Customer focus no longer means just researching current and future needs in order to design expected or desired goods and services. Instead, a rising trend in business today is co-creating value with customers.
Value is created when a product and buyer come together within a particular use situation. Some examples include retailers getting the customer involved in the shopping experience to save time (Home Depot’s self-checkout) or costs (IKEA’s assembly and delivery by customers), smartphone personalization through app selection and Dell’s online built-to-order computers are others.
Another is utilizing management consultants who collaborate with clients to add value in research projects.
Co-creation of value can lower costs, increase benefits and improve the overall service experience for both the organization and the user. As the table below explains, co-creation of value has a dual emphasis on the customer and company as value creators and is an applicable business strategy in a wide variety of market contexts. Airlines, supermarkets, supply chains, theaters, theme parks and retailers have all embraced co-creation of service opportunities through self-serve initiatives such as check-in, checkout, price checks, information/purchase kiosks and other technology enhancements.
Value Creation and Marketing Opportunities
|Marketing Strategy||Market Emphasis||Value-Creation Focus||Corporate Examples|
|Market driven||Established market||Customer||Coca-Cola, Procter & Gamble, Toyota|
|Market driving||Emerging or imagined markets||Company||Google, IKEA, Virgin Group|
|Co-creation of value||Established, emerging or imagined markets||Customer and company (simultaneous)||Amazon, Apple, LinkedIn|
A great example of the new co-creation of value model is illustrated in the case of Crushpad, a Sonoma, Calif., winery. Crushpad is a state-of-the-art winery where customers choose their level of involvement for small lot wine-making — typically 25 to 100 cases — based on their interest in the production process.
The company allows customers to develop wine-making plans, engage in hands-on activities, such as sorting, de-stemming, crushing, fermenting, pressing into barrels, labeling and packaging bottles, and even distributing and marketing the products. Wine enthusiasts, restaurants and retailers have co-created value with Crushpad, and as a result, the business has launched more than 150 world-class brands.
The rock music industry has also experimented with co-creation of value. Radiohead’s “In Rainbows” album was sold directly to more than 2 million consumers who paid what they felt the music was worth. The symphonic band Renaissance also raised more than $92,000 from 860 loyal fans to record a new CD called “Grandine il Vento.”
Innovation and creative collaboration allow the smartest — not necessarily the biggest — companies to win in the marketplace.
Here are six questions to think about as your company ponders the idea of co-creation of value.
1. Do you strive to continually exceed customer expectations?
2. Does your view of value creation go beyond the firm (to include the customer)?
3. Do you actively seek to create an extended community of users?
4. Is personalizing the customer experience a major part of your marketing strategy?
5. Is your marketing team truly obsessed with researching and improving customer experiences?
6. Do you nurture and forge enduring business relationships with customers and collaborators?
Art Weinstein, Ph.D., is a professor of marketing at Nova Southeastern University and author of “Superior Customer Value: Strategies for Winning and Retaining Customers.” Visit his website www.artweinstein.com or reach him at firstname.lastname@example.org or (954) 262-5097.
When Al Crawford visits Disney theme parks, he’s thrilled by the rides, the theatrics and the entertainment. But what really leaves him in awe are the park’s employees.
“I’m absolutely amazed by an organization like Disney,” says Crawford, chairman and CEO of the Southwest Ranches, Fla.-based Bankers Healthcare Group Inc. “I’ll walk through their parks and I’ll ask, ‘How do they handle this? How do they control everything?’ … For just one park, you wonder how do you get the right people being responsible?”
At the time they founded BHG in 2001, Crawford and his partners didn’t have to worry about any of these questions. Among the three of them, they had all the skills they needed to launch a successful venture on their own.
As president, Robert “Bobby” Castro, was “the guy who brings the business in” and “makes it rain.” His brother Eric Castro —BHG’s COO and the “glue” between the three founding partners — put the systems in place to help the company scale. Then there was Crawford, who handled finances and built the balance sheet for the company, which provides financial services to medical professionals.
“One of the unique things about the company was that you didn’t have to go out there and hire people to do things that you didn’t know how to do, because the original three owners had expertise and experience in really all areas,” Crawford says. “So you didn’t rely on anybody else. You knew that you had the experience and that your partners had brought a tremendous amount to the table to get the job done and to grow the company.”
But as growth accelerated, so did the demands on the three partners. Soon enough, the notion of doing it all was feeling more like a burden than a joy. Like the Disney parks, they needed to assemble a team of people who could run the organization’s day-to-day operations and could be trusted to make decisions and take care of customer needs independently, so that the owners could focus on expansion. Yet this was easier said than done.
“When you’re doing everything yourself, you know there’s accountability,” Crawford says.
“As we grew, one of the challenges has been letting go of those reins and finding people who had the passion and dedication that we did in all three areas.”
Recognize when you need help
Flash back to 2005, the three owners were drowning in the responsibilities of day-to-day business. They no longer had the time and resources to run the company on their own. But when you’ve been handling certain parts of your business independently for years, it’s hard to recognize when it’s time to delegate some of your job to other people.
One way to gauge whether you need to reallocate some responsibility is by asking, “Can I take a vacation?” For instance, whenever partner Bobby Castro was out of town, it showed up in the bottom line.
“It was where you just couldn’t handle it all by yourself, and the fact that you were trying to handle it all by yourself was actually hurting the company,” Crawford says.
“I could tell you when Bobby was on vacation because there would be a drop in originations, which is unacceptable when you’re looking at $15 million of small ticket $100,000 loans on a monthly basis. All of a sudden Bob’s on vacation so we do $7 million that month because he was gone for 10 days. We can’t have that. We’ve got to have other people that, though maybe not as good as Bobby, are close.”
Another question to consider is how many hours are you working? Working nights and weekends may be necessary when starting out, but 60-hour workweeks may not be the best use of time for the CEO of a growing business.
As the head of finance, Crawford found himself struggling to juggle too many tasks while also trying to finance business growth. COO Eric Castro faced a similar dilemma.
“Eric was close behind me in saying I can’t build all of these systems myself,” Crawford says. “I need to hire people, and we need to grow proportionately.
“So I had to grow my section — I can’t run around talking to banks for the rest of my life, because I’m also trying to handle accounting. We’re trying to handle legal. And I need to be a little more grounded. Consequently, I need some people who can do what I’m doing and do it just as well and not drop the ball.”
In the end, each of the partners felt the strain differently and independently. But acknowledging that they needed to let go of the reins was a critical step in preparing the company for the next stage of growth.
“As your plate starts to grow beyond an average of eight to 10 hours a day and you truly to see growth from a P&L standpoint — you’re making money and you’re becoming more profitable — you need to put the money out and start to mentor somebody,” Crawford says.”
“From a real microeconomics look, as the tasks become so vast that you find yourself just about getting to none of your to-do list, it’s time to find somebody who can start to take some of those tasks.”
Reset your priorities
Delegating responsibility to other people is a relief for some leaders, but incredibly difficult for others. Either way, it helps to start small.
As Crawford and his partners began unloading some of their mounting job responsibilities, they handed off their lowest priority items first.
“If I made a list of everything I had to do today, there’s probably a bottom 10, 15 or 20 percent that somebody else could do,” Crawford says. “And they could do it just as efficiently as me. If I’m just running around in circles and constantly trying to catch up, constantly not getting to things, I’d be better off and more efficient doing the bigger things better and allowing somebody else to do that bottom 20 percent.”
Instead, take that bottom 20 percent and give it to a new employee, who can give it his or her utmost attention.
“Give it to the person who is looking to ride something in that department and let them make it their top priority, so all of the stuff on your list is always getting high priority,” Crawford says. “You’re getting effective representation if it’s customer service stuff. Your customers are being serviced better.”
If it’s taking you two or three days to get back to a client or customer, ask yourself if there’s an employee who could take the task of following up on phone calls or even an entire account. A new person will also be excited and eager to get back to them, Crawford says.
“Maybe they are not dealing with you, but that’s OK,” he says. “Because dealing with you is really hurting the relationship because you haven’t gotten back to them in three days. That type of delegation makes the whole organization better, when you can take a look at your list and say, ‘What am I not doing well here?’
“Delegate that to someone who’s anxious, who’s looking to climb, looking to grow within your organization, and they make it No. 1 through 5 on their list, so it gets done extremely well.”
Help new people learn the job by staying close to them — literally. As Crawford began delegating to new leaders, he frequently had them in his office or next to his office to shadow and learn from him. He also confesses that finding the right people tends to be a process of trial and error.
“It’s no different than a professional baseball team or a football team,” Crawford says. “They can go out there and they can literally go after what they think is going to be the best quarterback in the country. And he can be a flop.
And just because someone has pedigree or experience doesn’t mean that he or she is going to be a success.
“We’ve had people who we’ve hired that have been tremendous,” he says. “We’ve had people that we’ve hired who we thought were going to be tremendous who were horrible. And then we’ve had people who we hired that we cultivated, homegrown and have become superstars.
