Northern California (1069)

While government regulations and prices for energy and raw materials influence manufacturing competitiveness, having a talented, innovative workforce was deemed the most critical factor in a country’s ability to compete in manufacturing, according to the 2013 Global Manufacturing Competitiveness Index by Deloitte.

Unfortunately, the U.S. is lagging behind other high-wage nations such as Germany and Japan when it comes to innovation in its manufacturing sector. And we’ll continue to lose ground if executives wait for colleges to churn out science, technology, engineering and mathematics graduates.

“We can’t wait for someone else to fix it. The talent issue needs to be addressed today,” says Jennifer McNelly, president of The Manufacturing Institute, a non-profit affiliate of the National Association of Manufacturers.

Experts may not agree about the existence of the so-called skills gap, but they unilaterally concur that manufacturing executives can jump-start innovation without breaking the bank by tapping into widely available brain trusts.

Cultivate collaboration

Collaboration is the secret sauce of innovation, John Zegers says. The director of the Georgia Center of Innovation for Manufacturing, Georgia Department of Economic Development, says creativity doesn’t evolve from one person — it comes from inviting different perspectives.

“Whether you’re trying to solve a problem on the manufacturing floor or develop a new product, it’s critically important to garner feedback from everyone who touches the product,” he says.

Historically, manufacturers have expected engineers to be their innovative spark plugs, but the notion of the lone innovator is fading amid the shortage of engineering talent. Today, 90 percent of managers view the manufacturing workforce as full partners in solving problems, improving processes and satisfying customers, according to the 2012 Manpower Manufacturing Workforce Survey.

Moreover, cross-functional teams comprised of accountants to shipping clerks are using their detail orientation and intimate knowledge of supply chain processes to streamline procedures and create new efficiencies.

“Involvement creates ownership and ownership inspires creativity since employees feel empowered to make changes,” Zegers says. “Plus, the cost of marshaling existing resources toward a problem is negligible.”

At the same time, garnering input from people in dissimilar roles broadens a team’s perspective and buoys critical thinking by injecting a dose of cultural and ethnic diversity. Of 321 companies surveyed by Forbes, 85 percent agreed or strongly agreed that diversity is key to driving innovation in the workplace.

 While many organizations want the benefits of high-stakes innovation, their culture won’t support it. Executives who resist outside-the-box ideas or penalize failure may unconsciously stifle creativity. If you champion the efforts of cross-functional teams by removing the barriers to innovation and sponsoring a culture that shuns the status quo and rewards risk-taking, the seeds of creativity will sprout and bloom, but only under the right conditions.

Close skill gaps through training and education

Manufacturing executives frequently bemoan the dearth of workers capable of mastering today’s increasingly hi-tech, team-based roles, yet the answer to the problem could be right under their noses.

About 20 percent of all American jobs are now in the STEM fields, with half of those open to workers who don’t have a four-year college degree, according to a new analysis by the Brookings Institution, who refers to these workers as the second STEM economy. Second STEM workers come from high schools, community colleges and vocational schools and are critical to the implementation of new ideas since they advise researchers on feasibility of design options, cost estimates and other practical aspects of technological development.

Manufacturers bear some responsibility for their predicament according to Manpower, since most companies are not recruiting for manufacturing talent as if they were knowledge workers and are not managing them as a knowledge workforce either.

Specifically, they’re neither developing their current employees nor building a pipeline of technically proficient talent to meet near-term hiring needs.

“There are plenty of 40-year-olds working in the industry who were trained in a different way,” says Rick Jarman, president and CEO of The National Center for Manufacturing Sciences. “The talent is there, they just need retraining and development.”

Investing in daylong seminars that use simulation to teach lean manufacturing concepts, kaizen events, overall equipment effectiveness, value stream mapping and so forth can yield big dividends, Jarman says. Workers who understand modern manufacturing concepts may enhance a company’s penchant for innovation.

Plus, ingenuity is a teachable skill. Employees can learn the fundamentals of the innovation process and start generating money-saving, useful ideas after attending a short, four-hour training course. Plus, upgrading your current staff is less risky and time-consuming than developing novices.

Since manufacturing will see a 50 percent increase in the number of mature workers over the next decade, companies should consider this workforce segment as they assess their near-to-medium-term talent acquisition strategies. Innovative organizations are pairing mature workers with technically savvy new hires to facilitate knowledge transfer and mentoring.

Indeed, some industry veterans have the ability and desire to learn advanced technical skills like computer numerical control, machine tools, computer-aided design and manufacturing programs or even robotics, if given the chance. High-potentials are being offered tuition assistance because having a technically competent workforce is critical to innovation.

“Manufacturers can’t capitalize on groundbreaking technology or invest in computer-aided machinery if they don’t have someone to operate it,” McNelly says. “This is just one example of how the skills gap can impact innovation throughout an entire industry.”

Employers can close debilitating talent shortages in as little as three to six months by raising their expectations and requesting certified workers from local community colleges. McNelly cites a pilot program in Northeast Ohio as an example of successful educational alliance. Community colleges provide NAM-Endorsed certified training to students to prepare them for advanced manufacturing careers.

“Just showing up is no longer enough,” McNelly says. “Employers need certified employees to thrive in a manufacturing environment that’s grounded in teamwork.”

