant in an upscale hotel. The restaurant typically drew a steady following of local gourmands, so the two were no strangers to a hectic dinner rush. On one particular night, a sudden maelstrom of guests and orders sent the kitchen into an uncharted state of pandemonium.
“I remember the place got packed,” Hauck says. “The kitchen got swamped, and the dishwasher was swamped. Dishes were stacked up everywhere.”
Abandoning his post as maitre d’, Hauck rushed into the fray to help. He had witnessed lesser chaos in the restaurant industry before, and he was no stranger to rolling up his sleeves and lending a hand. When he entered the kitchen on this night though, he saw something that caught him by surprise: “I went back into the dish room, and I saw the company’s vice president, who was there with his wife and family having dinner, back there with an apron on washing dishes. He just took his sport jacket off and threw on the apron and started working like that’s the most important thing to get done.”
When you’re trying to establish a culture of excellence, Hauck and Saccone say you have to be willing to do whatever it takes to get the job done. Just as that vice president stepped away from his own plate to wash everyone else’s, you can’t hesitate to step in and serve as an example for your internal constituents.
That’s something the duo has tried to do since founding their own restaurant group in 1988. From the day their first Hyde Park Prime Steakhouse opened in Cleveland, the partners and owners have chipped in at every level of the company to contribute to an unflappable culture of success.
“It’s really just leading by example,” Saccone says. “It was whatever it took washing dishes, cleaning up after people in the bathroom whatever needed to be done. It really started off early, setting the standard that we were going to be above and beyond the best we could possibly be and showing it by example.”
That philosophy became even more pronounced as the partners expanded their business into 10 new markets and under two new brands. Today, Hyde Park Group’s revenue is in excess of $40 million per year, while averaging 15 percent growth during the past 10 years.
Here’s how Hauck and Saccone made sure their culture was cooked to perfection before serving it up in new markets.
Establish your culture
If you fix your gaze a mile down the road while jogging, you’re going to trip on the ground right beneath your feet. The same is true in business. You’ll never reach that goal of responsible expansion if you don’t first look to develop a strong cultural base at home.
When Hauck and Saccone opened their first Hyde Park Prime Steakhouse in 1988, they didn’t suddenly look for new markets in which to open their second restaurant. Instead, they worked to strengthen the company’s culture and mold it as a point of differentiation within the industry.
“Our entire approach from day one has been to be the local guy,” Hauck says.
Adds Saccone, “We (also) said, ‘We’re not going to be the second-best steakhouse in the city. We’re going to be the best one.’”
Once they decided to pursue a goal of providing a first-rate dining experiencing combined with a local touch, the partners began to visit other area restaurants to vet their competition. Likewise, when you begin to craft your cultural identify, shopping your competition is a great way to gain some perspective. Look at what similar businesses are doing, how they’re doing it, and then how you can distinguish yourself.
“We go to all different types of restaurants and try all different types of foods,” Hauck says. “We want to see what’s out there and to see what the trends are. We go out and look at the competition, and we say to ourselves, ‘We’re better than these guys.’”
Saccone says you may be tempted to follow your competitors in the process. What’s familiar often feels safe. Instead, use the exercise to gain perspective and then focus on what cultural tenets make you different within the industry.
“You’re supposed to know what your competition is doing in business,” he says. “But then also you need to not follow your competition; you need to lead. You need to be different; you need to set yourself apart. It’s harder, it’s a challenge, and sometimes, it’s more risky to do that.”
As you begin to foster a culture that sets you apart, the leaders say not to drift toward extremes. If you went to a steakhouse that was renowned for its 24-ounce porterhouses, for example, you would be pretty upset if they served you an eight-ounce cut instead.
“It’s not reaching too far right or too far left,” Saccone says. “To be a leader, you don’t need to go to the extreme. The most important thing is if you do go too far out, you have to have the ability to adjust back quickly. If it doesn’t work, you’ve got to say, ‘We’ve stretched a little too far here.’”
Communicate to promote accountability
The ability to adjust back quickly is made a lot easier when you have a system in place to hold managers accountable. Just because you’re waving your cultural flag for all to see doesn’t mean a member of your leadership team will be able to wave it in exactly the same way. As you implement changes to lead your industry, your managers may falter and stray from those tenets you hold most dear.