“It’s finding the right candidate with the right degree, the right experience and the right attitude that you bring in and put in close proximity to you. You look for them to just really absorb everything you’re doing. You try to share what you’re doing, and you look to grow them into your spot, honestly, so they could replace you.”
Find people like you
Since 2001, BHG has grown from its original three partners to 150 people. And as a result, Crawford doesn’t see the “young, aggressive, talented person” anymore. Instead, most of the hiring decisions are pushed down to different department heads, who are given the freedom to hire, fire and mentor the people who work within their area.
“We use that model where you’re counting on people who you’ve trained, people who are moving up the corporate ladder, and they have earned the respect of their peers, earned the respect of the owners,” Crawford says. “Now they’re making the same decisions that you were making two or three years ago, and they’re looking to grow that department by implementing the same type of strategy.
“So they’re going to find that person. They’re going to find a person that fits with them, and they’re going to mentor that person in the same way.”
As people become more independent, they’ll take on larger roles in the company and eventually their own disciples. This tiered mentoring ensures that new leaders are continually being developed at all levels of the organization.
“It’s important for me, Bobby and Eric that people within your department respect you and they look up to you, and your personal traits and business traits appeal to them,” Crawford says. “If we can get that out of the individuals that work for our department heads, it’s a home run because they’re the people that have to do the entire day’s work with their peers.”
Furthermore, managers in the company can be more effective because they’re able to surround themselves with people who share their working style, whether it’s fun and laid-back like the BHG marketing department or more structured like in accounting. For example, the company’s lead treasurer, Angela, is always one of the first to get to work and last to leave, so she looks for this work ethic from everyone in her department.
“I can guarantee that she’s going to surround herself with people who are like her,” Crawford says. “It’s going to run in straight contradiction to her if you’re coming in at 9 a.m. and you’re leaving at 5 p.m. You’re taking an hour and a half for lunch ... It’s just not going to work. Angela probably works longer hours than I do. So if you’re in her department, you’re probably going to log some hours. And she’s got to hire. She’s got to fire.”
Hiring and mentoring people who share your values is important, but it doesn’t mean you want to fill your company with a bunch of “yes-men” either. That’s why Crawford always abides by the rule to hire intelligent people who are passionate about keeping the business innovative and thinking for themselves.
By developing and mentoring new leaders for the company, the partners grew BHG to $155 million in revenue in 2011, making the company a staple on Inc.’s list of fastest-growing companies, with six appearances in the last seven years. The company also received the Ernst & Young Entrepreneur of the Year 2012 Award in the Financial Services category in Florida — evidence that the new generation of leaders is carrying on the vision of its owners.
“We love to hire people that are smarter than us, that can bring ideas that we’re not bringing and that can just really push the envelope,” Crawford says. “In the future, we have the right people in place to challenge us daily, to come up with new products, to bring better solutions to the customer. And with those solutions, you’ll see a growth in business.” <<
How to reach: Bankers Healthcare Group Inc., (866) 297-4664 or www.bhg-inc.com
- Recognize when you need to transfer responsibilities
- Delegate some duties to a new employee
- Encourage managers to hire and mentor people like them
The Crawford file
Chairman and CEO
Bankers Healthcare Group Inc.
Born: Troy, NY
Education: BA from Gettysburg College, 1984
On being a worry wart:
I’ve been told that, ‘Geez Al, you worry a lot’; and it’s interesting, because Bobby [Castro] – he doesn’t worry. He’s so type A. The glass isn’t half full with Bobby. The glass is 7/8 full. And so that’s been a real help for me, because I’m a positive person. But a positive person can still worry about what’s coming around the corner.
What’s the best piece of business advice you’d give to another leader?
I don’t think it’s bad to worry and to be concerned that the world changes daily now. You have to be concerned. There are so many things that don’t last forever. For me it’s been a trait of always looking over my shoulder to see what might be coming at us from behind us and worrying about that, yet still not dwelling on that.
You’ve got to be positive. You’ve got to be thinking outside of the box. And I think the two traits go well together, where you’re willing to push on your people and willing to push on yourself…because nobody wins the Super Bowl every year.
On trusting your partners:
It’s trust in what they’re bringing to the table to the company. I’m dealing with two brothers who are 66 percent. People say to me, are you ever concerned about that? Could you be voted out? It’s not even a thought. They trust my opinion. They respect my opinion when it comes to growing the company, being the CEO of the company. And I feel the same exact way about them as individuals.
On loving what you do:
We’ve never been interested in even looking at a sale of the company because to sell the company and then have a non-compete clause and have to do something else – we like what we’re doing. To a point that might be not a good thing because maybe there’s a time where every company should be sold, but for us, it’s kind of like; well, what else would we want to do?
When Joe Peilert came on board at Veka Inc. in 2010, the company was 2½ years into a more than five-year building recession. The company had gone through its first layoffs in its 30-year history, and it seemed there was no end in sight to the shrinking construction market.
Veka Inc. is a 500-employee, $110 million manufacturer of PVC and vinyl extrusions for residential and commercial windows, doors, fences and decks. As the number of homes being built in the United States continued to decline, Veka saw some of its customers shut their doors and its competition struggle to stay in business.
“By the time this was all said and done, 75 percent of the market was gone,” says Peilert, Veka president and CEO. “You’re looking at the peak of 2 million homes being built a year, down to 405,000 homes in 2011. It was a massive breakdown of opportunity.”
Peilert and his leadership team had to act to ensure Veka wouldn’t be the next company closing its doors.
“When you’re in a situation like that, morale is a challenge with employees and customers alike,” Peilert says. “That wasn’t something that was exclusive to Veka. It was a very tough emotional state for people because they were used to growth and success.”
As Veka’s new CEO, Peilert needed to do his due diligence within the organization, which gave him an opportunity to evaluate the business and gain a strong understanding of its operations. However, he had the added pressure of an industry that kept slipping more and more.
Here’s how Peilert identified key areas of strength for Veka and created opportunities within a shrinking market.
Evaluate the business
Peilert has spent a majority of his career in the building materials industry. He was attracted to Veka because it was a quality leader in the industry, and as a family-owned business, it provided a unique working environment.
“It’s a family-owned group with a global presence, which is a great mix because you get a long-term commitment to growing the business and what that provides to me is what I like to call the luxury to make the right decisions,” Peilert says.
“A lot of times you find companies with a three- to five-year horizon, and if you go through a recession, you can bet you start cutting maintenance, you start cutting people development, expenses and things like that.
“With the type of view we have for growing a business bigger and stronger for the next owner generations, you continue to do those things through difficult times and that is very attractive.”
Peilert took advantage of that luxury to make the right decisions. He addressed the people at Veka to share his plan for moving the company beyond the building recession.
“We gathered around 60 managers and supervisors here, which gave me the opportunity to introduce myself and talk about mainly what I considered to be key ingredients for a successful organization,” he says.
“What it boils down to are mainly two things — No. 1 is people who care. They care about the company, the customers and the co-workers. The second element is a well-defined strategy and an execution plan that’s linked to it. If we have those two things going in the right direction, it doesn’t matter what the industry and what the economy does; we’ll do well.”
Once he had met with key people he spent the rest of his first week listening.
“You have to spend time with the employees and with the customers and allow them to talk about their ideas, their concerns and their perspectives because you’re a sponge during that time,” he says.
A big part of what Peilert soaked up was the condition of the company’s customers and competition.
“With the customers, there was quite a bit of consolidation going on in the market,” he says. “As you can imagine, there were a number of people going out of business, so for us it was important to understand if we were aligned with the right people, both from a culture business philosophy point of view, as well as their approach to the market and product positioning.
“We wanted to make sure we provide them the right products. Our design capabilities that we have in-house allowed us to help our customers to transition from a new-construction-focused business into a renovation-focused business. That’s where we spend a lot of time proposing new concepts that help them get into those markets faster and more successfully.”
Peilert also had to fully understand the company’s three stakeholder groups — ownership, customers and employees — which he relates to a three-legged stool.
“There is an inherent balance to the system and the fact is you can’t neglect one group over an extended period of time because you introduce imbalance, and ultimately, that three-legged stool collapses or you fall off the stool,” Peilert says.
“You’ve got to understand the needs of those three groups and make sure that you address them in a balanced way. Understanding that inherent balance and managing that is the key.
“Once you’re there, you can never undercommunicate. You’ve got to constantly be visible, approachable and building trust all the time.”
Rally your team
Building that trust was crucial as Veka employees watched the building market continue to contract and began questioning whether the market would ever get better.
“Ultimately, communication is key in bad times more so than in good times,” Peilert says. “You need to be honest with people and you cannot overpromise. That is really dangerous.
“If you overpromise, then you lose your credibility and then you lose the buy-in and the business culture of the company is also being damaged.”
Peilert spread a message to the employees of Veka that he wanted to see them show an ownership and can-do attitude.
“You always find the people on any given day who will talk about the Steelers and find the negative things,” he says. “That’s really dangerous if that is prevailing in an organization. Fortunately, we have a lot of people, based on their seniority, that had seen the good times and they understand that this is a phase that, at some point, will come to an end.”