Enticing high school students is a long-term solution to looming talent shortages in manufacturing. To succeed, executives need to change students’ perception of the industry.

Offer them apprenticeships and invite students to tour plants so they can see that there’s more to a manufacturing career than standing on your feet all day, says McNelly.

“Show them a distinct career path and the technical aspects of the job, or else bright students with a flair for innovation will pursue opportunities in other industries,” she says.

Cross boundaries to expand your brain trust

Augmenting the creative efforts of a modest staff by crowdsourcing ideas and suggestions from customers and stakeholders is a new approach gaining attention. According to Newsweek, Unilever established an open innovation unit to work with outside partners in 2009, which increased the share of external ideas that are adopted by the company’s business units from 25 percent to 60 percent. Even Starbucks is asking stakeholders to help develop ideas to reduce waste.

While it’s possible to solicit ideas via social media and traditional focus groups, many companies are using online discussion boards to engage outsiders in stimulating conversations with executives and engineers. The back-and-forth banter encourages participation and helps flesh-out creative ideas in real time.

If a shortage of engineering expertise and technical know-how is stifling R&D, one technique is to borrow the requisite expertise by tapping the brain trust at your local college or university.

“Many colleges and universities will gladly provide research, access to labs, professors and engineering students to local manufacturers,” Zegers says. “They can help you develop cutting edge technology or solve problems without adding to staff. They can even help defray development costs by connecting manufacturers with grants or matching funds from state and local governments.”

Collaborative R&D is another way to leverage external expertise and technology in the quest to develop cutting edge products and efficient manufacturing processes.

“Manufacturers can reach the end game faster by pooling intellectual capital and sharing the investment and the return with partners who have complementary talents,” Jarman says.

If you don’t have the wherewithal to source partners and manage large-scale projects, you can still enjoy the benefits of collaborative R&D, by engaging an intermediary.

The National Center for Manufacturing Sciences provides neutral, third-party collaborative project oversight. Or, seek out industry programs that form strong multi-disciplinary teams by matching willing partners with experts from universities, government labs and external funding sources. Collaborating with engineers from the U.S. Department of Commerce’s Manufacturing Extension Partnership or other public/private partnerships is yet another option.

The opportunities to innovate are endless, even for small manufacturers, if executives go out of their way to broaden their talent circles.

“There are more than 300,000 manufacturers in the U.S. and endless opportunities to collaborate,” Jarman says. “Some of the most creative ideas are coming from small and mid-size manufacturers who have crossed boundaries and barriers to pursue talent-driven innovation.”

 

How to reach: National Association of Manufacturers, www.nam.org; The National Center for Manufacturing Sciences, www.ncms.org; The Georgia Center of Innovation for Manufacturing, manufacturing.georgiainnovation.org

Wednesday, 28 August 2013 07:14

The God of Greek Yogurt

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Back in 2005, Hamdi Ulukaya stumbled upon a classified ad for a yogurt plant recently closed down by Kraft. After initially ignoring the ad, Ulukaya had a gut feeling that he should at least visit the plant.

It’s a good thing he listened to his gut. Otherwise the story of his company, Chobani Inc., may be very different today. After seeing the plant Kraft had for sale, Ulukaya bought it on the spot and went to work perfecting the recipe for Chobani Greek yogurt based on his belief that everyone, regardless of income or location, deserved access to delicious, high-quality yogurt.

“I grew up with yogurt,” says Ulukaya, who is founder and CEO of the New Berlin, N.Y.-based company. “Being from Turkey, a big part of our diet was yogurt.”

It wasn’t just a gut feeling that made Ulukaya visit the plant, but it was also a gut feeling that Chobani would make it in the world of yogurt in retail.

“I didn’t analyze it too much,” he says. “It was nothing but a gut feeling. Everyone I knew that had a knowledge of business were looking at the category and at who was closing a plant, which was Kraft. Everyone who looked at the idea was against it.

“I would be convinced for a day by the people I talked to and then the next day I’d change my mind. The only thing I knew was there was a big opportunity in yogurt.”

Here’s how Ulukaya built a yogurt empire that has gone head-to-head with category veterans Dannon and Yoplait.

Keep the faith

Chobani began with the hiring of five employees. However, the initial employees, including Ulukaya himself, lacked the experience in launching a yogurt company.

“I built the company based on people, not with experience from before, but willing to learn and try anything,” he says. “We had a bunch of people that had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s.

“Whatever you look for in people to bring them into a company — none of us had it. Most of the people came in from an entry-level position and now they’re leading departments. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”

With that mentality Chobani’s first yogurt hit shelves 18 months after Ulukaya bought the Kraft plant, and has since grown to become America’s No. 1 yogurt.

“It was not easy, but what we found out was what is seen and what is reality are two different things,” Ulukaya says. “The category was owned by two major companies. Dannon and Yopliat owned about 70 percent of the market, and they had been there for years. As a startup, you go to the specialty stores first. That’s how you start and you grow and once you reach a certain level then you go to the big retailers.”

Ulukaya didn’t want to do that. He wanted to go to the big retailers first and be in the regular dairy isle.

“That was a crazy idea and nobody thought that would go, but at least we tried,” he says.

