If you had told Dr. Kandice Kottke-Marchant five years ago that she would be the next chairman of the Pathology and Laboratory Medicine Institute at the Cleveland Clinic, she probably would have thought you were crazy. However, for the past five years that is exactly what she has been doing, and her journey there was long and filled with obstacles.
Kottke-Marchant’s journey started with the tough task of college, med school and raising a family. It was a challenge that at times she doubted she could accomplish.
“Given the path that I wanted to take academically where you have a bachelor’s and a master’s and a Ph.D. and an M.D., it’s going to take you 15 years from the time you finish high school to get anywhere close to being out and getting a job,” Kottke-Marchant says. “To do some of that part time and extend it to 20 years, you’d practically be retired before you start working. The kids are only little once and you can’t say we’re going to put the kids on hold and we’ll get back to them in 12 years. One of the things that’s really crucial is people working together to be as much of a family as possible.”
Kottke-Marchant didn’t want to make sacrifices for her career, and with her husband’s help, she was able to balance her career and home life and started climbing the ranks at the Cleveland Clinic.
“I started at the Cleveland Clinic as a hematopathologist, which is essentially diagnosing blood disorders, and worked in pathology and lab medicine for 20 years,” she says. “Eventually I rose through the ranks and became the section head of the laboratory. But the whole time that I was there, the chair of pathology was a very prescriptive sort of individual and really didn’t acknowledge and help people up in their careers. He was very military in the way he ran the institute and, I thought, shortsighted in terms of how the institute was run and didn’t really bring out the best in most people.”
For years, Kottke-Marchant thought about how she would make a difference if she was the department chair. When the previous chairman retired, she had a shot at the job. Up to that point there had never been a female institute chair at the Cleveland Clinic. The search took a year and a half, but eventually they picked Kottke-Marchant for the position.
“I’ve been chair now for almost five years and it still feels like it’s a new job,” she says. “This is a job that I’ve loved, and I think the thing I’ve loved about it so much is that I’m in a position where I feel I can make a difference and make a difference in an area that I know has struggled in the past to get the resources it needs to grow and develop like it should. That’s why I really like this job, because every day there are so many challenges, but you feel like you’re constantly moving forward.”
Her hard work and perseverance has ultimately resulted in a new lab for the institute that opened this year and will certainly be a difference maker for the Clinic.
“The new lab gives us expansion space to grow,” Kottke-Marchant says. “The old building was built about 30 years ago when our testing volume was one-tenth of what it is now. We’ve essentially doubled the footprint of the laboratories. Pathology in most hospitals is in a little dingy room in the basement and doesn’t get any space, doesn’t get equipment and doesn’t get respect because people don’t understand much of what pathology is and does. That’s my goal in life to make the institution understand how valuable we are to everything that they do with their patients.”
Kottke-Marchant loves tackling the challenges her job creates and it’s because of perseverance and a drive to achieve her goals that she has gotten to where she is today.
“It’s a combination of knowing what your goal is, knowing where you want to get to and taking things one day at a time and not letting things get you down,” she says. “I think so often little things can upset the apple cart. If you let every little thing get to you, you get so tied up in the present that you don’t see how to get to the big picture long term. Every day you just do your best and you get through that day to the next day. You just chip away one day at a time.”
HOW TO REACH: Pathology and Laboratory Medicine Institute, Cleveland Clinic, (216) 444-2484 or http://my.clevelandclinic.org/pathology/default.aspx
Last April, Esther Potash was sitting inside Severance Hall listening to the panel of women leaders who Smart Business selected for the 2011 Perspectives: Women Who Excel event. The experience inspired her.
Potash, CIO of Olympic Steel, a $1 billion steel company, had been going through a low point prior to last year’s event. Hearing the stories and encouraging words of fellow female executives gave her a boost.
“I was injured in the fall of 2010 and then I had two surgeries and a nerve complication that required a longer recovery time and a lot more physical therapy than with a routine fracture,” Potash says. “I was definitely at a disadvantage in being able to fully put all my energy in my career. I didn’t have a whole lot of energy to spare and having that second job of recovery was taking up a lot of my mental, emotional and physical energy at a time in our company that there was a lot of pressure to work on these systems that were coming due and still are.”
People told Potash that she should retire because of the injury and the stress she was going through.
“It galvanized me to push on, because I worked at my career,” she says. “For the first part of my career I was working part-time because I was focusing on my family and I really didn’t start in serious earnest until my late 40s. It made me react in the way that I was just in the middle of this, and I’m really enjoying the fruits of being at the peak, and I’m not ready to give up, and I’m not ready to go away. Age is a chronology, but in my way, I’ve taken a non-traditional approach to the timing of my career. So I definitely wasn’t ready to stop and definitely am not ready to stop now. I’m looking at how I can expand and grow and learn.”
Potash certainly doesn’t lack perseverance since her parents, both holocaust survivors, taught her at an early age to never give up, but she needed encouragement.
“When I came to the conference in April, it was affirming to see people, who maybe haven’t struggled through physical challenges or accidents, but people who just stayed with it,” she says. “(Sarah Sinclair) who was with the Cleveland Clinic … put things into perspective for me. You really can have an impact. You’ve got to be purposeful and know your own strengths. You’ve got to come and bring your A game every day, and it was just energizing and gave me something to focus on past the recovery.”
Renewed with determination, Potash returned to work, determined not to give up.
“If you feel like you’re armed and you have ammunition and you have all the tools that you need, then go for it,” she says. “We need smart people in this country to keep going forward. People shouldn’t give up. I’m behind not giving up.”
Potash has been hard at work keeping Olympic Steel’s systems up-to-date with changes in technology and in the company.
“As a growing company, what we are always doing is bringing on new units and different product lines and all the other pieces of growth and our systems always need to expand,” she says. “A lot of what I’ve been doing is trying to optimize our technology investment and a lot of it has to do with consolidating and bringing things together and making standards.”
Besides keeping Olympic up-to-date with technology changes, Potash is starting a women’s initiative at Olympic. Tired of being the only woman at the executive table, she has taken the lead in getting women more involved at the company.
“I asked if I could start a woman’s initiative to explore development opportunities for women to get more people to understand what their opportunities are and to attract people to the company and to make sure that whatever their developmental gaps are that we could help them,” Potash says. “In our industry, there haven’t been a lot of women that have risen to the level that I’m at. I don’t have a lot of peers and some of what I’m doing is for the first time, so it’s interesting to meet women at other organizations who actually have had some leadership and mentorship from other women who have come before them or who really have more of a peer group, and that’s what I’m trying to build here.”
HOW TO REACH: Olympic Steel, (216) 292-3800 or www.olysteel.com
One of Candace Klein’s mottos in life is that she doesn’t believe in the word “failure.”
“It’s not part of my lexicon,” says the founder of Bad Girl Ventures Inc., a nonprofit micro-finance organization focused on educating and financing women-owned start-up companies, and founder and CEO of SoMoLend, a Web- and mobile-based peer-to-peer lending company. “Instead, I use the word ‘pivot.’ I think women are very good at that particular word — that when we see a challenge in front of us and one that we don’t know if we can overcome, we just change directions.”
Klein has had to put her pivoting skills to the test ever since she was diagnosed with ovarian cancer after college and right before going off to attend law school.
“I had to stay home and move back in with my parents in my baby sister’s Barbie bunk bed — major blow to the college-grad ego,” Klein says. “And I had no money — every dime I had went toward my medical bills.”