Not all of the employees were able to view the market situation with that mindset, so Peilert had to make sure he was allowing employees to voice their concerns.
“You can give company updates where you stand in front of 100 people, but the more effective way, while it takes a lot more time and effort, is to have those one-on-one interactions,” he says. “You get some good quality discussions and people talk about their concerns. They listen and they are not afraid to ask questions. That in my opinion is the best way to reach people. You’ve got to walk the plant.”
That kind of attention to individual employees greatly helped Peilert in the buy-in process. To get his management team on board, Peilert took them for an off-site strategy meeting at Fallingwater, a groundbreaking mansion that Frank Lloyd Wright built over a waterfall in the Allegheny Mountains.
“We took a tour of the building, and it became very obvious that the man had a phenomenal vision and an exceptional amount of focus on detail,” he says. “We said, ‘That’s how we want to approach our business and that’s how we want to develop strategy.’
“The second day we started mapping out our game plan going forward. People got a sense for how we wanted to tackle the business and certainly were inspired by the building and the thought behind it. If the management team has a can-do attitude and shows that ownership attitude, at some point, everyone else in the company will follow that lead.”
To truly rally your employees behind a new direction aside from company meetings, one-on-one discussions and strategy sessions, you have to celebrate your small wins.
“You show people you are hitting the milestones and when you hit those milestones, you’ve got to talk about them,” Peilert says. “You start building the confidence and building the momentum.”
To keep momentum going, Veka had to make several changes to account for what was happening in the industry. The company closed a location in Youngstown, Ohio, and converted its Canadian operation to a warehouse and logistics center to retain critical mass at key sites. It also made adjustments to personnel to help the company head in the right direction.
“Some of that was done, but there was quite a bit of work left to do in terms of looking at both cost and business development,” Peilert says. “At the end of the day, I made it clear to my management team that you can’t cut yourself to prosperity. With that being said, we said, ‘We can grow share and we can grow in bad times. We just have to have the right approach to the market and the right products.’”
Peilert started to break down the critical success factors in each area, one being cost management and the other being new business development.
“Once we had identified them in a fishbone diagram [which identifies many possible causes for an effect or problem], we started to break them down into further detail,” he says. “Once we had the detail, we started to put initiatives behind them. Once we had the initiatives, we attached them to a SMART execution plan.”
SMART is a big initiative for Peilert and the company. It’s an acronym that stands for specific, measurable, achievable, responsible and time-based.
“Once we started breaking this down into individual initiatives, people said, ‘That is achievable. That is realistic,’” he says. “Once we started to see traction on some of those projects and we had the additive nature of those initiatives, people started to gain confidence again.”
There wasn’t a magic trick or a rabbit that Peilert pulled out of his hat — it took rolling up his sleeves and clearly outlining performance expectations.
“I think that helped once people understood very specifically what they need to do to succeed in their job,” Peilert says. “In many cases, that’s not been properly defined. You typically see performance improving once you measure and once you set a target. So we spent quite a bit of time establishing metrics.”
The company focused on quality ratings, internal metrics and specific improvement targets aligned with the philosophy of SMART.
“We wanted to make sure that they were achievable, so we broke them down in quarters and showed a step-up improvement,” he says. “Those were key elements that people say, ‘I can do that over the next quarter. And if that’s possible, I can do it again the next quarter a little bit better.’”
Breaking objectives down into bite-size goals made a big difference. The key is being able to define your core business and put resources behind opportunities that will move the business forward.
“You start off by defining what your core is,” he says. “That’s always worthwhile revisiting and putting on a test vent. Once you’ve done that, you want to make sure you fund your biggest opportunities properly and put the right people behind it.
“It’s not always the biggest account that deserves the best person, but it will always be the biggest opportunity. Ultimately, you just have to spend time in the market and understand the leverage and the levers you have for success.”
Veka’s hard work paid off through a 56 percent reduction in quality claims, the signing of new business and a good growth return. So far, 2012 has been a good year.
“What we are seeing in 2012 is the beginning of a slow but steady recovery,” Peilert says. “People are starting to create households again and that’s how home construction benefits. It will not be a return to the 2 million unit residential homes, maybe we’ll never achieve that again, but it’s now a stabilized system that has experienced some slow and steady growth not based on government programs but based on recovering market strengths.
“For Veka, we are very excited about some of our partners that we have and our customers in the market that we’ve been able to work with on new designs for products that zero in on energy efficiency, sound insulation and impact resistance. Those are all big trends and big needs in applications that will help us grow faster than the market.” <<
How to reach: Veka Inc., (724) 452-1000 or www.vekainc.com
Evaluate and understand your business and stakeholders.
Develop a strategy and communicate expectations.
Implement your plan to head in the right direction.
The Peilert File
President and CEO
Born: Altena, Germany. I came to the U.S. in 1991.
Education: Has a Diplom Oekonom/MBA in business and economics from Ruhr-Universitat Bochum
What was your first job, and what did you take away from that experience?
I worked in my dad’s CPA office. I did classic, old-style accounting with a big journal where you had to write every entry in. That gave me a sense for the complexity of business, but also the need for accuracy and execution.
What advice would you give someone else stepping into a new CEO role?
For me personally, I’ve always strived for having the freedom to shape the direction of the business. There is a saying one of my mentors always said, which was, ‘It’s better to be the head of a mouse than the tail of a lion.’ It was always attractive to me to rather than work for a large organization to work in an organization where I can impact the structure and reach the people. I would recommend to a CEO to be the guardian of the company culture because that is a very precious asset.
Who is someone you admire in business or leadership?
I look up to George Washington. I have a painting of Washington crossing the Delaware in my office, and to me, that is the essence of leadership. If I look at my career, the founding CEO of Ardex, Herbert Goller, was a great mentor to me.
If you weren’t a president and CEO, what is something you have always wanted to do?
One day when I retire, I could see myself teaching.
For 28 years, the late Fred Krum developed the vision for Akron-Canton Airport (CAK), a vision that changed the relationship between the airport and its customers. It involved low fares and complimentary Wi-Fi and massage chairs for passengers. It called for $250 million to modernize airport facilities. The vision was to create “a better way to go” for airline passengers.
Krum cast the vision, and now Rick McQueen is carrying it forward.
“Every decision we make, we think about how it impacts our customers, and we make sure that that continues to be a positive impact,” says McQueen, who became president and CEO after Krum retired in 2008. “We want to be a good partner for this region and we want to give back.”
First-time visitors may be surprised at the effort a regional airport would put into delighting its customers — for example, furnishing new guests with gift bags upon arrival, filled with handy items such as ChapStick, Purell and a personal note from McQueen — or offering complimentary Cinnabon coupons on customer appreciation days and free shirts on “T-shirt Tuesdays.”
CAK has also made strides to improve travel experiences, from retrofitting its website with innovative, interactive content to leading the industry in its hands-on social media strategies and partnerships with low-fare carriers.
“We do not want for our customers to feel like there are bricks and mortar between us — that there’s pavement between us — but that we are all doing the same to serve this community, to get them where they need to go, on time, at a price that they can afford,” says Kristie VanAuken, senior vice president and chief marketing and communications officer for CAK.
This philosophy has paid dividends and not just for the airport. In addition to breaking passenger records for 12 out of the last 15 years, CAK has gradually grown its annual economic impact in Northeast Ohio to about $400 million and 2,250 jobs. Smart Business spoke with McQueen and VanAuken about how CAK continues to refine the vision of “a better way to go” through innovation around the customer experience.
Q. How do new technologies such as digital and social media complement the airport’s vision?
? KV: There are a couple of reasons why it really makes sense for us, one being because of the broad adoption. Two, because it’s extremely transparent, and we are a very transparent organization by choice and by orientation as being a government agency. And because it’s really cool to be in conversation with our customers and to learn from them what they want and what they like.
The website was very much a product of what we’ve done on the social media front, and then it was figuring out how do we integrate our strong brand voice — this ‘better way to go’ theory’ — which really has deep meaning for all of us here.
? RM: This also goes back to our low-fare commitment. What’s the first thing that you are looking for when you go online to look for an airline ticket — lowest price, right? So if our carriers have the lowest price, and it’s so easy now to go online and check all these different fares, it helps us to have that position where people recognize us.
Q. What were the challenges of building a presence on these new platforms?
? KV: You don’t deliver content on social media the same way you do on the website or in the same way you do in a TV ad, but they all have to make sense together. I often go back to this analogy of a rock band. So it’s not everybody strumming the same instrument and the same tune at the same time, but every instrument has to play its part. And it all has to come together to make beautiful music.
Last year, we spent a lot of time thinking about the integration of our brand voice, how the public relations effort really needs to be in concert with everything — stakeholders, airline relations and all of the ways we communicate the things that matter to the community. It needed to have that familiar voice of the airport, that warm, transparent, authentic voice.