“When we tried, we convinced one retailer in New York, ShopRite. The result from that was we were able to expand to a couple of other retailers. After the second or third customer that we had success with for our yogurt I knew it wasn’t going to be about selling — it was about making enough. So from that moment on I lived in the plant.”

Chobani has grown from five employees to almost 2,000 today. The company started out with one truckload of milk a day and now uses more than 4 million pounds daily. Its products are now available nationwide as well as in Australia, the UK and Canada. 

Build a culture that breeds passion

Chobani’s success has been driven by Ulukaya’s passion, which earned him the title of EY Entrepreneur Of The Year 2012 U.S., and subsequently, the 2013 World Entrepreneur Of The Year. That success has also been a result of Chobani’s culture of delivering the highest quality.

“We have a reason for doing what we are doing,” Ulukaya says. “We want to make an awesome product for everybody. We want to make it nutritious, delicious and accessible. While we are making it, we want to build things around it. We want to be a part of the community. We want to be places where we can make a difference. That gives people reasons to get together and do something awesome.”

As Chobani has expanded and its core team has grown-up, it’s been important to transfer that culture and belief to everyone else.

“That passion was so strong, and I think we are so connected to our business. I am personally so involved in the business, especially in the plants, that having those one-on-one conversations and being an example, not just preaching and putting things on the wall, but by living it and putting in hard work, affects us more,” he says. “We built Chobani on those qualities.”

Chobani has gone from nothing to $1 billion in five years. That kind of growth can be stressful, but Ulukaya enjoys what he does and that’s what pushes him forward.

“It has its highs and lows, because let’s face it, it’s not easy,” he says. “They asked Steve Jobs what was the most important thing in business and he said, ‘Passion.’ If you don’t have passion you would give up when things get difficult. We have so much passion and love for what we do that it becomes a part of our life. I personally don’t separate my personal life from my business, because I’m doing something that I love.”

Ulukaya calls that passion “The Chobani Way.” He doesn’t expect any of his employees to have to pretend they enjoy what they’re doing or act differently than who they are.

“I have never become different depending on whether I was involved in business or in my personal life,” he says. “You don’t have to pretend to smile. You come as you are and you just try to learn it. That became ‘The Chobani Way.’”

How to reach: Chobani Inc., (877) 847-6181 or www.chobani.com

 

 

If you are an entrepreneur, and you see what you think is a growth opportunity, you may be tempted to take the advice that’s been offered many times: risk all you can and jump in head first.

But if you catch your breath, the proper decision at that time is not really what to do. Your analysis lies more with if you think the opportunity is one for growth.

With that in mind, Smart Business interviewed some of the world’s greatest entrepreneurs and the leadership at EY about growth opportunities. These business leaders come from the more than 60 countries at the recent EY World Entrepreneur Of The Year conference in Monte Carlo.

 

“We’re looking at China and other Asian countries. The key to that market is to have big internationals that are creating value for their communities where we can sell our products. These are the kind of countries, those that can generate big internationals, that we are looking at.”

Martin Migoya, CEO, Globant

Entrepreneur Of The Year 2012 Argentina

 

“I have been tracking where I see money going. Where is the most foreign direct investment happening? Africa is clearly one. In South America, Colombia has been coming much more into its own, as have Indonesia and parts of Southeast Asia. Those are some of the markets you’ll start to see. Mexico is another one you have to watch because it’s close to the U.S. and its leaders have had change in their political landscape to be more pro-business.”

Herb Engert, Americas Strategic Growth Markets Leader, EY

 

“One of the ways that we encourage innovation is we partner with a lot of technology startup companies. We look for alliances and what’s next in technology that can drive improvements and enhancements in our industry.

When we see a technology that’s promising we’ll start working with them and provide them with real-world market feedback. That gives us the data and confidence to help them get to commercial deployment.

Our people are always looking for innovative ways to do things with the discipline of knowing that at Chevron we have to represent our brand and stand behind everything that we do and our customers expect us to keep them on that proven level of technology.”

Jim Davis, President, Chevron Energy Solutions

 

“I am in one of the newest economic blocs to emerge from Latin America, the Pacific Alliance, which seeks to create a Latin American gateway to Asian markets. Chile, Colombia, Mexico and Peru are members. The bloc hopes to make the commercial, economic and political forces among the members work more closely together.

The entrepreneurs representing Colombia chose me to be in that alliance two years after it was founded. What it is going to do is to join the market of those five countries — it is one market for everyone.”

Mario Hernandez, founder and president, Marroquinera

Entrepreneur Of The Year 2012 Colombia

 

“There continue to be tremendous opportunities in Brazil; it’s a big country, a big market. It will be back on the world stage even more with the 2014 World Cup and ultimately the Summer Olympics in 2016.

But when you look at Spanish-speaking countries, certainly Mexico is attracting a lot of direct foreign investment. The new administration, the federal government there, has definitely got a strong commitment to entrepreneurship.

We are seeing that as being important to them, and we are working with them on a number of different initiatives as the U.S. State Department and others try to help foster more entrepreneurial startups and more entrepreneurial growth in Mexico, both big and small.”