She had asked her boss at the time if he would be able to help her go to law school but to no avail.
“Essentially, the ‘no’ that I got was first my health,” she says. “Something totally out of my control, an act of God, told me I wasn’t going to be able to do what I had set out to do. And then my boss told me I wasn’t going to be able to do what I had set out to do.”
Her boss instead introduced Klein to Alice Sparks, a woman on the board of regents of her undergraduate university who was committed to promoting women.
“That turned into a $40,000 scholarship from that woman, a personal scholarship to pay for me to go to law school,” she says.
When Klein asked what she could do to repay her for her generosity, Sparks said, “Find a way to invest in women.” Klein has been working at doing just that ever since. She became a lawyer and later started her two companies.
“I first launched Bad Girl Ventures at something called ‘Unite Cincinnati,’” Klein says. “My speech was ‘The Bad Girl’s Guide to Getting What You Want,’ which is a book I read in college as to how to get out of the things that girls get stuck doing in the workplace. And at the very end, I said, ‘If you say, “I’d love to do it, but my boss will never let me get away with that,” quit your job. Start your own business. And if you do, I’ll invest in you. I’m launching a company tonight, Bad Girl Ventures.’”
Today, Bad Girl Ventures is in Cincinnati, Cleveland, Columbus and Oxford, helping to change the lives of women looking to get financing and education to start a business. The recent growth of her company has presented more challenges to pivot around.
“Originally, it was my plan to grow to be in 15 cities by 2013,” Klein says. “That’s not realistic and it’s also not healthy or sustainable for our company. My board has just pushed me down and said, ‘No, Candace, we’re not expanding into any more cities in 2012.’ It makes sense, because you need to create infrastructure. My vision for this business was to be nationwide in three years.”
While Klein has never been one to take no for an answer, she appreciates the people who help her make smart decisions about her business.
“As the leader of the company, it’s good for me to have advisers, because they have the long-term health of my company in mind,” she says. “Sometimes being pushed down is a good thing. Sometimes my passion and my excitement for growth is not the healthiest thing for my business. I need to have opposing viewpoints in the room and people who are willing to push back against my concepts and make sure in the long run I’ve got the healthiest business.”
Without ever being told no throughout her life or having to fight against opposing viewpoints, Klein would be a different person than who she is today.
“I like to have somebody push back against me and fight me every step of the way, because in the end it’s going to make a much stronger product,” she says. “It’s not necessarily a bad thing to have people push back against you and have people vary from your opinion.”
HOW TO REACH: Bad Girl Ventures Inc., (513) 675-8500 or www.badgirlventures.com
For Shigeki Terashi, March 11, 2011, marks a day that affected millions of fellow Japanese, but it also marks a day that greatly impacted production for Toyota Motor Corp. The earthquake and tsunami that hit Japan that day caused manufacturing production levels for the auto maker to drop to 50 percent capacity in Japan and 30 percent in the U.S.
The damage and destruction affected many of Toyota’s suppliers throughout the country, caused a scarcity in parts supply around the world and as a result reduced production levels for the better part of a year.
Terashi, president and COO of Toyota Motor Engineering & Manufacturing North America Inc., the 2,500-employee division of Toyota responsible for engineering design and development, R&D, and manufacturing activities in the U.S., Mexico and Canada, had to help the company and its suppliers overcome obstacles to return production levels to normal as quickly as possible.
“Once we ensured that our team members and employees at dealers, subsidiaries, vehicle manufacturers and suppliers and all their respective family members were safe, our team members and suppliers focused their effort to normalize the production,” Terashi says. “In response to the earthquake and tsunami … Toyota Motor Corp. established a companywide emergency task force to assist the situation.”
Toyota is known for its exceptional practices and processes of efficiency and the onset of these obstacles put those systems to the test. Here’s how Terashi focused on communication, continuous improvement and new risk management processes to help the company overcome unforeseen circumstances.
Assess and communicate the situation
Following the disaster, production levels plummeted. Roughly 150 different parts were involved in the workflow between Japan and the U.S.
“A big impact to TEMA suppliers was one supplier could affect many parts, technology related parts sourced from Japan,” Terashi says. “TEMA implemented practices and policies across the region, which included multisourcing. Some parts are unique, and if we move toward more standard parts, we can buy all over the world. We view this as more of a risk management issue. Regarding production, we adjusted week by week and day by day as we went along.”
That constant adjustment required the efforts of a team that met to continually monitor the situation and the progress being made.
“We had to be very team-oriented,” Terashi says. “We established a risk management team at TEMA and every day, every morning, and every night we had meetings. Through these meetings we gathered and calculated information from Thailand or Japan and we shared that information in order to make a quick decision. Those decisions were shared with team members and the management level and we announced our next week’s production schedule.”
Even at the low production levels the company had dropped to during this time, Toyota never laid off employees. They put their downtime to other uses.
“This is the Toyota way,” he says. “We use nonproduction days for training and kaizen. The founding principle of our company’s foundation is respect for people and continuous improvement. We rely on our foundation to show us the way.”
Since production days were cut, schedules were altered and changes were being made daily throughout the recovery process, it was critical to communicate what was happening to keep things running smoothly.
“There has to be a lot of communication with team members,” he says. “At this moment the North American business affiliates with these huge organizations and how to communicate is always a very big first priority with team members. You have to announce to the team members for total understanding.”
This communication was not only critical to keeping processes running well, but it also served the important purpose of keeping employees informed and not receiving wrong information from unofficial sources.
“Open information is a very risky situation and so a quick response to the team members is very important,” Terashi says. “This is important because team members can get information from outside sources like the media or something like that; however, team members want to hear direct communication and direct information from the company. If your team members get information from someone else it may not be accurate. Through our past experiences we figure out new ways of how to communicate with team members and how to share information. This is our top priority always.”
These initiatives helped bring up production levels, which following the disaster were expected to reach 100 percent by November or December. By June, production increased in the U.S. from 30 percent to 70 percent.
Use the experience as a lesson
Toyota has always been known for its leading practices in efficiency and ability to solve problems quickly. The company learns from its experiences and this was no exception.
“You have to gather correct information quickly to assess the situation and to make quick decisions and then communicate,” Terashi says. “My role in TEMA was to make quick informed decisions and support recommendations to Japan. We had experience with impacted production, but we needed larger scale countermeasures. So we had plans for minimal disruption, but we did not have plans for a large-scale disruption.”
Just as in the past, the company used this experience to help prepare for the future.
“Through our experience we found one area has an impact around the world,” he says. “As the result of issues in Thailand and Japan, we developed a target and brought our risk management up to scale. In the organization of a consensus you need to bring the team together quickly to make an informed decision that countermeasures can support. We now have a larger scale plan for a more comprehensive and wider scope of risk management processes. At Toyota, we always look for a systematic approach to the problem. You begin by making plans for all scenarios.”
One of the steps the company took was to buckle down on its risk management process so that if and when a similar situation ever happened again, the company will know exactly how to handle it.
“We had to do that and it’s now global risk management,” Terashi says. “We tightened our risk management process, and recently we had an issue with a parts supplier from Thailand. So our experience with that supplier in Thailand allowed us to have a process in place and we made a production adjustment. We tweaked and expanded our countermeasures.”
TEMA and Toyota use these experiences as opportunities to understand where things can be improved throughout the business.