Q. You have such a strong brand focus. How does it translate into your new media strategies?
? KV: It’s not a top-down strategy. The great thing about social media is that it’s all about the customers themselves. We get to go to their space. Social media is all about what matters to them. It’s their space and we are often welcomed into that, and that is a privilege.
We’re honored every time someone even posts something to our wall. Because the way we look at it is, ‘Look, that customer could do anything with those 30 seconds, but they chose to spend those 30 seconds posting something to our wall. It was the most important thing at that moment to them.’ In our minds, that kind of commitment deserves a swift response and deserves our friendly and compassionate answer to whatever it is that they’re going through.
Q. So how does the airport respond to this feedback?
? KV: There are two people on my staff, including myself part-time, who monitor and listen every day to what’s going on in the social media realm. But we’re not trying to supplant our current infrastructure for customer service. We have a customer service manager. If something comes up that needs individualized attention, we bring him in. He’s very skilled at quickly responding to customer needs, working on behalf of a customer who needs to interface with an airline or a car rental company.
Another way to look at it is what do our customers really care about? They tell us all the time, and we respond to that. They want free Wi-Fi. Great, they get it. They really respond to our sparkling clean facilities. They want clean bathrooms. … So we listen. We’re looking at all times for something that we can improve. We’re also listening for areas that maybe we should pay more attention to.
Q. What does it take to stay so responsive?
? RM: It’s another level of dedication that most people don’t realize.
I use the analogy of a house of cards shaped in a pyramid. I’m sitting at the top of the pyramid just because of who I am, but if I don’t do my job, the house of cards will fall. If our custodians and our building maintenance folks and our operations people, middle management folks don’t do theirs, imagine if you just take one card out. What happens is the house of cards falls as well. So we all have to work together.
? KV: There are a lot of different ways that we’re trying to use the technology to try to engage people where they are. There’s a lot of give and take. We try to send information out that they would find valuable. But we also like to bring in our people and our family orientation here.
Q. Is it just the marketing team that’s involved?
? KV: We’ve got five in-house bloggers. We feel like there are a lot of viewpoints on the airfield that are interesting, maybe some behind-the-scenes looks that you simply don’t get from the marketing people. I can’t give you the inside track on some cool thing that’s happening on our operations side or even go out there and talk about construction of our new runway because it’s just not in my DNA like it is theirs. Of course, Rick does his ‘Prez says’ once a month, and that’s an open forum for our customers to ask the top dog here any question that they want.
Q. Ever have any really tough questions?
? RM: We’ll have somewhere between 20 to 25 questions each month, and quite frankly, the hardest questions to answer are the ones such as, ‘What’s your favorite airplane?’ Well, that’s hard because I like them all! If it’s just about the operation of the airport — I’ve been here for almost 30 years — those are actually easy for me to answer. But it is great to hear what people have to say, and on occasion, they have suggestions on how we can improve our service, and we’re always interested to hear them. A lot of times, they have new destinations that they’d like to see because they travel there all the time with their families.
Q. How do you reinforce the vision for employees?
? RM: Part of our strategy has always included people or other employees here in the facilities that don’t necessarily even work for us — for instance, the courtesy van drivers. We contract the parking lot out. Those folks don’t directly report to us. But they have to buy in to the idea that we need to be ‘a better way to go’ and that we need to take good care of our customers.
Even the Transportation Security Administration go down and talk to all of their new employees about how we want them to interact with our customers, that our niche as a marketplace is very customer-driven, and we really do live and die by our tagline.
We give away ‘Better Way to Go’ awards on a monthly basis. If someone has gone above and beyond the call of duty, whether they’re our employees or an airline employee or a car rental employee, whoever — we give them an award. They come up, and I get to talk to them for a few minutes, thank them personally. We give them a little tchotchke, which is an airport bag or a watch or something of that nature. So we try to reach out and develop the culture that will permeate the place and keep the message front and center — that we need to be a better way to go and that customer service has to be a priority.
Q. What can other leaders do to make their company more customer-centric?
? RM: You have to make your employees part of the solution and empower them to make decisions and to do things, to buy in and take ownership. I also think it’s key for them to look around their industry and not be afraid to take other people’s ideas and make them your own.
[That applies to] a lot of the customer amenities that people really like here, for instance, a cell phone lot where you can come in, and as long as you stay with your vehicle, you don’t have to go into the paid parking lot. With the advent of the cell phone, people call you and say, ‘Hey, I just got off the airplane … can you swing around and pick me up?’ Our customer service manager saw that at another airport, but we thought it was such as really good idea we incorporated it into our culture as well.
Q. With the recession, ticket price remains a major factor for airline passengers. Will you be able to keep offering low fares?
? RM: It’s interesting because, of course, we don’t set the airfares here — the airlines do. But how we can influence those fares is by the mix of air carriers we have here.
We developed that relationship when AirTran came in 1997, and we’ve been able to keep that leadership as we’ve moved forward. In fact, we just did a study and it shows that currently because of AirTran and now Frontier Airlines, the people in Northeast Ohio are saving about $90 million a year in air travel, because of these low fares.
Q. You also have a new partnership with Southwest Airlines, correct?
? KV: It’s very exciting for us to start thinking about our partnership with Southwest Airlines. They have committed to staying at CAK and growing here. It’s such important news for this community because it means that we can continue to offer low fares.
On the communications side specifically, we’re going to look at other media that are out there. We’re currently experimenting in Google+. We’re looking with great interest at Pinterest. (The company has since started a Pinterest account). We’re already on Foursquare. We’ll keep looking at the ways our customers want to be in a relationship with us.
? RM: We’re in the midst of the master plan right now, which is one of the things that the Federal Aviation Administration asks us to do anyway — but it couldn’t be coming at a better time for us, coming off of record passenger years — one of the key things for me I learned a long time ago from Fred — and that is to always keep abreast of what’s going on out there because we need to be positioned to take advantage of whatever opportunity comes our way. And we don’t know what those opportunities are. <<
How to reach: Akron-Canton Airport, (888) 434 2359 or www.akroncantonairport.com
The CAK Files
President and CEO
Senior vice president and chief marketing and communications officer
Rick, born: North Canton, Ohio
Kristie, born: Lansing, Mich.
Rick, education: Walsh University
Kristie, education: Austin College (BA), then Western Michigan University (MPA)
What are some things CAK does to make airline travel more fun for people?
Kristie: We had a wonderful customer appreciation day on Valentine’s Day this year. What we wanted to do is delight and excite them, give them that ‘wow’ experience. But on Customer Appreciation Day, it was for everyone who was in the building. It was our opportunity to say thanks for being our customer … so we just wanted to treat them right. We had cupcakes and we had flowers and cookies and free coffee and Cinnabon treats. We also partnered with Delta Airlines and for its first flight of the day we had customized gift bags for every customer that had a bag coming out on our bag belt. So the first thing that the customers saw were gifts for them, individually named, and it was so cool to be down there and see the delight on their faces as they’re searching for their bags and snapping photos. It just created happiness.
Rick: Another thing we’ve been doing is on our website in order to encourage more participation is free T-shirt Tuesdays. You’d be surprised at how many people I see who say, ‘Hey, I keep entering but when am I going to win a T-shirt?’ It’s amazing what people will do for a T-shirt. But once again it’s fun, and it gives them a chance to feel like they are part of what we’re doing.
Kristie: We’ve given away about 400 T-shirts.
James Wendle and EQM Technologies & Energy Inc. are largely reliant upon government spending to drive business. However, with the lack of funds and resources from the government recently, Wendle has had to resort to alternative ways to keep the company flush.
EQM is a $75 million, 240-employee sustainable solutions company that provides consulting and technology to business and government. Wendle became EQM’s president and COO in 2010 after the board brought him in to help grow the business.
“What I bring to the table is accountability and know-how in the construction and the engineering world and growing more on the engineering side and developing that part of the business to get us more diverse,” Wendle says.
That diversity is what Wendle expects will ease EQM’s reliance on government spending. His acquisition strategy is to find companies that will get EQM into different aspects of the environmental and engineering industries. Most recently, EQM, which at the time was Environmental Quality Management Inc., merged with Beacon Energy Holdings Inc. in 2011 to become EQM Technologies & Energy Inc.
“The Beacon merger was a reverse merger,” Wendle says. “Beacon Energy gives EQM an added benefit that wasn’t there before.”
EQM has five different divisions that give the company a wide range of capabilities. Now Wendle is searching for the next company that will bring added value to the business.
Here is how Wendle is diversifying EQM through mergers and acquisitions.
Look for opportunity
EQM was looking to broaden its business and get into an industry that it wasn’t in yet, but one that was similar to the work it did. The company came across Beacon Energy Corp., a biodiesel production business.
“The plant was sitting idle, and we had a strategy that we were going to restart the plant, which we did, and be in the biodiesel business, which we are, and the plant is running now,” Wendle says. “It helped diversify us.”
Wendle and EQM put together an acquisition strategy that focused on finding companies in the engineering business and environmental services business that would help the company grow.