Bryan Pearce, Americas Director, Entrepreneur Of The Year and Venture Capital Advisory Group, EY

 

“There are always things you can do to improve and grow your business. You should be rethinking and retooling it every chance you get. The key thing is making sure everybody in the organization understands the story, where you’re going, are you going to get there in the belief that you are doing the right thing. People want to know their purpose, so that’s for me the biggest area to keep the energy going — keep a sense of purpose very strong.”

Dr. Alan Ulsifer, CEO, president and chair, FYidoctors

Entrepreneur Of The Year 2012 Canada

 

“Always be seeking new opportunity. Always be looking for new technologies, innovation and creativity within your people. The best ideas within our business have come from the people inside our company. You have to give opportunity to your people. Tell them it’s OK to be wrong and make mistakes. That’s important so people will learn from those mistakes and come up with better ideas.”

Lorenzo Barrera Segovia, founder and CEO, Banco BASE

Entrepreneur Of The Year 2012 Mexico

 

“The growth driver in the world is coming from entrepreneurs. They are the ones driving economic growth and driving job growth. If you look at leading indices of companies, they churn much more rapidly than they ever did before.

“It used to take 20 years to have a half of a churn in some of these indices. Now it takes four or five years. It’s because the entrepreneurs are building businesses so quickly. We have to keep investing and keep recognizing their strengths.”

Jim Turley, retired global chairman and CEO, EY

 

“It’s important to understand where the trends are going. So communication and information is important. I fully support the free market system. It’s a great way to understand where the best new ideas are coming from and where the value lies. We keep an eye on our competitors on technology and on alternative learning aspects. So to the extent that the web provides a better way to educate more students more efficiently, we’ll be using that.”

J.C. Huizenga, founder, National Heritage Academies

 

“I built the company based on people, not with experience from before, but willing to learn and try anything. We had a bunch of people that had never done this before. None of us had run companies. None of us had worked in high levels of companies. None of us were from Fortune 500s.

“Whatever you look for in people to bring them into a company — none of us had it. Most of the people came in from an entry-level position and now they’re leading departments. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”

Hamdi Ulukaya, founder, president and CEO, Chobani Inc.

Entrepreneur Of The Year 2012 United States and 2013 World Entrepreneur Of The Year

 

“Companies attracted by the Latin American market have to decide where to establish the operations in Latin America. They have many opportunities: Sao Paulo; Buenos Aires; Santiago, Chile; or maybe in Peru. But in Uruguay, there is a very small market. You have to operate with a different concept, much like an offshore company, to operate in Latin America.”

Orlando Dovat, founder and CEO, Zonamerica

Entrepreneur Of The Year 2012 Uruguay

Another year of EY’s Entrepreneur Of The Year Awards has come and gone, but the stories told and the lessons learned are far from over. Each year EY’s entrepreneurial programs get bigger and better and the entrepreneurs involved are getting more creative and leading more impressive companies than in prior years.

For instance, Hamdi Ulukaya, the founder and CEO of Chobani Inc., was named Entrepreneur Of The Year 2012 U.S. He went on to win 2013 World Entrepreneur Of The Year, making him only the second entrepreneur from the U.S. to win the world award.

This summer Smart Business caught up with a few of EY’s leaders, Herb Engert, Americas Strategic Growth Markets Leader, and Bryan Pearce, Americas Director of the Entrepreneur Of The Year Program, to discuss how these programs have evolved and talk about some new ones that are being developed.

It should be noted that EY itself is going through a leadership transition with the retirement of Jim Turley, global chairman and CEO. Smart Business spoke with him as well to understand the future direction of the company.

Here’s what we learned.

How are you effectively developing a seamless global leadership transition?

Turley: We announced Mark Weinberger was going to be my successor well over a year ago, probably 14 or 15 months ago. It was interesting because unlike many of our competitors who do this very quickly, we realize this is a really important transition.

The reason we gave ourselves 15 months of transition is because we’ve got 170,000-plus people around the world. So we take our time; we do this well.

How do you see your legacy?

Turley: If there is a legacy it’s our people culture. We’re a special place. More experienced folks join EY from our competitors than ever leave us to join the competitors. They come and they say it’s because of the culture we have.

What is one of the greatest marketing challenges moving forward?

Turley: Everybody has realized now, much later than we realized some 34 years ago, that the growth driver in the world is coming from entrepreneurs. They are the ones driving economic growth. They are the ones driving job growth.

I think we have to keep investing in and keep recognizing their strengths. But we don’t do this for our own marketing. We do this because of the impact entrepreneurs are having in the communities where they live, and they weren’t getting the attention in the press when we started the program some 27 years ago. Increasingly they are getting the visibility they need.

How did the issues discussed at the WEOY program relate to what’s going on in the U.S.?

Engert: They’re directly correlated. Everybody is talking around the issues and challenges in the world economy, which is growth, jobs, investment and innovation.

When I think about innovators and some of the companies that have come through the EY programs, they are companies that are disrupting, or said in another way, addressing a need, demand or service. In some cases in emerging markets they are replicating what might have already been met in another developed market.

That whole concept of replication and foreign direct investment, at the root of it, is what entrepreneurs are all about and it’s going to bring parody to the global world. A stage like WEOY puts it in perspective and how it’s all tied together.