“The last couple of years have been difficult for the industry and Toyota because so many of the challenges are beyond our control,” he says. “So we view these challenges as opportunities to improve and tighten our processes and response to issues. You have to constantly look for productivity improvement, cost reduction, and marketability improvement.”
Toyota calls this ongoing process PDCA, or plan, do, check and action.
“It’s a systematic approach to problem solving, running an organization and outside strategy,” Terashi says. “You ultimately reflect on the processes and how to improve. You do not want to think you already have the best ideas. You always have to look for a better way. In that changing spirit we benchmark our automotive companies to improve our risk management group. You have to breakdown the problems to make things better for the process. A very fundamental portion is being able to find that root cause of those issues.”
The root cause of the reduced production levels was that all the automotive parts were coming from Japan. There was no place else the company could go and so it was stuck waiting. Toyota is now giving more responsibility to Terashi and the U.S. manufacturers.
“At this moment we are accelerating in North America in every area,” he says. “Many of the responsibilities were transferred from Japan to the United States in process. We’ve been instructed to accelerate more localization to avoid these kinds of disasters. In the past we were supported by Japan for vehicle development or production preparation. Now we can do that. Additionally we have had more localization that’s unique to each vehicle.”
The company has put more people in charge of individual vehicle models.
“In the past Toyota hasn’t had a local chief engineer for vehicle development,” he says. “At this moment we have three local chief engineers for the future of production.”
Additionally, the company has started an export business from the United States.
“In the past the volume was very low; however, this year we’ve started a Sienna project to export to South Korea and this is just a starting point,” Terashi says. “In the future, we’d like to increase more export business from the United States to all over the world. We are accelerating our self-reliance and localization processes through the direction of Toyota’s Global Vision.”
The constant effort from all Toyota employees, the formation of a risk management team, and the increase in self-reliance and localization of U.S. manufacturers brought production to 100 percent in mid-September, a full two months ahead of predictions.
“During the last few years we had a very severe situation,” Terashi says. “We look forward to a bright and eventful future with production of a safe quality vehicle that makes people smile.”
HOW TO REACH: Toyota Motor Engineering & Manufacturing North America Inc., www.toyota.com/usa or (859) 746-4000
- Understand what and where your obstacles are.
- Communicate the situation to keep people informed and move progress forward.
- Implement countermeasures to fix and prevent future problems.
The Terashi File
President and COO
Toyota Motor Engineering & Manufacturing North America Inc.
Born: Kobe City, Japan
Education: He studied mechanical engineering and earned a bachelor of engineering degree and a master of engineering degree from the University of Kobe.
What was your first job, and what did you take away from that experience?
I cleaned up the vehicles in the preparation division of Toyota. I have been working for Toyota for more than 30 years. I learned genchi genbutsu, which means to go and see or do things for yourself.
Whom do you admire in business?
For a long time I have looked up to Takeshi Uchiyamada, executive vice president and representative director of Toyota Motor Corp. in Japan. He is the father of the Prius.
What do you enjoy most about the auto industry?
I love driving all the different kinds of vehicles.
What is your favorite Toyota car?
What are you most excited about for the future of Toyota?
We look for the industry to continue to recover and to pick up. We are in an excellent position to take advantage of the rebound in the marketplace during the coming year. We will benefit from the biggest influx of new and updated product in our history.
Two months into his role as president of American Beverage Corp., Kevin McGahren-Clemens was looking at a company that had realized a $40 million loss. The 500-employee, $150 million beverage company was in a dire situation.
It was January 2009 when American Beverage’s parent company, Royal Wessanen, had trouble with its European business. In order to raise cash to focus on that area, the company decided it would need to sell its U.S. divisions, starting with its strongest, American Beverage. That April, American Beverage’s previous president left the company for a job with a competitor. McGahren-Clemens, who had been hired in 2006 to aid with some of Wessanen’s other divisions, was called on to run the day-to-day operations until American Beverage was sold. However, within a couple of days on site, he realized the business wasn’t in good shape.
“Due to poor fundamental management over time, results were becoming impossible to deliver so financials began to be increasingly manipulated to achieve targets,” McGahren-Clemens says. “No reliable financials existed, meaning no clear picture of profitability by product line, channel or customers existed either.”
Not only did the company have an unclear financial picture but prior management also had built an organizational structure with little involvement, communication or transparency with the broader work force and its focus as a consumer products company was wrong.
“The company had been managed for quite some time with a very short-term focus of delivering quarterly earnings instead of building any sustainable value for the long term,” McGahren-Clemens says. “Very little time or money was ever invested in consumer research or marketing as the organization’s focus was on short-term sales customers and not relationship building with consumers.”
The company was taken off the market and a turnaround effort began with McGahren-Clemens at the helm.
Evaluate the business
American Beverage’s previous president led the company behind closed doors. Since very little information was shared throughout the organization, McGahren-Clemens had to evaluate everything within the business to understand where to start.
“It was a situation where we really had to start from scratch because this person who was running the company, everything went through him and he was now gone,” he says. “In some ways it was easier that way. We literally just revisited and challenged everything. Basically, we just took the company apart over the next three to nine months to really understand what we had.”
Since a lot of information was unclear, McGahren-Clemens had to prioritize and become clear on the fundamentals.
“I put together a top 10 ABC priorities list, and that’s literally how I explained to everybody what we were going to do,” he says. “The first step literally was confirm and clarify financials because we had no idea what we were working with. Nothing was as it seemed. Things weren’t as possible as they looked and thoughts were not in the right place, and everything was manipulated. It was like driving a car that had no speedometer, no gas gauge, no anything, yet you had to operate it day to day.”
Establishing those fundamentals was critical, but the way to do that was to make sure everybody in the company was involved, which was not the way things were set up before.
“It was really getting everybody involved, breaking down walls between functions, making sure everybody was talking, making sure everybody had input, gathering information from everybody we could,” he says. “Everybody knew a piece, but they didn’t know how it all worked together. So it was gathering all the information and getting all the brutal facts on the table so that we could say, ‘What do we have? What do we go do?’”
When your employees are not clear about how the company is performing or what is truly driving the performance, you have to gather that information.
“It’s kind of a combination of doing your own analysis and getting as much information as possible and just objectively looking at it versus what does everybody think it is,” he says. “You have to look at customer lists, your profit by customer, your product line, what’s selling and what isn’t selling. In time, you really do have to contact all the people in the company who have knowledge and have more of a dialogue with them and try to pull out of them what’s working and what isn’t working. How else will you know beyond the numbers and what the numbers are telling you what’s working and what isn’t working? There’s no manual for gathering this information when it’s not clear what’s true and isn’t true.”
Before going any further, ABC needed a new senior leadership team to help turnaround the company.
“I started by first working on ultimately gathering the strongest senior team possible because you can’t do anything difficult within a fairly large organization alone,” he says.
“As we stand right now today, there’s only one holdover, which was the HR person. Operations, sales, marketing, finance, and IT all turned over. There’s usually a transition period like that because in a situation like this or anywhere, it’s hard to really attract the talent you want until you have some stabilization. You have to work with what you have, and that’s what we did for a while. As we began to get some stabilization and I had a better handle on the situation, I could go out and recruit people. I could very clearly explain what they’re getting into and, at the same time, explain the opportunity, which was fantastic because it is a lot of fun being apart of building something from scratch.”
The next step in the turnaround was to confront the brutal facts and communicate those throughout the organization.