“Growth is an expectation,” he says. “It’s not something that you just do by mistake. Growth of companies is what’s expected, and it’s expected by our board. Growing organically can be difficult, and I think a lot of companies are experiencing that.
“So with our equity partner, we have a company that is an expert at it. They’re on a constant search, and raising the capital to make the acquisitions is something that they do every day and they’re very good at.”
In today’s market, if you’re going to grow, you have to look at growing both through acquisition and organically. If you grow through acquisition, you have to understand the business you’re interested in.
“We set up a model of companies that are in a certain range of what their revenue is, what their margins are, how we can be more of a strategic acquisition and what synergies there are,” he says. “If we merged, how can both firms benefit from it? It is something that we need to know something about. We’re not going to buy a company we have very little knowledge about.”
The other part of acquiring a company is what leadership comes with it.
“That is just as important as the company itself, because we are constantly looking for leaders and leadership,” he says. “When you acquire a company, you also acquire the leadership and you have to look at how those leaders can help you grow in other areas.”
One of the most challenging aspects of the acquisition process is not losing sight of your current business.
“You have to align yourself with a private equity company that can assist you in your search, because it can be very distracting, not only for the buyer but for the seller,” Wendle says. “You have a business to run while you’re doing all this and you want to keep your eye on the ball.
“I’ve seen sellers particularly get so distracted through the process that they don’t watch their business. You have to stay focused and keep your eye on the ball. Don’t get all consumed in an acquisition potential.”
Wendle understands how difficult a merger process can be, so he makes sure he is as helpful to those involved as he can be.
“That’s the way I develop a relationship with the people, because it is a relationship,” he says. “If the process goes well, then the closure is going to go well. It can’t be adversarial. It needs to be very friendly and very professional. Instead of looking at it like you’re out there buying assets, you should look at it as you’re being an advocate of the seller’s and you’re helping them sell their business.”
Integrate the merger
Once a deal is made to move forward with the merger and you’ve gone through and agreed on terms and produced a letter of intent, then you need to go through due diligence.
“We’re really trying to understand more and more about the company and they’re trying to understand more and more about us,” Wendle says.
“The integration actually starts in the due diligence process. You want them to learn as much about you as you learn about them. You want them to learn about what your benefits program is. The key for owners selling is how are my employees that I hired going to be treated.”
EQM gets its HR department involved to look through the merging company’s benefits program and matches it up with theirs.
“Typically ours is going to be overall in a better position, so the new employees are going to benefit from it,” he says. “Then it’s integrating the financial packages or the business systems. How do we communicate financially? Rarely do the new companies coming in have the same types of systems that we have.
“From there, we really try not to make changes. Any changes we have to make we want them to go slowly. What’s working obviously has been working and the last thing you want to do is keep it from working. You want the leaders and the employees to keep on doing what they’re doing.”
In a merger process, there are two sides: a legal side and an emotional side. The due diligence process focuses primarily on the emotional side.
“The legal side is pretty cut and dry,” Wendle says. “The emotional side is more cultural. What kind of culture are they coming into and how comfortable do they feel with it? I start explaining that once I first meet a potential acquisition candidate.
“For someone who’s going to sell their business, it’s a very emotional process and they have to be very comfortable with it. You have to pay attention to how you get the cultures to integrate and whether they feel they still have autonomy.
“That’s the one thing about running your own business that’s good, but now they’re part of a much larger organization and they have more potential for growth.”
Making this transition successful relies on strong communication between the two companies, specifically among leadership.
“You cannot communicate enough,” he says. “We have town-hall meetings. We have staff meetings every week. Each business unit has staff meetings every week and you’re just trying to keep the lines of communication open. It really comes down to employee engagement and whether the employees feel that they have a say and whether they’re being listened to.”
While cultural alignment is a big part of making a merger successful, there still has to be a good fit in other aspects of the business.
“Cultural alignment isn’t necessarily more important, but it is as important,” he says. “There still has to be intrinsic value and what the company brings to the table as far as net income. There has to be value-added services that customers want to buy. What I find is if employees have the right attitude and they’re happy, then they have a pretty good customer base. They walk hand in hand.
“If the employees are not happy, customers are going to hear about it because there are close relationships between the employees and the clients. And vice versa, if our client’s employees aren’t happy, we hear about it.”
EQM’s strategy is to leave the incoming company alone to continue the work it was already doing. You have to make a judgment call whether or not to make any changes to a company you’ve acquired.
“There are two aspects of it,” Wendle says. “When we look at a company we look at the brand. Most the time the companies that we acquire have a good brand and we want them to keep that name and that brand and operate it as a subsidiary, unless it is parallel to one of our business units and our brand may be stronger than theirs.”
Develop a strategy
The key to being successful at acquisitions and mergers and with the growth of your business in general is to have a strategy with goals that you hope to achieve.
“I think the business changes so fast that you can have a five-year plan, but to really put tactics behind that strategy is very difficult to do because it changes so fast,” Wendle says. “It’s been my experience that if you look in two to three years, you’re going to have a better chance of meeting your goals and putting more realistic goals out there. We’re in a different climate now than we were in four or five years ago. We’ve all managed downturns and now we’re trying to grow.”
Wendle is looking to keep EQM doing more of the same it did with Beacon Energy Corp. He is focusing on the private side more so than the public side.
“My belief system is that private industry is not investing in itself right now so there is a pent-up demand for capital improvement and industries are hoarding cash,” he says. “And I don’t think it’s going to matter who the president is, companies will start spending money on capital and start investing in themselves again. The first companies that private owners spend money on are environmental and engineering companies. We are going to be positioned to be there when companies start spending on themselves again.”
One of the biggest aspects of laying out any kind of growth strategy is the need to constantly change to stay ahead of competition.
“Presidents and CEOs have to constantly be looking to reinvent themselves and reinvent their companies,” Wendle says. “I think that the business moves so fast in the world we are in that you cannot restrict yourself geographically and you really have to reinvent yourself every three years.”
Part of that reinvention is attracting entrepreneurial people to your business to keep ideas fresh.
“To really look at new services, one of the keys is hiring entrepreneurial leaders in your company and creating a culture and environment that allows people to think freely and say their mind and be able to put strategies together without being frowned upon,” he says. “You have to create that kind of culture of growth … and have the right kind of people to create that culture.” <<
How to Reach: EQM Technologies & Energy Inc.,
(800) 229-7495 or www.eqm.com
- Acquire companies that will allow you to grow.
- Integrate the acquisition by developing a relationship.
- Develop a growth strategy with two- and three-year goals.
The Wendle File
President and COO
EQM Technologies & Energy Inc.
Born: Alton, Ill.
Education: AAS degree in architectural engineering and a B.S. degree in construction management from Southern Illinois University.
What was your first job and what did you learn from that experience?
When I was 10, I swept hair in a barber shop and I also had a paper route. I was raised by parents who were born in the Depression. I was taught that if you worked hard everything would be fine. So I always had a job and I always had money. It’s about the work ethic. I knew I could get a job if I could prove I could work hard. People would want to hire me.
Who is somebody you look up to in leadership?
Abraham Lincoln. The man failed so many times. He had no way of becoming president of this country because of all his failures, but he did and he was the right president at the right time. Another man that had so much against him at the time was Winston Churchill.
What is the best advice that someone has given you?
I was taught by the CEO of the first professional job that I had to be friendly and be professional, but don’t be abused. Don’t let anyone treat you poorly. Stand up to it no matter what.
If you could do something dangerous one time without consequence, what would want to do?
I would ride my Harley through the Alps.
When I was a young Marine officer, I observed that otherwise ordinary people could perform amazing feats. All they needed was training, tools, a clear goal and motivation. My job was to make the most of those four things.
Leaders in the business world are trying to do the same thing. But increasingly, I see them falling short, often because they’re not clear enough about the objective or not committed enough to achieving it. Yet others miss the mark because they have disconnected from their teams personally and emotionally, and that is what I want to focus on now.
Leadership is a messy business, in the sense that all meaningful human relationships are messy. Rewarding relationships last; the rest fail. So part of a leader’s primary responsibility is to ensure that there is a rewarding relationship between his or her subordinates and their work. The more rewarding the subordinate finds the relationship, the more latitude the leader has in sculpting and directing the team.
The problem I see increasingly in Silicon Valley — though it is by no means confined to this area — is that too many leaders are behaving as if the only meaningful rewards are financial, whether cash or stock options. In fact, the most effective motivational tools don’t cost the company anything, except a talented leader’s salary. They include incentives such recognition, praise, inclusion, important assignments, respect, status and the satisfaction of having produced impressive results.
The business press talks a lot about “customer care,” but the best leaders focus maniacally on “team care” because it is the team that will ultimately care for the customer. And the team will care about its responsibilities to the degree they perceive the leader is personally engaged with the team, its work and its members.
If you reflect in a calm, quiet moment on your working relationship with each of your subordinates, one by one, name by name, you’ll know in your heart whether you are leading them or just playing at it. If you’re not engaged with each of them and their work or not doing it as well as you could be, then changing the compensation scheme shouldn’t be your first move to improve performance.