Pearce: The companies that are here have been successful in growing their companies perhaps in their domestic or regional markets and this gives them a great opportunity to meet counterparts that are operating in other parts of the world. At a minimum, they may learn a little bit more about those markets. Ideally, they may meet people who are potential partners, strategic relationship candidates or people who could help them in some way to expand their own business into expanding foreign markets.

How do you plan to apply the information gained in the WEOY program into the Strategic Growth Forum this fall?

Pearce: The WEOY and the series of strategic growth forums that we do around the world are definitely part of getting knowledge to entrepreneurs as well as networks to entrepreneurs. When you bring those two things together, they learn more about how they can grow their business, run a better business, access capital and develop their people.

It’s a focus on the five important pillars around customers and growth: people, operating effectively, capital and managing risk. You get insights into that here and you’ll get insights into them at strategic growth forums.

How has the program content developed with WEOY?

Pearce: We have added a lot of content to what has historically been a program only focused on awards. That knowledge and greater focus on networking with each other obviously has been well received by the entrepreneurs. They came to WEOY to meet their colleagues, but also to learn and so we had people coming in as keynote speakers and panelists.

We have also created a series we are calling E exchanges, which are groups of 10 to 15 people sitting around the table with common issues. These E exchanges will be very helpful for people to get to know each other and to really get into some of the down and dirty, nitty-gritty of what they are doing to tackle problems in their own business.

Are there any particular countries where you see big opportunity?

Engert: I have been tracking where I see money going. Where is the most foreign direct investment happening? Africa is clearly one. In South America, Colombia has been coming much more into its own, as have Indonesia and parts of Southeast Asia. Those are some of the markets you’ll start to see. Mexico is another one you have to watch because it’s close to the U.S. and its leaders have had change in their political landscape to be more pro-business. It’s the No. 7 GDP nation in the world.

What does the Entrepreneurial Winning Women Program mean to EY and how is it developing?

Engert: The Winning Women Program is a recognition program, but it is so much more. It really is a development program. We really focus on recognizing the women and giving them an award, but we’re putting them into an EY incubator where we give them the opportunity to participate in a lot of different aspects of thinking about the strategy of their business, their financial plans, how they approach media, branding, PR and investors.

We’ve learned a lot in the last five years of this program, and I’m proud to say we are expanding that around the globe.

Pearce: One of the recognitions that we had was that women are 48 percent of business owners in the world. They’re starting up businesses at a rate more rapid than men right now. But part of the challenge is scaling. You don’t tend to see the women-led businesses scaling as rapidly as others do.

What I think has really been the strength of the program is that there is more than just an award. There is ongoing education. They are recognized through the awards program, but also get mentoring and other skills to help them build better businesses. And then we bring them to events like WEOY.

We will have virtually all of them at the Palm Springs event in November. So they have that opportunity to get integrated in with our EOY award winners and other great entrepreneurs and find partnerships and boards of advisors and directors and various other things that can help them to scale their business.

So we began that in the U.S. We are now rolling that out to Canada and Brazil this year and looking at more rapid rollout into other countries because it is certainly a great opportunity to help support these women as they grow these businesses around the world.

What about the addition of a family business component?

Engert: The Family Business Award was put in place because family businesses are the bedrock of communities. They’re the unsung heroes.

Most private companies are family-owned businesses and a lot of public companies are actually family-owned businesses as well. A significant amount of them are multi-generation family businesses and it creates a focus on that market segment.

It’s a totally different class of business with different needs and attentions. So we are trying to celebrate family business, which will provide a lot of great learning and perspective for us.

Pearce: Our definition is that families are those at least in the second generation or beyond. Not only do you have all the same challenges that another company, private or public, would have in growing the business, but now you have this added dimension wrapped around it of family dynamics.

We try to bring them together with each other so they can learn from other families how they are handling those same kinds of challenges around family integration, succession, fundraising, liquidity, and all of those kinds of things, and then we are able to provide services to them as we look at managing through those same issues.

Across the 25 programs regionally in the U.S. we had more than 200 nominees this year that want to be considered for the family business award, which was a great start.

Can you explain a little bit about Endeavor?

Engert: We have a partnership with Endeavor. They are focused on building a better working world themselves and investing in and promoting entrepreneurs in emerging markets around the globe. The Endeavor model is wonderful because it’s entrepreneurs who are opening a local chapter, but have strong ties to the global connections of Endeavor that help bring entrepreneurs and perspectives to bear.

Endeavor is a great program and we’re proud to be partners with them. I look forward to Endeavor expanding further around the globe because they are a key difference in some of those emerging markets.

Pearce: In many of the countries that they operate in, particularly in the Americas and in Latin America, we’ve got strong relationships with our EOY program.

For example, this year is the first year that we’ve had EOY in Uruguay, and that really began as a partnership between Endeavor Uruguay and one of our former partners who is on the board. We were able to team together and the initial EOY gala was combined with the Endeavor gala. We had more than 800 people attend in year one. So it shows you the power of entrepreneurship and certainly the power of the partnership between Endeavor and EY.

Tuesday, 27 August 2013 18:48

Missed opportunities

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Nothing is more frustrating than missed opportunities — except when those missed opportunities were completely avoidable. For example, you and your organization put in the time and effort to drive prospects through the marketing funnel toward conversion. And then, when the prospect is engaged and reaches out to you, you’re not equipped to provide a timely follow-up response.