To combat such deviations, Hauck and Saccone say to turn to your front-line staff for help. You may not be able to work alongside every manager as your company grows, so use the eyes and ears of your lower-level employees. Develop a questionnaire that rates their managers’ performances based on your cultural canon.
“We let our employees survey and give feedback and rate their managers,” Hauck says. “We do that about once every three months. When the manager’s not present, HR will go in and do these questionnaires. We want to know how the employee feels about how good their managers are.”
Use a mix of closed and open-ended questions for the surveys. Have your lower-level employees rate each manager on a scale of 1 to 5 based on the tenets of which you hold them accountable. Then have employees provide brief explanations to expound on the ideas you’ve presented in the rating scale and to identify specific strengths and weaknesses.
“They’ll rate three or four managers, and after that’s done, we consolidate the responses, and then we sit down with the managers and then we’ll talk to them,” Saccone says. “Say, ‘These are your strengths and weaknesses and challenges that you have that some of your staff members are saying you need to improve on.’”
When sifting through that feedback, Saccone says to look for general trends.
“Of course, you have the highs and lows, so try to filter through and see where the majority of the concerns are or the challenges are,” he says.
Address extremes only if they represent a serious concern or lapse in judgment on behalf of the given manager.
Even then, you can’t just rely on surveys when holding your associates accountable for your company culture. Saccone and Hauck say there’s no substitution for hitting the road and visiting different locations to see them in action. Getting such ground-level perspective puts you in a much better position to steer the company culture back into alignment if it’s jumped off the tracks.
“Visitation to the units, the factories, to the restaurants firsthand and seeing it and talking to them would then allow me to filter through what information is coming across my desk,” Saccone says. “You have to make the jump not only to introduce yourself to the line people that are out there but also to find out what they’re saying.”
Put a face on your culture
Last Mother’s Day, Saccone was working at one of his restaurants during brunch and found himself in a bind. A sudden maelstrom of guests and orders sent the kitchen into pandemonium, and dishes piled up everywhere.
Just like the vice president from Hauck’s younger days, Saccone rushed into the fray to help, with similar results: His employees were stunned, but it sent a message.
“I was basically cleaning plates and stacking for the dishwasher last year,” he says. “I did it simply because they needed help for about a 45-minute period.”
If you want to establish a thriving culture, Hauck and Saccone say you have to serve as a living, breathing example for everyone to see. That doesn’t mean you should always drop what you’re doing to work in your plant, cold call clients or even wash dishes. Saccone says if he stopped to help each of his approximately 750 full- and part-time workers, he would have worn himself out a long time ago. Instead, simply be willing to interact with your management team and employees to exemplify your cultural canon.
“Whenever that possibility arises that you can put your face to the name, we believe you need to do that,” Saccone says.
“It puts a human face on the company for the staff,” Hauck adds. “People really look and respond to people.”
Put aside your pride in the process. You’re not going to convince anyone to follow your lead if you refuse to tread on the same ground.
“It all kind of starts when you check your ego at the door,” Hauck says. “Take your plaques off your walls or your degrees. It’s not all about you. The organization is what made you successful. It’s really the people below you that really make it all happen. The people are the ones in the engine room making it go.”
If you actively engage your employees and serve as a living representation of your company’s culture, you should be able to spread those tenets to other locations during expansion. Just be sensitive to any fallbacks in the process, and don’t hesitate to slow growth to shore up any gaps that develop along the way.
“Stay focused on what your first objective always was when you first started,” Saccone says. “You know when you’re growing too fast. Everybody feels it. You feel it yourself. Maintain your principles.”
Hauck adds, “If you feel any kind of slippage at all where people are not getting it and the company’s culture is not getting through, that mission statement is not fully executed, be prepared to take a step back. You’re better off having X amount of units that do very well and get the result that you want than double X and the whole thing is going to hell in a handbasket. Just be very sensitive to growth. When you feel the stumbles and rumbles, be ready to pull back a little bit. Not everything is about being the biggest. It’s about being the best.”