Instead, change your behavior. It requires no budget increase or sign-off from above, and it will allow you to change the behaviors of your team more effectively and more sustainably than any other management concept, cash included. That’s because, no matter what tomorrow may bring, your team will be prepared to weather storms and seize opportunities, and you’ll be prepared to lead the way.
I understand that creating and deploying these nonfinancial incentives takes a lot more time, energy, thought, humility, humanity and maintenance than simply goosing the compensation plan. But there is simply no substitute for this harder work, which is frankly the essence of the leader’s job. Trying to sidestep it with cash is to abdicate a leader’s core responsibility.
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. Reach him at JerryMcLaughlin@branders.com.
Don Knauss has built a career transforming new brands into household names, from debuting Simply Orange at the Minute Maid Co., Coca-Cola Zero as president of Coca-Cola North America or launching Green Works — one of the most successful new products in consumer packaged goods in the last decade — as chairman and CEO of The Clorox Co.
While the road hasn’t always been easy, Knauss says there’s one characteristic that will never change when it comes to what makes brands successful: People trust them. “At the end of the day, a brand is a promise of performance,” says Knauss, who joined Clorox in 2006. “It really is about creating trust with the consumer.”
Advances in technology have only magnified the role trust plays in consumer decision-making, Knauss says. Before people even set foot in a store to buy a product, they can research user reviews, look up product information and find out what other people think about the best practices of the brand as well as the company that makes it.
Coming on as the new CEO, Knauss quickly realized that Clorox, a company with products in more than 100 countries, needed to meet consumers’ need for trust and transparency if it was going to continue to get their vote as customers.
Here’s how Knauss created a corporate responsibility strategy at Clorox that’s not just good for consumers; it’s also good for business.
Make it a priority
One of the most important steps in the success of Clorox’s corporate responsibility initiatives dates back to 2006, when Knauss and his executive leadership team first formalized the company’s commitment to corporate responsibility (CR).
What began with a meeting about Clorox’s centennial business strategy — the company turns 100 in 2013 — quickly turned into a call to action as the group examined four “megatrends” going on in the business world, including health and wellness, sustainability, multicultural shifts and, of course, affordability. As Knauss and his team dove into the causes behind each trend, they kept coming back to the issue of corporate responsibility.
“Consumers were not only evaluating brands on strictly the performance of that brand, but they were also evaluating it on who was providing the brand to them,” Knauss says. “Was it a company they trusted? Was it a company that had the same core values that they espoused? And was it somebody that they wanted to do business with?”
Over the years, Clorox has grown from its trademark bleach and cleaning products to manufacturing and selling everything from salad dressing to water filters, cat litter and trash bags. And like many other brand-driven enterprises, it’s spent years focusing on its commitment to build trust with its customers.
But in that meeting, Knauss and his team realized that it was time to take the extra step. They needed to make the company’s commitment to corporate responsibility a formal strategy with clear metrics and goals.
“It was that insight to seeing the connection consumers were making between brands and companies that made us even drive it harder,” Knauss says.
“As an offshoot of health and wellness and sustainability, it really got us doubling down on our corporate responsibility of what do we want to stand for?”
They narrowed Clorox’s focus to five pillars of corporate responsibility: performance, planet, people, products and purpose. And they went about setting goals for each pillar. Some of these included making sustainability improvements to 25 percent of the product portfolio by 2013, reducing waste and moving to more sustainable product materials.
They also structured the goals in phases — annual goals as well as a three-year plan — allowing the leaders to adapt the strategy over time as consumer or economic trends play out. As you build a foundation for CR in your organization, the most important thing to consider is whether the goals you set are realistic, so that people internally and externally will take them seriously, Knauss says.
“If you set unrealistic goals, you can create some pretty bad behavior throughout the organization,” he says.
“So we thought it was a combination of getting the strategy right, getting the strategy focused on trends, sustainability being one of those trends, and then linking that to how do we do a better job from a corporate responsibility standpoint against the planet, against our people, against the purpose of the company.”
Creating a formal CR strategy gave Clorox the foundation it needed to drive the commitment throughout the organization. From there, Knauss says it was up to the company’s leadership to build alignment on the strategy, or “tone at the top.”
“It starts with the top,” he says. “So a CEO or COO really has to drive this thing if you’re going to get traction with the rest of the company, and then get traction with outside constituents.
“You have to keep people informed. So it’s not just me talking to the executive committee. It’s me sending out voice mails, emails, connecting with the rest of the organization on the kind of progress we’re making.”
As a leader, Knauss says he utilizes a piece of business advice he received from Don Keough, the former president of the Coca-Cola Co., when he’s trying to get buy-in from stakeholders.
“When I took over as president of Coca-Cola North America, I asked him, ‘Don, what kind of advice would you give me?’” Knauss says. “And he said, ‘Don’t act like a big shot.’
“One of the things I’ve learned is that as you move up in an organization, you’re given more power. The less you use that power, the more authority you’re given by people — in the sense that power is the ability to compel people to do things. Authority is really more about persuading people to do things.”
To get buy-in from shareholders about the CR strategy, Knauss simply reminded them how the integrity of the company that produces a brand translates into a consumer’s buying decisions, and therefore, profitability.
“Everyone understands the evolution of the consumer over time and how the consumer isn’t just evaluating the brand but the company that provides that brand — and is it somebody they really want to do business with,” Knauss says. “I think people intellectually get that. They get that intuitively. It’s just reminding them how important it is that our values and the focus on our corporate responsibility align with the values of our consumers.
“It was easy to make the leap from building trust with consumers — anchored in the performance of the brands — to building trust with investors by anchoring the trust in the performance of the stock and the company’s ability to deliver shareholder returns.”
Having a strong CR strategy means nothing if you don’t accomplish any of the goals you set out to achieve. So to keep your organization accountable for progress, you need to find ways to keep them engaged in the goals and focused on their success.
One way to do this is by tying those goals to monetary incentives.
Because Knauss knew he would rely heavily on his executive committee to communicate and lead progress on CR initiatives, he decided to pay the company’s senior executives part of their annual compensation based on Clorox’s ability to deliver against its environment goals, such as for greenhouse gas emissions, wastewater reduction, energy use and solid waste.
“If you really want to get traction, you not only have to measure it, you have to pay people on it,” Knauss says. “So it’s first, getting the focus right, including defining the metrics that you want to measure progress with, second, getting alignment throughout the organization that these are the right pillars and the right metrics, and then lastly, the discipline — putting the routines in place to monitor the progress against those on a quarterly basis, at least.”
In addition, people throughout the organization need to understand how important CR programs are to the consumers you sell your brands to, Knauss says.
So to help people see this link between CR and company performance, the organization released its first official corporate responsibility report in 2010. It also highlighted its CR strategy throughout the 2011 annual report, titled “Think Outside the Bottle.” In both instances, Clorox emphasized how CR ties into the company’s vision and mission for employees and consumers.
Building this kind of high-level engagement with employees is important short-term because it drives progress on your goals and long-term because it also helps you attract and retain the best talent, Knauss says.
“That’s what it’s all about, is the best talent,” he says. “So when you look at what we’re trying to do from a business standpoint and not what we’re trying to do from a corporate responsibility standpoint, all of that together really drives a high level of engagement with our employees. At the end of the day, that’s how you win.”
The No. 1 way to stay accountable to your CR progress is probably the most obvious. Because CR also reflects corporate values, you need to also link the goals and programs back to the wants and needs of consumers.
With the increasing availability of information, many companies have, at times, suffered financially because of their lack of transparency in corporate practices — think Wal-Mart, British Petroleum and Nike.
Demonstrating transparency with consumers is increasingly important for companies who want to prove that their commitment to the customer is genuine.
“It’s so fundamentally different in terms of the consumer’s access to information — the ability to really say, ‘Look, I want to do business with people whose values align with my own,’” Knauss says.
“You’re really putting your brands at risk if those brands and the company don’t connect and communicate this sense of value.”
Instead of going on the defense, Clorox has used the transparency of digital and social media as a way to increase the amount of information it shares with its consumers.
For example, when Knauss and his team saw that consumers across segments were showing more concern about what kind of ingredients were in products, and especially cleaning products, they implemented an initiative to disclose all of the preservatives, dyes and fragrance ingredients in the company’s U.S. and Canadian cleaning, disinfecting and laundry products.
Although the company was the first in its industry to do so, it eventually became a leader in ingredient disclosure as other businesses followed suit.
“A consumer can go on our website, pull up any one of our brands, and it will give full disclosure of whatever ingredients are in there,” Knauss says. “So it’s an example of the transparency that we’re not only trying to bring to the financial side … but to the consumer side of the company by letting consumers know exactly what they’re buying.”
Another example is the website for its brand Green Works, which offers users tips on how to create a greener lifestyle and features a sustainability blog called “Green Mommy in a Plastic World,” with posts such as “Seven things to do with your kids’ artwork.”