This happens entirely too often. But basic prep work on the front-end can help you avoid becoming one of those organizations whose well-planned marketing strategy is wasted.

Conversion means different things to different people. In retail, it may mean going to find a product — either online or in person. But in a different industry, it may mean that someone just wants to talk to you about helping to solve a specific problem.

Regardless of your conversion definition, the singular commonality is your ability to immediately follow up and act on the potential conversion. This is because when someone reaches out to buy a product or for help with a service, it is an emotional decision. He or she is claiming that they either need something (a product) or help with an area they do not have the expertise in.

The importance of this step in the marketing funnel is critical. Like it or not, we live in a world of instant gratification — both personally and professionally — and you must tailor your marketing efforts to accommodate it. When someone winds their way through that funnel by becoming aware of your services, having interest, and then being willing to engage and dig deeper to learn who you are, nothing kills those marketing efforts faster than failure to respond to that person.

Too often, we see conversion points that consist of a basic “email us” link on a website. It sends a note to a general email address that nobody regularly checks. Or, the company lists a phone number that reaches a general voice mail account that is rarely checked. In both scenarios, all the work required to lead a prospect to conversion is rendered moot.

Take steps to ensure conversion

So what can you do to reverse the trend and build systems that allow for more immediate conversion? Among the easiest to implement are

■  A phone number that connects with somebody who is dedicated to following up.

■  Online chat capabilities in real time

■  Marketing, through a website or other sales materials, that guarantee a 15-minute response time.

■  A well-designed form on your website that asks for four components: name, email, phone number and reason for the inquiry (any more information than that may cause prospects not to convert).

Keep it simple and swift

Many organizations simply fail to take the direct route, and as a result, they swing and miss.

Initiatives such as putting a map that points to your location as your prominent website “contact us” looks great, but how many people will actually get in their vehicle and drive over to see you?

Also, don’t underestimate the importance of offering multiple ways for people to reach you for a swift response. When it comes to today’s marketing funnel, there is no effective one-size-fits-all approach.

For example, let’s say you’re looking to refinance your house or buy a new one. This is an emotional decision. You do your research and find a company that you believe will offer the best possible rates. You reach out to them. And then, you don’t hear back for days. What happens? You lose interest.

But now, consider the result when you reach out to a company and get a return response within 10 to 15 minutes.

First, you get the information you need to make a decision. More importantly, though, that company has forged an emotional connection with you because they were responsive to your needs.

It is this emotional connection that can be highly effective in closing the final piece of the marketing funnel — conversion. And, if your organization’s marketing strategy includes optimizing your marketing spend, why would you ever overtly waste money by failing to have an effective — and immediate — follow-up process in place?

 

David Fazekas is vice president of digital marketing for Smart Business Network. Reach him at dfazekas@sbninteractive.com or (440) 250-7056.

Wednesday, 28 August 2013 02:34

F.U. or else!

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Calm down … those two letters in the headline are not what you might be thinking. However, it got your attention, for this leads to an important subject.

When you, or those with whom you work, don’t follow the principles of these two letters, problems occur. Not doing what these initials represent can be the difference between success and failure, cost big money, create disappointment and actually ruin relationships.

Hopefully by now you’ve figured out that F.U. stands for Follow Up. This skill is central to achieving objectives, supporting your people or customers, and maintaining your credibility. Too many people just don’t get it and consistently fail to make F.U. a part of their business regimen.

Words are cheap, but it’s action that makes the difference. Many promises are made every day such as: “I’ll get the answer and return your call soon,” or “My person will call your person so that we can get together.” Good intentions aside, if one does not make note of it, the call just might never happen.

Fortunately, only a relatively few get hit by locomotives because trains are big and people see them coming, but many are stung by bees. That’s the same with following up. Virtually no one would forget to pick up the big order, or neglect to attend a huge meeting, but too many let the smaller, yet important, matters slip through the cracks. This not only affects the person who didn’t receive what was promised, but also could significantly impede productivity.

As an example, an associate is to provide needed information first thing in the morning. Breakfast comes and goes and as the lunch hour approaches people along the line are sitting on their hands waiting. Do the math; count up what that could cost your business day in and day out. Frantically, and with a high degree of disgust, you track down the tardy offender and are appalled by the response, “Oh, sorry, it just slipped my mind. I forgot to write it down.” Sure, this can happen once but by the second or third time it becomes a pattern and the credibility of the perpetrator can be lost.

Following up is a reflection of respect. When people don’t have the courtesy of doing what they say, you begin to wonder if they can ever do it. In my companies, all those with whom I work quickly become aware of my sacrosanct F.U. policy.

Essentially after every meeting, whether a one-on-one or with a group, I assign a date for my own purposes of when what was discussed is to take place. If it was a task of significance, the date would be agreed upon with those who had to do the work.

When new employees receive a memo from me, with the unexpected “F.U.” initials in the bottom left-hand corner, many are initially stunned, thinking I’m giving them a crude ultimatum or don’t think much of their work. Fortunately, those with a modicum of common sense quickly realize that these two letters are not a pejorative as they are always followed by a numeric string that even a newbie can figure out represents a date.