“The key is being very objective about the state of the business absent biases about what it used to be or you want it to be — you have to focus on what it is now,” McGahren-Clemens says. “In my mind, this is the single most critical step in any recovery because nothing matters if you don’t fix the right things. Next, with the help and full buy-in of the senior team, you need to set very clear priorities as a team that, in turn, are clearly communicated to the entire organization in a very candid, transparent way. It is important to then create a true dialogue with everyone in the entire company by truly maintaining an open-door policy and walking around a lot to gain input, answer questions and dispel rumors. And then provide regular updates, both by e-mail and in person about your progress.”
To do this McGahren-Clemens met with 100 of the company’s employees one-on-one to gain a better understanding of what could be done and explain where the company needed to go.
“I believe the key is engaging everyone in an ongoing dialogue about how they personally fit into the big picture and why elevating their own game is crucial to our success going forward,” he says. “Once our situation had stabilized and moved out of crisis mode, since I only had around 100 salaried employees, I felt it important to sit down with each person individually for about an hour to connect directly. I would start by asking each person if they knew what had happened and why and whether they understood where we now were and what challenges we faced. Inevitably, people underestimated the seriousness of our situation, both past and present. Most importantly though, I would then ask everyone what performance barriers or morale issues they face plus what they thought we still needed to do to improve the company and our ability to complete a full turnaround and begin driving profitable growth.”
He had to be careful during this process not to scare his best employees away from the company but also make it clear that the company needed a change.
“From the very beginning, it was always challenging striking the right balance between creating a sense of urgency by explaining to people how dire the situation really was without being demoralizing or scaring people,” he says. “It’s a balance of painting a picture of, ‘This is a very, very challenging situation, but we can get out of this,’ and, ‘There is a lot of upside for people who help us with that.’ With the one-on-ones, you can tailor that message and tailor the questions much more specifically by reading the individual. How much do they understand or not understand? Some of them just had no idea how much the company made before or how little we made now or what the problems were. Some people want to know, and some people don’t want to know, and the reality is you’re trying to get a read on who those people are because that’s who you need going forward.”
To help get ABC to sustainability, McGahren-Clemens needed to find those individuals within the company who had the ability to be leaders.
“One thing I’ve always found to be true is, in general, there are some hidden gems within your organization that can move up to the next level,” he says. “Don’t immediately think you have to do everything externally. It’s going to be better if you can pull somebody from within who has some knowledge of the organization. Who’s acting without asking and doing the right things? When you really ask around and start to talk to people, they all know who’s who and who’s pulling their weight and who makes a difference and the same names begin to come up. You have to get out there and ask because it’s not going to be necessarily evident, but in times of crisis, it becomes a little more evident than normal.”
Now that a leadership team was in place, the right people were found and brought in, and progress was being made on understanding the circumstances of the company’s struggles, it was time to start putting plans in motion.
“It was very clear to me from day one that it wasn’t a situation where we could just cut our costs. It was about fixing the business and growing out of it. I believe all sustainable growth begins with a thorough knowledge of target consumers combined with engaged employees who have full access to information and the necessary tools to do their job — such as clear priorities and budgets — and none of those conditions existed.”
McGahren-Clemens had to switch the focus of the company from the short term to a long-term focus on branding and consumers.
“In the consumer marketing world of products, it always starts with spending, and there is a delayed gain on the profit because you’re going to have to invest first in market research to understand consumers, understand your competitors, understand what your product brings to the party, what gaps there are and its further investment to go fix those gaps,” he says. “We had products we had to improve the quality of. We had to add vitamins to our juice products, we had to change the packaging, we had to add benefits, and that’s time and money based on the consumer research. Then you have to go out to the market and support those products. Those are the basic steps that most brand companies do ongoing, but we literally had to start.”
Not only did the focus of the company need to change, but the employees needed to start thinking differently as well.
“It was getting everybody internally to understand that it is ultimately what the consumer thinks that matters, not customers,” he says. “Customers are very, very important, but those retailers and distributors care most about what the consumer says too. We had to go out and say, ‘We don’t know how good our products are. Let’s go do taste tests. Let’s get consumer thoughts.’ There were a lot of brutal facts that came up that you have to go out and be willing to hear. That commitment was something we had to build internally.”
With McGahren-Clemens’ leadership, the hard work of ABC employees and a renewed focus, the company has made a rebound.
“The company has been totally made over, and we have a great foundation from the ground up,” McGahren-Clemens says. “You can go in and renovate a house or you can take the whole house off and start over and that’s what we did. We know all the pieces and feel very good about the infrastructure and the talent and processes and the potential, and we feel we are just starting to scratch the surface. All of the investments we’ve made in consumer research, product enhancements, innovation and marketing the last three years are just starting to bear fruit.”
The journey from 2009 to today has been a long one. It took teamwork, communication and a unified focus to get there. The biggest key for McGahren-Clemens was to never let the task at hand bring him down.
“Don’t get too caught up in the enormity of the situation or the challenges or the tasks and just take it one day at a time,” he says. “Focus on ultimately where you want to be and know you can be and just work toward that. Trying to stop and think about how much has to be done can be overwhelming.
“I wish there was one clear formula or one sequential order of steps that would make it very cut and dried for people in a similar situation, but I liken it to a football game where you’re calling audibles along the way. You have a game plan, you practice it, you have a lot of ideas, you’ve studied your opponent, you know what has to happen, but the reality is you’re still going to have to make adjustments throughout. You have to be flexible enough to do that. You have to have a series of steps you’re ready to pursue and an order to them and a way you’re going to approach things, but you also have to be open to reading new information as it arises because it’s going to arise all the time.”
HOW TO REACH: American Beverage Corp., www.ambev.com
You need evaluate the business to understand what the problem areas.
Once you know the situation and where to start, communicate those facts to your employees.
Once you have buy in, put your plans in motion.
The McGahren-Clemens File
American Beverage Corp.
Born: New York City
Education: Studied economics at William and Mary and received a MBA from Northwestern
What were your biggest fears during the turnaround?
Looking back, I didn’t really think that much about it because it wasn’t productive. But if some of our biggest customers had said, ‘We’re not going to buy your product anymore.’ We wouldn’t have been able to get through the stabalization period. If Wessanen had not supported us and just decided to shut it down, but they did support us and were great throughout. Or if a lot of our talented people had walked out saying, ‘This is too big a risk. I don’t know how it’s going to turn out; I’m just going to leave.’ Any of those scenarios, particularly losing the talent we did have, would have been very damaging.
What has been the best business advice you’ve ever received?
I remember having a manager once where we were in a pretty bad business situation where things weren’t going the right way. We were managing a cheese business at the time and he just stepped back and said, ‘All right everybody, remember it’s just cheese.’ The whole room just burst into laughter. I’ve used that so many different times and kind of had to use it in this situation.
What is your favorite American Beverage product?
It would be the one that’s selling the best right now; the Daily’s Frozen Pouch. It really is a great product. I also like the Little Hugs. I buy cases of it for my kids and the whole neighborhood drinks it and I drink it as well.
If you could switch places with somebody for a day, who would you switch with?
It would be fascinating to be the chairman of the Communist Party of China right now. They are such a hybrid between old-line communism and new-age capitalism and there’s no script for what they’re trying to accomplish as they become a global power economically, but at the same time their social freedoms are lagging behind. It’s fascinating how that’s going to play out and I would love to understand all the different tensions within the country.