Because the ability to connect and get feedback is now so immediate, most companies can only benefit from policies such as increased transparency, communication and disclosure, Knauss says.
“There are just so many different ways of connecting, so you’ve got to be where the consumer is,” Knauss says. “So I think everybody intuitively gets that. But we’ve certainly seen a big payout.”
In addition, many initiatives that have helped Clorox reduce its environmental footprint, such as using greener packaging, have also reduced cost. Today, all of its segments have bounced back from recession lows, bringing the company to $5.2 billion sales last year. And the fact that 90 percent of Clorox brands are No. 1 or No. 2 in the spaces that they compete in is just further proof that corporate responsibility and profitability can — and do — go hand in hand.
“If you don’t have a solid strategy around corporate responsibility and articulate that strategy to people in a compelling way, you’re missing half of the demand creation equation,” Knauss says. <<
How to reach: The Clorox Co., (510) 271-7000 or www.thecloroxcompany.com
- Create a formal commitment.
- Get key groups on board.
- Find ways to raise engagement.
The Knauss File
Chairman and CEO
The Clorox Co.
Born: Highland, Ind.
Education: Indiana University
First job: Officer in the United States Marine Corps
What is one part of your daily routine that you wouldn’t change?
Senior corporate jobs are very demanding, not only mentally but physically, particularly given the extensive travel needed. I work out six to seven days a week. That physical exercise is a great release, and a high level of fitness is critical to being able to execute my job with excellence. I highly recommend a vigorous exercise program for everyone, but especially for those in high-pressure jobs.
If you could have dinner with one person you’ve never met, who would it be and why?
Margaret Thatcher. She was an incredibly effective prime minister during a very tumultuous time. I would like to understand her approach to leadership — the traits she valued the most in people for them to be truly effective and drive real progress whatever their role in life.
What is your favorite part of your job?
The aspect of my job I most enjoy is helping to define and sustain the values of our culture. The CEO must set a ‘tone at the top’ to win in the marketplace and, importantly, to win in the right way. It is extremely important to define the traits you expect from your leadership team and your entire company. I believe a values-based culture anchored in integrity, optimism, compassion, humility and curiosity will attract and keep the best people engaged.
If you own or operate a business, you have probably experienced slow periods where revenue was declining and you didn’t have enough leads coming in. But there is actually a way to market yourself so that you are not at the mercy of the season or economy again.
There are two things that you need to control your revenue year-round: an integrated marketing approach and an organized marketing plan.
Here’s how to do it.
Integration means that each piece of your marketing works together in a coordinated way. For example, an integrated approach might look like this: You have a direct mail postcard campaign that drives traffic to your website. Your website is optimized to convert that traffic into leads by getting them to fill out a form.
Then, that form populates your email database and your leads receive pre-determined emails from you for the next six months. During that time, your sales team follows up with the prospects over the phone.
Of course, the specific strategies that make up an integrated campaign vary by industry, but what follows is a good general outline.
In order to fully integrate your marketing approach, you will need the following systems in place:
- Lead generation. For this, I suggest direct-mail postcards. There are other options such as television, radio, billboards, letters and more. But I have found postcards to be the most cost-effective.
- Lead reception. Receptionists should have a predetermined way to handle callers and gather their contact information. Your website needs to be optimized to gather prospects’ contact information, which is easily done by offering free downloads where the prospect is prompted to fill out a simple form.
- Follow-up. You’ll want to go with an email service for this, because email is the most affordable follow-up option available and usually yields great results when used in this capacity. Postcards and phone calls are also great for follow-up, too.
The Internet is also a great resource to learn more about each of these elements.
It is one thing to have an integrated marketing approach, and it is another thing to have an organized, fully integrated marketing plan.
It may sound obvious, but you need to be intentional and organized about exactly how the pieces of your marketing plan will integrate. For example, how many days will go by before an online prospect receives the first email from you? How many days will you wait until you call your prospects? Does the design on your postcard match the design of your website?
The best way to handle this is to sit down with your marketing staff — or by yourself if you don’t have a marketing staff — and evaluate the process, beginning with lead generation and continuing all the way to the sale. You’ll also need to answer the questions that come up along the way.
Some of these questions you’ll want to ask and answer include the following:
- How am I going to generate leads?
- How am I going to receive these leads?
- Is the method of reception going to immediately let the prospect know they are in the right place?
- How am I going to get prospects’ contact information?
- How am I going to follow up with leads?
- How are my different follow-up methods going to work together?
- How often should I contact my leads?
Once you have built a solid structure for your marketing campaign, you can get to work implementing it. As you do, you will notice that your revenue numbers follow a pattern that correlates to your marketing output. And when that happens, you’ll have confidence that, even in your off seasons, you can get the leads you need by simply increasing your marketing output.
Joy Gendusa is the owner and CEO of direct mail marketing firm, PostcardMania. Joy began PostcardMania in 1998, with nothing but a phone and a computer, never taking a dime of investment capital. Since then, PostcardMania has expanded to offer its clients more services including website and landing page design and development, email marketing and full marketing evaluations — all while continuing to educate clients with free marketing advice. In 2011, PostcardMania reached almost $45 million in annual revenue and the company now employs more than 195 people, prints 4 million and mails 2 million postcards each week, and has more than 53,000 customers in over 350 industries.
Branch Rickey, the Hall of Fame big league baseball executive of the 1940s and ’50s, famously coined the expression, “Luck is the residue of design.” This grand concept of cause and effect, which essentially says that good things don’t usually happen by themselves, stands as the cornerstone for anyone looking to build a successful business.
While it is possible to stumble into early success, if you’re in it for the long haul, you need to gain a thorough understanding of what it is you’re selling and how it relates to the needs of your potential customers before you act on it. It’s one thing to have a good idea and to make a few dollars at it, and quite another to duplicate that success on a larger scale or to sustain it for an extended period of time.
Get in the mainstream
Many years ago, I was brought in to be the public face of a protein bar that was successfully sold in health food stores and gyms, targeting body builders and active males. As popular as the bar was, it occupied a narrow niche, with limited potential for growth outside of its very specific market.
The company behind the protein bar wanted to get into the mainstream retail arena — big box stores and supermarket chains — but didn’t know how to do it. So I had a meeting with one of their executives in which he asked for my advice. He placed one of the jumbo-sized bars in front of me, and after thinking about it for a moment, I took out my pocket knife, cut the bar in two and slid it back toward him. He gave me a puzzled look.
“The original bar is designed for body builders — you need a smaller bar for everyday consumers,” I said. “You also need to make it fit a lower retail price point for the mass market. Oh, and put my picture on it, too.”
I went on to tell him that there were countless other protein bars out there, but if the average consumer sees my picture on the wrapper, they’d be far more likely to at least take a look at it because they recognize me.
The suggestions were simple but game-changing. The company implemented these changes, and in short order, we got the product into all the places we wanted, becoming the No. 1 protein bar in the U.S. Understanding the difference between what body builders and mainstream consumers wanted, while also taking steps to make our product stand out from the crowd, was critical to our success as we expanded.
Stay fresh and topical
It is also important for your business to stay fresh and relevant over time. Every day we hear about another well-known company filing for bankruptcy protection or folding altogether. The poor economy is partly to blame, of course, but if you look closer, it’s interesting to note how many businesses have struggled or failed to adapt to the changing marketplace.
Whether it’s a department store, a snack-food company or a company that specializes in photography, part of planning for continued success is being willing to do things differently than in the past. Simply saying, “This is the way we’ve always done it,” is a surefire path to disaster.
Because I’m pretty well-known, it surprises some people when I tell them that, by definition, I am still a small business owner. That is, I own my company, and I operate it independently. I partner with many large corporations, and together, we’ve enjoyed a number of great successes over the years.
Stay ahead of the pack
But I’m still always concerned about maintaining or improving my position in the market. For that reason, I take it seriously when I notice that someone I’ve worked with is not staying ahead of the curve. I may notice that I’m not seeing new products from them, not getting any new proposals or hearing about them moving ahead in innovation.
So as much as I may have enjoyed working with them in the past, I know that I need to take charge and develop products on my own or find other companies that are just as concerned as I am about staying relevant.
Staying ahead of the pack means meeting your customers’ demands by keeping up with innovative technologies, diversifying and introducing new products. And if you’re proactive and smart with your business, you just might wind up with a reputation as one of the luckiest people around. But, of course, you’ll know better.
Tony Little is the president, CEO and founder of Health International Corp. Known as “America’s personal trainer,” he has been a television icon for more than 20 years. After overcoming a near-fatal car accident that nearly took his life, Tony learned how to turn adversity into victory. Known for his wild enthusiasm, Tony is responsible for revolutionizing direct response marketing and television home shopping. Today his company has sold more than $3 billion dollars in products. Reach him at email@example.com.
As a 36-year veteran of the auto industry, Warren Zinn has spent most of his life working around cars. From the time he learned to talk, he could rattle off the different brands: Mercedes, Jaguar and Lamborghini. And at age 21, he turned that passion into a lifelong career.