HOW TO REACH: Hyde Park Group, (216) 514-1777 or www.hydeparkrestaurants.com
How would you react if you walked into your attorney’s office and found him adorned in mesh shorts, flip-flops and a sleeveless neon tee? What if your doctor stepped into your exam room wearing an Armani suit instead of a lab coat?
Though both scenarios are absurd, they represent the stringent ties between fashion and expectation on the runway of corporate America.
“When people contact any kind of (professional), they have a preconceived notion of what that relationship ought to be, one of which is what the person looks like,” says Steve Ellis, partner at Tucker Ellis & West LLP. “If we show up in shorts and clogs, we’re going to start off with an issue.”
Most businesspeople have no trouble strutting comfortably down the middle of the style continuum. As Ellis says, “We all live in the middle of the bell curve, and I don’t know if there’s a great challenge to it.”
That’s not to say that some guidance isn’t helpful. There will always be outliers whose previous experiences or lack of self-awareness skew their perceptions of acceptable garb. To steer these exceptions toward the rule, a well-devised dress code can lead to a perfect fit.
To begin, Ellis says you need to come up with a list of things that do and do not qualify for either business dress or business casual.
“There are 10 items in any category for top wear, bottom wear or footwear,” he says. “Most people sort of roll their eyes because it goes without saying, but it’s not every person. For that very small group of people, a list may be helpful.”
Ellis says you should avoid going overboard when you’re devising your own list of acceptable apparel.
“If you have an endless list, the conclusion is that the employer essentially thinks everyone is stupid,” he says. “People are perfectly capable of applying general rules.”
But once you define those general rules, it certainly helps to set the example.
“I would ensure that you and your senior leaders dressed in the manner that you wanted others to follow,” Ellis says. “If you’re serious about having a business casual or a casual summer dress, the leadership has to dress that way. If they show up in a suit on Friday or during the summer, most people will follow that lead and come to the conclusion that the published dress code isn’t the real dress code.”
Reinforcing the dress code entails more than simple modeling, though. Even though most employees will have no trouble mirroring the general norms, you’ll inevitably still have to confront individuals who either come up a little short or miss the boat completely.
For the former, Ellis suggests taking them aside and pointing out any discrepancies.
“We’ll have a conversation behind closed doors and just point out what’s occurring and why it’s important,” he says.
For the latter — those show-stoppers who have become a source of tension in the work-place — Ellis says that a private conversation is not enough.
“If somebody is really out there, we’ll send them home,” he says. “We’ll say, ‘Here’s the list. We ask you to return with something more along these lines.’”
In most cases, Ellis says it’s not hard to provide some rationale for your enforcement. If you frame the dress code within the context of the success of that individual and the company, most employees are more than happy to oblige.
“There is real value in helping people understand why a dress code is important,” he says. “If you put it in the context of how these rules advance the interests of this organization, and therefore, their own careers, they’ll get on board in a heartbeat.”
HOW TO REACH: Tucker Ellis & West LLP, (216) 592-5000 or www.tuckerellis.com
Dressing for success
There’s a big difference between mindlessly following a dress code and dressing to impress. Randy Diamond has been helping executives do the latter for years as co-owner of Diamond’s Men’s Stores and, more recently, as regional director of custom clothier Astor & Black.
Here are his tips to help you stroll confidently down the office runway.
- Buy for fit. “Make sure you
buy a garment that is the correct
fit. We don’t want to be sold into
something that requires a lot of
alterations. I would rather have a
lesser garment that fits me well
than one that is an Armani
$2,000 garment that’s not fitting
- Buy outside of your comfort
zone. “Be willing to go out of your
comfort zone when you dress.
We need to sort of look at the way
that other (people) are dressing,
and if we like it, don’t think that
that’s not for me because that’s
- Buy from a trusted retailer. “It’s important to establish a relationship with a person or a store
where you have a lot of confidence. If you put on a garment
and you think it looks great, you
need somebody there to say, ‘Are
you sure you want to buy that?’”
- Buy quality. “Whatever your
budget is, it’s better to buy less
and to buy quality because it will
last, and you’ll enjoy wearing it.”
HOW TO REACH: Astor & Black Custom Ltd., www.astorandblack.com or (216) 402-6666