As a former client of Quest Fore Inc. Ken Cuccinelli had always known the company had great people and produced a great product. That’s why when the company came up for sale in 1999, he jumped at the chance to lead the 47-employee strategic marketing company forward.
Cuccinelli, owner, chairman and CEO, liked what he saw in his new business. However, there seemed to be something missing. The company needed processes in place and a strategic direction to help guide it.
“What they needed was better processes and financial controls as well as a strategic plan,” Cuccinelli says. “They were working mostly on a project-to-project basis. The first thing we wanted to do was move the company from being a project company to more of a strategic partner with our clients.”
Cuccinelli helped the company grow to that next level by adding direction.
Smart Business spoke to Cuccinelli about how to implement a strategic plan and add more value to your business.
Develop a strategy.
The important part of having a strategic plan is if you don’t have a plan, you don’t know where you’re going. If you’re just searching for the perfect wave, you might get lucky and find it, but you may not. Unless you have a plan and a direction, those day-to-day decisions that we each have to make if you’re not matching them to where you’re ultimate goal is, you may be taking yourself in the wrong direction. That doesn’t mean that a strategic plan doesn’t need to be looked at and revised at all times, but the bottom line is, you’ve got to know where you’re going or any path will get you there.
The real challenge people have is, they mix up strategy and tactics. That has been one of the elements of what we’ve been trying to help people understand. A strategy is more of a higher level of what we want to attain.
It gets to be a three-fold input. You have to talk to your employees because they see and hear things you don’t see and hear. The second thing is, you have to try to meet with your clients without any goal of selling, but just listen. How’s everything going? How are we doing? What could we do better? What do you foresee as your upcoming issues? In five years, what do you think is going to impact your business? You are trying to extract that information.
The third thing is to try and listen to what your competitors are doing. Maybe they’ve seen or heard something you haven’t and you can pick it up. Then you have to try and bring those three pieces together on a regular basis.
Measure your plan.
If you can’t measure it, you can’t manage it. The strategy doesn’t need to be complicated and it doesn’t need to fill tons and tons of books, but it needs to be the direction where you want to go and it needs to be understandable by everybody involved in it. When that happens, you’ll find that employees and staff will come up with the right kinds of programs, because they’re going to see how it’s going to get them closer.
A good strategic plan has three elements: it has a competitive analysis, it has an internal analysis, and it has a market analysis. Each of those has to be done to have a good strategic plan. Who are your competitors? How do you rank against your competitors?
We actually funded a third party to talk to all of our clients to see how we were doing and clients who we didn’t win bids on to do a lost-order analysis. We found out from that study that we had competitors we didn’t know about and people we thought were competitors were really not competitors. People really need to know who truly they’re competing against.
Know your value.
Value is a function of benefits divided by cost. You need to, from a strategic point of view, truly find out what your value is by knowing what your benefits are. You’ve got to talk to the clients. Look at each of your customers and study their business a little bit and see where it’s going. Is there consolidation going on? Is there technology advances going on? Be aware of what they are and see how you can help them get through those changes because change is pretty tough on a lot of companies.
There are three steps in any kind of selling process or in any relationship. The first one is people have to be aware that you exist. The second one is, they have to have a favorable opinion. The third thing is, they know now that you exist and they like you, then they’ll change behavior. So many people try to go into the behavior change piece right away. If you think of your own dating or relationships and things like that, it’s a multistep process.
HOW TO REACH: Quest Fore Inc., (412) 381-6670 or www.questfore.com
In today’s business environment, a focus on innovation is what helps keep companies relevant, thriving and primed for the future. Without it, your business falls behind, becomes an afterthought and will get passed by someone who can do it better. Innovation is the lifeblood of many corporations and it is something that you have to put a lot of effort and thought into in order to create and maintain that type of environment. Whether it is finding ways to shake up your organization, looking at solutions from different perspectives, or understanding what the customer expects from you next, you have to be willing to try whether you fail or succeed. That is what innovating is all about. Below is a sampling of what three CEOs previously featured on the cover of Smart Business Pittsburgh had to say about developing innovation.
“You have to always be able to challenge somebody to step out of their own bubble and look at it from a customer basis, but also from a very fresh angle. You have to make sure that you don’t get stuck with a certain way of looking at things. You always have to be able to challenge what you do and look at it from a different person’s perspective, a different market perspective, or a different requirements perspective because only then will you be able to overcome these problems and get this aha effect.”
Andreas M. Schulze Ising, president and CEO, Advanced Polymer Technology Corp.
“I’ve always found that the answer always lies with the customer. You have to get close to the customer and you try to understand and gain valuable insights from the customer that no other company can see. The decisions and the directions you take become very clear very quickly around what you should do. You take innovation that is driven by customer needs or customer insights, that’s what I would focus on whether you’re a company that’s doing well or a company that’s in need of a change in strategic direction.”
Sam Liang, president and CEO, Medrad Inc.
“You have to do a little bit of both innovation by design and innovation by discovery. You really have to constantly be redesigning the organization internally to match the customer voice and match the trends that are coming—being able to design things very well—designing systems, designing solutions, designing approaches, but at the same time put yourself in discovery mode. You know what you know, but you don’t know what you don’t know. You have to go out there and try to discover new things, so you need both design and discovery in the innovation process.”
Stephan Liozu, president and CEO, Ardex Americas
- Achieve an aha effect through gaining different perspectives.
- Gain insight from your customer base to form new innovations.
Design and discover new innovations to boost your creative effort.
John Dubis has had to embrace a change mentality from the very first day he started at St. Elizabeth Healthcare. He had to lead the charge on a merger between St. Elizabeth and the old St. Luke Hospitals and now he has to implement the changes driven by health care reform as well as continue to grow the system.
Today, St. Elizabeth is a 7,300-employee $1 billion health care system and the ability to implement new initiatives in the industry is critical for the continued success of the system. Dubis, president and CEO, has been running hospitals for a long time. He has worked for academic medical centers, children’s hospitals, inner-city hospitals and large community hospitals and that experience is paying off.
“The good thing for us is because we have such a high-quality mantra, that has a natural tendency to be more creative and innovative,” Dubis says. “So our ability to see things differently, to take calculated risks, to be more innovative, we already have a culture like that.”
While the changes in the health care industry will alter how things have been done for quite some time, St. Elizabeth has prided itself on being one of the elite systems in the country. Looking for best practices, high-quality service initiatives and more efficient practices is what St. Elizabeth does best.
Here’s how John Dubis keeps St. Elizabeth Healthcare on the cutting edge of its industry by adapting to and accepting change.
Become more efficient
Since St. Elizabeth acquired the old St. Luke Hospital system, the health care system has been on a mission to improve operations and become more streamlined.
“Anytime you do a merger, you’ve got challenges,” Dubis says. “The good news is that the cultural fit of the two organizations was very good. Once we became one system, we were quickly able to take advantage of the commonalities that we had and take advantage of the opportunities to create more efficiencies and reinvest savings in more efficiencies and other new services that didn’t exist in this market.”
One of the ways Dubis and the folks at St. Elizabeth became more efficient was by consolidating services. The biggest example is the consolidation of its OB programs.
“At one of the former St. Luke Hospitals, they were delivering two babies a day and losing $3.5 million a year and at the other major St. Luke Hospital, they were delivering three babies a day and losing $3.5 million a year,” Dubis says. “We were losing $7 million a year on OB services. We decided to consolidate all the deliveries at the main hospital, the St. Elizabeth Edgewood campus, and by doing that we concentrated 5,000 deliveries in one place. We took the $7 million in annual savings and invested in redoing the entire OB service area physically from a floor perspective, and programmatically, we put in place a high-risk OB service, which this community never had.