But Zinn also knows that passion isn’t everything. As the president and CEO of Warren Henry Automotive Group, he readily admits that his nine dealerships and more than 300 employees would not be in business today if the company hadn’t taken some tough steps to adapt to consumer needs.
“We like to think we’re in the front of the pack, but every day, we have to do more to stay in front of the pack,” he says. “We’re really only as strong as our dumbest competitor.”
In late 2007, Zinn began to see signs that the business was falling behind. People weren’t focused on results, and while there were a lot of reasons, the one that stood out to Zinn was the company’s loose structure and lack of process. Without these things, it was becoming harder for employees to deliver the kind of service consistency and responsiveness that customers now expected.
“It was the manner in which things were becoming so automated, computerized, the process that needed to take place because the way the business was changing,” Zinn says. “It was all becoming very electronic. So it was just a big change for us — the Internet, the world was changing.”
It was then that Zinn decided his company needed to change, too.
Zinn knew that it would take a big transformation to bring structure to the company’s operations. The problem was that the prevailing mentality at the auto dealerships was hardly one that embraced change. At the time, the company’s average employee tenure was about 16 years, and many of the more experienced employees were used to certain ways of doing things.
While having long-term people was great to build customer service relationships, it presented a challenge when it came to change management.
“Part of our success, which was also part of the problem, was familiar faces,” Zinn says.
Before making any changes, Zinn really needed to convince long-term employees to accept a new way of doing things.
“We needed to follow a process, and everybody had to be going in the same direction to get there,” Zinn says. “Nobody could take a shortcut to get to where we needed to go.”
So he and the company’s upper management held meetings with employees to discuss the process implementation, the reasons for doing it and how it would affect different areas of the business. The goal was to share the new direction but also help people overcome their reluctance to change.
After holding those meetings, Zinn and his leadership team were disappointed to find that only about one-third of the people seemed interested in the new direction.
“Very few people honestly were excited about it,” Zinn says.
“We had a lot of people here in different positions for a long stretch of time that had shown good initiative, knew what their job was and did it well. But at some point in time, when you are no longer able to have the people who have the same type of initiative — you really can’t teach initiative.”
As a leader, you need to communicate your reasons for taking your company in a certain direction. But once you do, you also must make it clear that the company is moving forward with people who embrace this direction.
So Zinn was also very upfront with employees about the fact that the company would only be moving forward with people who could get on board with the new processes.
“I had always known we needed to do this, but I really had to put my foot down and get it done,” he says.
“I had to convince people, in the best way that I could, that this is the way the company is going to go, and you’ve got to come along with us. And if you can’t make the process work — if it just doesn’t work for you — we’re going to have to part company, and that while it’s been a great relationship and we’ve worked together for a long time, this is the way that we have to go about doing things.”
Bring in new blood
After parting ways with a number of employees, the company was left to fill the empty positions before moving forward with the process implementation. But Zinn was hesitant to hire more experienced, automotive professionals, having seen the reluctance of his own long-term employees to accept a new way of doing things.
“I knew that if I hired somebody with experience, I could get the same individual that tells me everything I want to hear, but when it’s all said and done it’s, ‘Look, I’ve been doing this for 15 years. I know what I’m doing,’” Zinn says. “And that was dangerous."
Instead, he decided to take the talent search outside the automotive industry.
“We found that in order for us to do what we needed to do and to initiate the change that we needed to put in place here, it was easiest for us and most effective for us with people who came from outside the industry, rather than people who come from the industry.”
So Zinn and his team began recruiting individuals with no automotive experience at all. Largely relying on referrals, they sought out people who were articulate and expressed themselves well — real estate agents, stockbrokers, lawyers and marketers — to be trained in a variety of industry positions.
Zinn says he looked for the kind of people who inspired confidence, people who “if they looked at you and said, ‘I can take care of this,’ you would believe them.”
As the new team members came on board, he explained to them what the company was trying to accomplish with its process-driven operations, how it would go about doing it and how it would help and support them as they entered into the unfamiliar business.
What he found is that that the inexperienced people were not only much more eager to embrace the changes than long-term employees, but they also had a better attitude in making the new processes successful.
“It’s very, very easy to get people who haven’t done this before to learn what we expect,” he says.
“It’s easy for them to absorb. It’s easy for them to do, and they embrace it. Then they become very effective in what they do.”
Create a ‘focus’ group
Because the company historically lacked structure in its operations, Zinn and his leadership team felt they needed to make the new processes simple if employees were going to execute them consistently and willingly. They decided that it would be best to implement them one department at a time, beginning with parts and services.
The parts and services department focuses on two areas in particular: greeting and inspecting. So after putting together the “best and simplest” guidelines for the new processes, Zinn and the department leadership spent time explaining the benefits to employees. They described how new processes would make customer interactions more efficient, for example, saving time by creating electronic reports on vehicles being serviced or allowing customers to make appointments electronically, so people wouldn’t have to constantly man the phones.
“I looked at what appeared to be the easiest to do, the easiest to be understood, the way that if someone who had been doing this for a long time — if they wanted to — could change to be able to do it,” he says.
Zinn especially wanted long-term employees to understand how consistent, automated processes would make the business more efficient in its customer service.
“It gives more structure,” Zinn says. “Everybody should be in the same place as to how we go about greeting a customer, how we go about selling cars, how we go about servicing cars.”
Recognizing that training would also be important in achieving process consistency, Zinn also gave employees the opportunity to shadow other experienced colleagues.
By shadowing team members in three different areas, they could master the different processes, one at a time, and then review them once more with the help of an experienced supervisor before trying them on their own. The company continues to use this “1-2-3” training process.
“So all that really changed is that there’s a manner and order in which we go about getting our job done,” he says. “We have a consistency in which, if you go to different people, they may have a little bit of a different style, but the steps and the processes it takes to get there are the same.”
Once the company implemented the changes in the parts and service business, Zinn moved on to new and used car sales department. By focusing on one department at a time, he and his top leaders were able to be much more hands-on as they went through the implementation. It also allowed them to take a lessons-learned approach as they faced similar issues or employee concerns on a larger scale.
“The key is to take care of [the problem] while making sure that it doesn’t happen again,” he says. “That’s what process is all about.
Stick with it
As luck would have it, soon after the new processes were in place, the economic recession sent the auto industry into a tailspin, and few businesses were immune. Despite the financial challenges, Zinn and his top leaders have continued to work hard, keeping employees focused on executing the new processes.
“Those were some very, very difficult times — some of the most difficult times in this industry ever,” Zinn says.
“You just have to keep your head down and make certain that it happens — because it works. I’d say if we didn’t embrace this, I don’t know if we’d still be in business today. I don’t think so. We couldn’t continue to do things without having established firm processes in place.”
One built-in benefit of the process automation was that it gave the company the ability to measure and monitor business metrics in areas such as sales, customer satisfaction and customer retention.
Zinn says that giving everyone in the company access to these results, including individuals, department heads and upper management, has helped motivate employees by holding them accountable to continuous improvement.
“We hold ourselves and each other responsible,” he says.
“If we get a great report, I shoot off an email to the individual, the department head or the whole department and tell them what a great job that they’re doing or tell them that we need to pick it up.”
Today, the company is much more efficient and spends significantly less time “putting out fires” thanks to the new processes, Zinn says. At the same time, he believes that it’s the focus on results, “not reasons,” that will keep the company innovative and competitive in the future.
In fact, if you ask Zinn what is the biggest difference between his company today and five years ago, he won’t hesitate to tell you that it’s accountability.
“We have to feel like we’re looking for constant improvement,” he says. “We have to feel like we’re all on the same team. This is the direction that we’re going to go, and you follow the captain or you don’t.”
And that’s one thing you can’t teach. <<
How to reach: Warren Henry Automotive Group, (888) 856-3113 or www.warrenhenryauto.com
- Get the right people on board.
- Hire people who can support change.
- Keep the focus on improvement.
The Zinn File
Warren Henry Zinn
President and CEO
Warren Henry Automotive Group
Born: New York City, but moved to Florida when 6 months old
Education: Northwood University in Michigan
Role model for success: I admire Alan Mulally, CEO of Ford Motor Co. Mulally saw what was coming, put a plan together and stuck with. He saved the company without taking help from the government unlike other U.S. auto manufacturers, and he has been extremely successful since.
One part of his daily routine that he wouldn’t change: I wouldn’t change my communications with my department heads. To be a successful CEO, you must stay right in the thick of it — be involved with your staff, always have an open mind, and listen to what everyone has to say.
Why do people like working for you?
I’m available to people. I sit in my office with my door open. I move around from dealership to dealership on different days, and of course, I make people feel like they are part of something very important. They’re not on the outside. They’re on the inside.
What do you like most about your industry?
It’s something that I’ve always liked. I like seeing the new cars that continually come out. I like seeing people get excited when they get a car, happy about having their car, happy about the experience that they’ve had with their car. And I’m happiest when they come back and they get another car.