I remind my team that I do not want to be their father or their baby sitter. Instead, when I ask that something be done by a certain date, and everyone involved agrees, it must happen.

Alternatively, the person assigned the task could always come back and say he or she can’t meet the deadline, don’t know how to do what was being asked, need help with the issue, or had figured out a better alternative. What could not happen is for the person assigned the task to pretend that no follow-up was required, or worse, that the covenant was never agreed upon.

Because so few follow up as promised, this presents your business with an outstanding opportunity to rise above others and create a rock-solid reputation for saying what you’ll do and then doing what you say. All it takes is a little discipline and respect for those with whom you work. It’s better to carry around a little string for your finger than run the risk of finding the proverbial rope around your neck as a result of errors of omission.

 

Michael Feuer co-founded OfficeMax in 1988, starting with one store and $20,000 of his own money. During a 16-year span, Feuer, as CEO, grew the company to almost 1,000 stores worldwide with annual sales of approximately $5 billion before selling this retail giant for almost $1.5 billion in December 2003. In 2010, Feuer launched another retail concept, Max-Wellness, a first of its kind chain featuring more than 7,000 products for head-to-toe care. Feuer serves on a number of corporate and philanthropic boards and is a frequent speaker on business, marketing and building entrepreneurial enterprises. “The Benevolent Dictator,” a book by Feuer that chronicles his step-by-step strategy to build business and create wealth, published by John Wiley & Sons, is now available. Reach him with comments at mfeuer@max-wellness.com.

Wednesday, 28 August 2013 06:24

Ready, set, think

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Thinkers solve problems.

Mark Zuckerberg found a better way to connect people with friends and family through Facebook. Larry Page and Sergey Brin invented a better way to search the Internet by creating Google. Steve Jobs showed us a better way to obtain and listen to music through the invention of the iPod.

None of these examples happened by luck. Each of these great thinkers spent a lot of time working to perfect their ideas. Great thinkers are not born, they are made.

To create great products and services, you have to develop the habit of expanding your thought processes and critical thinking skills. Why? Because the human mind tends to be lazy. It tends to repeat the same thoughts unless it’s trained to explore new ideas. Great thinkers put in the effort to analyze things in new ways and not accept the norm.

We live in a negative society where bad news trumps good news and the potential downsides of an idea outshine the potential rewards. It takes a lot of effort to retrain our minds to focus on the positives and the solutions rather than the ramifications of a failed idea.

Becoming a great thinker requires an investment of time; there are no shortcuts. You have to be organized and plan for it. Take time to think about the problems unique to your business or industry. Work through the pros and cons of any idea, looking for a way to make it work. Study competing companies and leaders and gain an understanding of how they think. It’s also helpful if you always do your heavy thinking in the same location, and it doesn’t have to be anything fancy. Some people do their best thinking in the shower or over a cup of coffee at a cafe.

But there is one major pitfall to avoid: Don’t equate change with new thinking. Just because you are changing something does not mean you are being a creative thinker. There might be several “accepted” ways of doing something within your industry, and changing from one of the accepted ways to the other isn’t doing anything different. The goal is to identify new ways of thinking and as a result, find a new solution to a problem that no one has thought of before.

Finding these unique solutions won’t be easy, but success never is. 

Looking to save money and focus on core competencies, business owners are turning to cloud solutions — where someone else hosts their systems and manages their infrastructure. However, by using a third party, companies can lose the transparency they previously had with respect to the security, operations and controls around the technology.

“It’s put a premium on doing due diligence on the provider upfront to set a baseline understanding of what the cloud providers are doing — and ongoing how they deliver their services,” says Christopher Kradjan, a partner at Moss Adams LLP.

Smart Business spoke with Kradjan about cloud services risks, as well as cloud provider audits that are setting industry benchmarks.

What are the concerns with receiving services from a cloud provider?

When businesses self-hosted, they could observe and directly control the systems to understand if the systems were performing as expected, making changes as necessary. Now, they lose a lot of that transparency working with a third party.

With the ongoing cloud-based operations, companies want to see inside the operations to track performance, such as the system’s security and availability, its functional processing integrity, and the practices around maintaining privacy and confidentiality of the data.

What do business owners need to consider before selecting a cloud provider?

First, look at your current methods of using technology to understand the costs, staffing and implications of how you are delivering services now. Then identify the new system’s requirements and how you want it delivered.

Properly screen vendors through the request for proposal and procurement process, including taking time for demonstrations. Once you’ve narrowed it down to finalists, do reference check references to ensure the systems will work as expected, both from a technical standpoint and being able to achieve your expected ROI.

There are large, well-known cloud providers, but more are small businesses in their startup phase or still building out market share. They lack sophisticated infrastructure, raising questions about their long-term financial viability. Also, if they are successful, their ownership could sell the business to another provider.

You want a reliable vendor with staying power, but in order to have a continuity of operations, contractually you need to know who owns the data and have exit strategies if the vendor sells or goes out of business.

How should you monitor cloud services?

You need a good vendor management program that looks at the risks associated with each vendor and benchmarks the complexity of the solutions to determine the level of monitoring required. The sophistication of the data, level of importance, what it’s automating and its criticality to the business drive backward what is implemented.