“We were able to improve the quality of care rented to patients, we were able to improve the quality of care rented to premature kids, and we were able to save $7 million a year in the process. We took those dollars and started reinvesting into other clinical programs. So we really have enhanced the system overall and concentrating specialty needs in the right places that need to have them.”
It is critical in any business that you look to find areas where you can consolidate services or divisions to save money that can be put to better use.
“We wanted to eliminate unnecessary duplication of services which are costly, use those cost savings and expand the clinical programs in the community, both in terms of enhancing what we currently do and creating new services that didn’t exist,” he says. “That’s the focus that we have. Our mantra is quality. This organization learned many years ago that quality is the most important thing, not just for patient care, which is obviously our first priority, but also quality has shown to be good for business. It keeps you financially solvent and prospering because you’re able to do things in a more cost-effective high-quality manner and the resources that you get as a result of that goes into this cycle of upwardly investing and new and different activities for the patient’s well-being.”
The ability to reinvest is extremely important when trying to grow and improve any business. Health care reform is putting pressure on hospitals to make these types of improvements to enhance the system as a whole.
“There are really only two strategies that make sense in terms of dealing with that,” he says. “One is to grow your business, grow your volumes, and grow the market that you serve so you can get additional resources through that mechanism. Simultaneously and maybe even a little bit more importantly at this juncture, is beginning to be very cost efficient in terms of providing the services that you do provide, but in the same process not reducing the quality of what you’re doing. That may seem a little bit contradictory, but really it isn’t, because research has shown if you produce high-quality outcomes, patients tend to come to those types of organizations, which means your volumes tend to grow, which means you have additional financial resources that allow you to keep that reinvestment cycle going upward.”
Foster a change environment
While reinvestment is a very promising way to make business better, there is a lot of fear and anxiety by many about the future in the health care field. You have to make sure people feel at ease about the direction you’re going and it starts with your internal environment.
“The thing you have to do more than anything else is communicate, communicate, communicate,” Dubis says. “You have to make sure that everybody understands what the strategic goals of the organization are, that they’ve had a part in developing those goals, and to make sure that people are properly directed and rewarded for the achievement of those goals. By creating that level of constant communication and alignment of incentives and purpose, that’s how we’ve seen ourselves grow and develop and get better and better year after year.”
It’s never enough to just talk about it and assume things will get done. You have to work hard at forming that kind of environment and make sure you demonstrate it from the top of your business.
“It obviously doesn’t happen overnight, but there has to be a commitment at the top level from your board and senior leadership all the way down through the ranks of every employee in your organization,” he says. “There has to be a clear belief and clear example shown by the top echelon of the leadership ranks that the direction we’re going in is the right direction. You really have to get down to a lot of personal communication and a lot of personal involvement of employees in the process.”
Communicating direction is always critical, but it also takes involving employees in the process to help cement their understanding of new changes.
“They have to be part of the strategy and then they have to obviously be a key part of the solution,” he says. “They have to be part of developing the solution in terms of what they’re going to be responsible for and what they’re going to be held accountable for to make sure that we are achieving the goals that we have to achieve. It all comes back to constant communication from top to bottom and bottom to top. That’s what makes the alignment happen, the understanding happen and the teamwork happen to accomplish the goals that you set out to do.”
It’s easy to say just keep doing what you’re doing. However, if you have that mentality you won’t survive in any industry. You have to accept change.
“You have to be adaptable,” Dubis says. “You have to be able to assess your environment — whatever your environment may be — and make the changes and improvements that will best serve your customers that will utilize your facility. If you’re not adaptable, if you’re not open to change and innovation, you’re leading yourself down a road for bad things and potentially extinction or maybe being bought out by another system that can do it better.”
Develop change strategies
Leading through a period of change is a tough task. You have to make sure that you are heading down a path that your company agrees with and can understand.
“First of all, you have to explain what the situation is and then secondly, explain what strategies you want to employ that will ensure your ability to continue doing the things you want to do,” Dubis says. “You communicate the growth strategy, you communicate the efficiency strategy, and you communicate the consolidation strategy and make sure that people understand it’s not what’s good for one part of the system, it’s whatever affects one part of the system affects all of the system and creating the good for the whole is much better than the good for one organization.”
St. Elizabeth has been going through a number of changes over the past few years and more will be coming. Understanding where to start has been crucial.
“The first question we need to ask ourselves is what’s in the best interest of the patients and their families,” he says. “That is absolutely the most essential question. From there, we cascade down and figure out what are the resources needed, what are the barriers, what are the political issues, whatever they are. That is the first cut. We look at what’s the biggest impact we can make for the dollars we have available. We go through criteria starting with whether there are any safety issues that need to be addressed.
“Secondly, what are the enhancements or new services that are going to be of most benefit to the most number of patients? Thirdly, we get down to new clinical programs that we have determined the community has told us they want. Lastly, we look at replacing equipment that’s used for life. That’s the tree we go down in terms of prioritizing what we do.”
Planning your changes is an important part of being able to adapt to change easily and effectively. You have to understand where changes can have the biggest impact.
“You should set a decision criteria tree in terms of how you’re going to look at things,” Dubis says. “Secondly, you need to get broad-based input into that process. It can’t be something that’s done in my office or the chief operating officer’s office. It’s got to be something done in conjunction with literally the entire organization. You should be getting ideas from the ground level and looking to push that upwards so you can have those discussions. Then you need to provide a draft plan of what it is you want to do so that associates, managers and board members and all other interested constituents can have their say in terms of what makes best sense. Obviously, it’s management’s final call to make the decisions, but once you get that consensus built, it makes the process a whole lot simpler.”
However you go about your changes, you have to make sure you remain positive during the process.
“Don’t look at the glass half empty; look at it half full,” he says. “It’s easy to get negative and pessimistic about what’s going to happen in the future. I frankly look at it as an opportunity to lead ourselves in a different way that could be even better than what we have today. When people get negative about things and pessimistic, they tend not to be very creative or very innovative and that’s where I think the future lies for organizations that do those two things very well. This is not a time for the faint-hearted. This is a time for people who embrace changes and see this transformation we’re going through as an opportunity and not as a negative. This is a new world in which having a strong desire to embrace change and work within the abstract and uncomfortable zone of unfamiliarity is what it’s going to take to guide your organization to be successful down the road.”
HOW TO REACH: St. Elizabeth Healthcare, www.stelizabeth.com
- Find areas you can save money and become more efficient.
- Make change part of your culture.
- Develop strategies to decide how to implement the best changes.
The Dubis File
President and CEO
St. Elizabeth Healthcare
Born: St. Louis
Education: Graduated from Washington University in St. Louis and received his master’s in health administration from Washington University School of Medicine
What was your first job, and what did you learn from that experience?
My dad was a waiter, and when I was 12-years-old, I was 6 feet tall so I passed for 15 and I started working with my dad in the restaurants. What I learned from that is not only good organizational skills … but more importantly, I learned about the importance of customer service.
What is the best advice you’ve ever received?
Never give up. I learned in life you should never give up, because every day brings an opportunity to make something better. The only time that you can’t is the day that you don’t wake up. I believe that very much. If you really work through things and think things through, not only on your own but with a group of talented people, you usually can find solutions. You may have some failures or you may have some set backs, but if you keep pushing for the long term, usually you can do pretty well.
What do you see as the most important change hospitals are going through?
We’re going to have to become more customer focused in terms of dealing with our patients, creating a more positive patient experience both on the inpatient and the ambulatory side. The public is demanding that more and more. The other thing would be innovation. The ability to accept change and to make changes happen because the world will be different, and you have to develop new strategies and approaches and systems to deal with it.
If you could have a conversation with anyone, who would you speak with?
Jack Welch. I got to know Jack Welch through his first book and when I read it, the emphasis on the importance of having talented people in the organization and the process that they go through annually to do that, I thought was one of the best things I had heard on how to make your organization successful. He’d be someone I’d like to talk to and probe a little bit more into his thought process.
When William Lambert looks back at his transition into his role as CEO, he remembers a time of uncertainty. He could tell that dark clouds were forming and a recessionary storm was approaching.
Lambert took the CEO role of Mine Safety Appliances Co., a nearly $1 billion global manufacturer of safety equipment that employs 5,200 people around the world, in 2008 and serves as president and CEO today. With a harsh economic environment ahead of the company, Lambert gathered his executive team and planned for how to carry the business forward without sacrificing its status as a leading safety equipment manufacturer.
“Just after I became CEO, I think the dark clouds had started to form and already were starting to impact our business, and by the end of 2008, had really impacted our business in a significant way,” Lambert says. “2009 was difficult. We were focused on the core areas of strength for MSA.”
The nearly 100-year-old company is no stranger to the ups and downs of economic cycles. Together with his leadership team, Lambert led a corporate strategy to push MSA forward focusing on strengths, the customer voice, and areas of growth in an effort to make the business stronger than before.
Here’s how Lambert carried MSA through the tough times by improving the core areas of the company.
Overhaul your corporate strategy
Whether you are facing good times or bad in your business, a focus on strategy is critically important for leading a successful company.
“We do a major look and overhaul of our corporate strategy just about every five years,” Lambert says. “We had made an update to the previous corporate strategy in 2006, and in 2008, we could begin to see the signs that things were about to get serious. It was about that time that we were coming due on a new corporate strategy, and there were some indications that there was a crisis coming and so we decided to accelerate a new corporate strategy.”
MSA brought in experts to help the board and the leadership team in the guided effort over a multimonth period. It could not have come at a better time.
“2009 was a very concerning time for everybody to batten down the hatches and make sure that your business could make the adjustments and weather the storm,” Lambert says. “I’m very pleased that this leadership team here at MSA did a great job of getting us through and the strategy helped to be that guide to help with some of those tough decisions we had to make.”
Those tough decisions revolved around the core areas of MSA — its line of safety products. Secondly, the company took a look at adjacent areas that could help continue to grow the business.
“Most businesses have a core that has been very successful in the past and where so much of your capabilities and strengths are centered,” he says. “Every business also needs to move into adjacent areas just outside the core. These adjacent areas tend to be derived from the core, but hopefully those adjacencies strengthen the core in some way.”
These adjacencies by definition and by the very nature of human behavior start to lead you into peripheries.
“It’s kind of an adjacent area, but it tends to be even further from the core,” he says. “You have to simply understand how you look at your business. Where’s the value really being generated? What creates value? Is it the core or is it in the adjacent area, which means the core is shifting to this new adjacent area? Generally the value is not being generated in the periphery. Generally it’s been my experience that the periphery actually destroys value. It can detract from the value generating capability of the company. It can distract management. It seems like a good idea, but when you really get down to it … these peripherals tend to not add value.”
How your business creates value is what keeps it moving forward, especially in the bad times. To add value or create new value you have to have a plan.
“Businesses need to have a plan,” Lambert says. “It’s not so much the plan, but it’s all the planning that goes into it. Dwight Eisenhower said that the plan is nothing. It’s the planning that’s everything. It’s the thinking through the various scenarios and understanding the business and what are the value drivers of the business. Where is value derived? Where is value created? Then it’s deciding what is the core that you want to build on for the future? Over time, that changes. Over time it has changed for MSA. At one time, mining was our core. The mining market today represents 10 to 12 percent of our total sales. The core of MSA has shifted somewhat from where we were at one point in our company’s journey. Our top three markets today are oil and gas, construction, and first responders. Mining is our fourth now.”
The company’s latest plan focused on its five leading lines of safety products and it would ultimately be the customers who would provide the new directions for improving them.
“There are five areas to our core and these are those areas of the business that generate the most value, create the most value, that get disproportionate resources and investments, and they get the most management attention,” he says. “That’s where we spend our time talking and debating and investing and that’s where we have market-leading positions.”
Find the voice of the customer
To strengthen the company’s core product areas, MSA went to its customers to understand where their needs were and how the company could meet them.
“At MSA, we have seven core values that we use to guide our efforts and to guide our behaviors,” Lambert says. “One of those core values is customer focus. Driving customer satisfaction is one of the most important things that we look to do, that we look to measure, especially in mature markets. In those kinds of mature markets, the way you gain share, the way you increase sales, is through innovation and product development efforts meeting unmet needs of the customers. Listen to the voice of the customer and then also drive customer satisfaction, measure customer satisfaction and measure customer loyalty and then make the adjustments in the factory or other areas where you service the customer.”
These “voice of the customer” activities must be embedded in your research and development teams, your product enhancement teams, your manufacturing and quality teams and even into your customer service center.
“We listen to the voice of the customer and then we track those issues and put improvement plans in place based on that which we’re being told,” he says. “The first step is you have to measure. You have to start to measure what your customers are saying. Do the customer satisfaction and loyalty surveys and find out what the drivers are behind those responses and how customers view you. Then you have to understand what the drivers of customer satisfaction are in your particular business or company.”
Driving a customer focus in your business starts with developing a culture that puts the customer at the forefront of your operations.
“The culture that we’re trying to create has to do with that core value of having a customer focus,” he says. “There are customer-focused initiatives throughout the organization. We all know that it’s one of the core values that we have here so that drives a culture of continuously monitoring and seeking to improve that customer experience.”
As with the creation of any company culture, it has to start at the top of the organization and be pushed throughout to be successful.
“The creation of a customer-focused culture is difficult,” Lambert says. “There has to be a tone at the top of the organization that emphasizes it, that expects it, that highlights it, that makes it one of the core values you have as an organization. Then you talk about it. You talk to the associates about the customer experience and measure the customer experience and customer satisfaction results and then you can communicate those to the work force. Then you get the work force engaged by setting up teams that address certain issues and problems and begin to solve some of these customer experiences. You get your engineers out in the field living with customers or users and observe how your product performs in the field. Or talk to distributors about their experience when the product arrives on their shipping dock. Pretty soon, the culture begins to develop a momentum of it’s own within the organization. You make it a part of the everyday dialogue and the every-week dialogue.”
Put your plan in motion
Lambert and the folks at MSA had the foresight to develop the company’s new plan before the economy really took a fall. As the environment grew worse, Lambert began to do the things outlined in the corporate strategy.
“When we put our corporate strategy together back in 2008, the elements of our strategy focused on the core of MSA,” Lambert says. “That was one big element or pillar of our strategy. The second pillar was a focus on the emerging markets. The emerging markets of middle Eurasia, Latin America, Southeast Asia and China, those four areas are where we saw great growth potential for the future. Double-digit growth potential, adding head count, adding employment, increased activities going on in those core industries of ours like oil and gas, construction, fire service first responders and mining. So that was the second pillar of our approach to put programs and initiatives in place that focused on the emerging markets area. The third pillar was called Project Magellan, which was to have the organization best enabled for this emerging market growth.”
MSA found the new markets it saw the greatest potential in and then began to invest in developing initiatives to grow its operations and in some cases shrink its operations around the world where necessary.
“If we were to really grow the way we thought we could grow in China, we needed to have a new facility, a new investment, a new plant, and a new R&D center in China,” he says. “We also opened a new plant in Mexico. We expanded our San Paulo, Brazil, plant. At the same time, there were certain parts of the organization that we needed to shrink. We no longer needed the same kind of footprint in the company because that wasn’t the area of focus or the area of the core that we wanted to emphasize.”
MSA had a Berlin plant where it manufactured protective suits. Protective suits were a peripheral product and weren’t in the core, so the company moved away from and deemphasized that part of the business and that product line.
“As you go through this exercise of looking at your portfolio and looking at what you really want to focus on for growth in the future and where that is going to be coming from, then you start to make those kinds of choices to shrink this part of a factory or your footprint in this part of the world, because you’re increasing your footprint in this other area of the world,” Lambert says. “Those are the capital allocation decisions and resource decisions that we were making. Project Magellan was really about understanding our footprint and where our focus was and where the best places for us to put our resources were. It involved more than just manufacturing, it involved all aspects of our business.”
The decisions to become leaner and more efficient and find the markets you can grow and prosper in have to always be going through the minds of business leaders.
“You need to go through an assessment of the attractiveness of that market, the growth potential, the profitability potential, and the competitive rivalry that exists in that area,” he says. “There’s got to be a relatively thorough process of understanding and measuring all of that and then you chart out your course to say, ‘Here are my critical success factors. Here’s what we need to do better than those others to achieve this success.’ Then establish for yourself some mileposts. Here’s what we expect to do by six months into it. Here’s what we expect by the end of year one. Here’s where we ought to be 18 months from now, two years from now, three years from now, four years from now. Here’s how we get to that vision of future success.”
HOW TO REACH: Mine Safety Appliances Co., (800) 672-2222 or www.msanet.com
Lead a corporate strategy every few years to keep your company agile.
Understand customer needs and develop a customer-focused culture.
Discover areas of growth and areas you can shrink to improve operations.
The Lambert File
President and CEO
Mine Safety Appliances Co.
Education: Attended Penn State University and received a degree in mechanical engineering. Received a master’s degree in industrial administration from Carnegie Mellon University
What was your very first job and what did you learn from that experience?
I was a paper boy and I delivered the Pittsburgh Press and the Pittsburgh Post Gazette. I learned a strong sense of commitment. It was something that other people depended on. They depended on reading that newspaper every morning or every evening, so I had to be dependable and reliable. It didn’t matter if it was snowy, icy, rainy or a real hot summer afternoon day … I had to deliver those newspapers because my customers depended on me. It instilled a strong work ethic and sensitivity to customer satisfaction.
What is the best business advice you’ve ever received?
Sometimes it’s not about being the smartest, but it’s about working the hardest and being the most committed to the mission that drives success. The other advice that I’ve received over time is that it’s also about the emotional intelligence that you have as a leader and how you influence people and how you lead people emotionally, not just intellectually.
What would you say is one of the most important products or innovations today in the safety field?
The ALTAIR 5X incorporates what we call XCell Sensors and these sensors are absolutely changing the market for portable gas detection instruments — total cost of ownership, reliability, durability and response times. These XCell Sensors are one of the most dramatic and important innovations to come along in the safety industry in a long time.
If you could do something dangerous one time without consequence, what would you do?
I would sky dive. I think the freefall would be exhilarating. That’s only because I would be guaranteed there wouldn’t be an unfavorable outcome.
When Antonio Torres looks at the building and construction industry he sees opportunity. He knows that it’s not what it used to be, but as president of Syntheon Inc., a building science company, he also knows that if you don’t sit on your laurels you can accomplish great and new things.
Torres has taken advantage of the economic times and has used that to find new opportunities within Syntheon to continue to grow the more than $20 million, 200-employee company.
“This is an industry that can change and is an industry that hasn’t changed in a very long time,” Torres says. “It’s a tremendous opportunity and a great place to create jobs and a great industry for the U.S., and I’m very pumped up about delivering it in a new different more efficient way.”
It is that excitement that has allowed Torres and Syntheon to think about the business in different ways.
Smart Business spoke to Torres about how he has grown his company by taking advantage of opportunity.
Be creative. In a company that’s multinational, you end up shifting resources around to the high-growth areas and minimizing the resources in the lower-cost areas as much as you can do that. That’s one good lever that you have. The other thing is, this is a good time to do the development for new products. If you think about the construction industry at the peak, the amount of work that was done on the fact that you could sell everything you made or every contract you signed, kept all your workers busy and your manufacturing plants running at full-tilt. That did not allow for any new development. Now there is a little bit more bandwidth for those manufacturers or contractors to take a look at what’s new out there and integrate that into my options as the economy begins to turn.
The other thing is just keeping everybody focused on the longer-term vision rather than the short-term issues. Especially in a company like this one where what we’re trying to get to requires significant resources and aspiration work, and we’re not where we want to be. Having people focused on the capabilities that need to be developed internally has also been important, and it’s a good time to do it, because there is not external pull for business.
Take advantage of opportunities. The challenge is of course what situation your company is in. If you can afford it, the best thing to do is identify your lead users. These are customers that are very willing to be the first out in the market with a new product, new idea, or a new system, and then work with them closely to pull the technology out of your company.
It gets your customer motivated and then your employees see that even during more difficult times, there are people out there trying to make a difference and trying to change the world, or at least improve it, and everybody stays focused on the future rather than the present. You have to focus beyond tomorrow, especially when we’re in the times that we’re in, because it will get better. We have to be ready when it gets better with different offerings and different capabilities than the ones we had when we got into the quagmire that we’re in today.
Focus on growth and focus on the longer-term vision. Look outward from your company. I think that many times, especially in bigger companies, we tend to internally focus and internally develop answers that while they may be quite advanced and very capable, may not meet the needs of the consumer. You have to get out of the company.
Balance your culture. One culture, I’ll call the growth culture, and the other, optimization culture. The growth culture really looks at what the customers are doing, where codes are going, what’s the government thinking, and how is (the industry) implementing this. That culture really brings a lot of richness to your ability to develop the appropriate right products. The problem with that culture though is that they don’t like to close; they don’t like to implement. They are inquisitive and want to find out what’s happening.
Then you have the optimization culture that says, ‘Hey, enough inventing, enough ideas, we’ve got to sell something. If we don’t sell something, we’re not going to be around.’ So there is a natural tension within a successful company where you have enough of the growth culture people and enough of the optimization folks to keep the company growing.
A lot of the focus of the CEO has to be to protect both of those. If you don’t protect the growth people, they all get fired. They’re seen as inefficient and not creating any value. If you don’t protect the optimization people they’re seen as too narrow-minded, not enough capability, hard to deal with and so on. The CEO has to establish a balance and that’s the key for an innovative culture in a growth culture.
HOW TO REACH: Syntheon Inc., (412) 490-4252 or www.syntheoninc.com