If a business takes the time to do this properly, it winds up stratifying cloud providers into very low risk all the way up to moderate and high-level impact to create monitoring systems accordingly. High-risk areas may require vetting with a due diligence questionnaire or site visit, as well as regular reports from the cloud provider.

How can external audits help in this space?

Companies often ask cloud providers for insight into their business, and providers are continually filling out questionnaires. Therefore, many cloud providers are using SOC 2 (Service Organization Controls) reports, which are based on standardized attestation standards that measure how well the cloud provider is providing its services. The examination can attest to the security, availability, processing integrity, confidentiality, and/or privacy of the system.

In addition, the Cloud Security Alliance (CSA), a leading organization that evaluates cloud providers, has developed the Cloud Control Matrix (CCM) as part of its best practices for examining cloud providers.

The SOC 2 report can be mapped against the CCM for double value —the value of the independent SOC 2 attestation report, coupled with the depth and questions from the CCM — to create a rigorous benchmark.

With the SOC 2 examination and/or CCM, cloud providers can give answers to customers, while differentiating themselves in the market. These examinations help business owners with their upfront due diligence and ongoing monitoring. It can even be used as a gating function with the cloud providers to assess their quality and dedication to strong business practices.

Christopher Kradjan is a partner at Moss Adams LLP. Reach him at (206) 302-6511 or chris.kradjan@mossadams.com.

Insights Accounting is brought to you by Moss Adams LLP

 

 

 

You need operating cash to grow your business, but securing a traditional commercial loan isn’t always easy for small and midsize business owners. Fortunately, Small Business Administration (SBA) loans are a worthwhile financing option. An SBA loan typically offers longer terms, more competitive interest rates and, best of all, bankers can be more lenient because the government guarantees up to 75 percent of the loan amount. 

“An SBA loan is a sensible option for businesses that experienced a decline in sales and profits during the recession,” says Santiago “Chico” Perez, SBA sales manager for California Bank & Trust. “Bankers can consider your financial projections, along with historical data, when evaluating your loan application.”

Smart Business spoke with Perez about the growth opportunities through an SBA loan.

When should business owners consider an SBA loan, and how do these loans differ?

New ventures traditionally have a hard time securing working capital, but you may get $100,000 to $5 million through a SBA loan, as long as you’ve run a similar enterprise and propose a viable business strategy. You also can use SBA funding to purchase another company or procure equipment or inventory to fulfill a new contract. 

Generally, SBA loans can offer more favorable terms. For example, you only need 10 percent down to purchase real estate, and you can roll fees into the loan balance. SBA loans feature higher loan-to-value ratios, longer repayment periods and no balloon payments. Companies often qualify for higher loan amounts because they can amortize the purchase of buildings over 25 years or equipment over the remaining economic life, and need less cash flow to service the debt. Owners also can use funds to buy raw materials, finished goods or equipment to expand into new markets.

How does the SBA’s underwriting criteria differ from traditional commercial loans?

Bankers will review standard requirements such as financial statements and credit reports, but some criteria differ:

  • Projections. Bankers consider future sales and historical data when evaluating loan applications. Ensure your projections are realistic and correlate with current financials and forecasts. For example, earnings won’t automatically double with a larger facility or new equipment. Instead, explain how the equipment lowers operating costs or how you’ll use the extra space to add a new production line. Substantiate claims with copies of customer agreements and contracts.
  • Resumes. Tout your management team’s industry experience and track record.
  • Ownership. Owners with more than a 20 percent stake must submit signed personal financial statements and tax returns.
  • Down payment. Lenders must determine the source of a borrower’s down payment, even if the funds are in an escrow account. 
  • Collateral. The need for collateral hinges on the loan purpose and program so review underwriting criteria at SBA.gov, and state both in your proposal.
  • Tax returns. Owners must supply three years of tax returns, financial statements and balance sheets to qualify.

Does the SBA offer other support to small business owners?

The SBA provides myriad tools and support to help owners create a loan proposal and navigate the underwriting process. Small Business Development Centers offer free assistance with financial, marketing, production and feasibility studies, and many centers engage local experts. 

The SBA also provides mentorships, free counseling and business plan expertise through the national nonprofit SCORE. 

What else can owners do to successfully navigate the lending process?

Loan approval hinges on an accurate, thorough proposal, so take your time and seek expert advice. Bankers want to hear the story behind your numbers; be ready to explain how you overcame adversity and how you’ll use the SBA loan to take your business to the next level. Help your banker understand your customers by including links to your company’s website, LinkedIn page or Facebook page in your proposal. Finally, you can accelerate the process by selecting an approved Preferred Lender who can approve loans without submitting the entire package to the SBA.

Santiago “Chico” Perez is SBA sales manager at California Bank & Trust. Reach him at santiago.perez@calbt.com.

Website: California Bank & Trust is an SBA Preferred Lender. Learn more at www.calbanktrust.com/smallbusiness/loans/small-business-loans.html.

Insights Banking & Finance is brought to you by California Bank & Trust

 

 

 

Kailesh Karavadra didn’t always want to be an accountant. In school he studied electronic engineering and later decided he wanted to try his hand at accounting. He fell in love with the profession and first joined EY in the U.K.

A few years later, the $24 billion accounting firm asked Karavadra if he’d be interested in moving to Silicon Valley.

“With my background in engineering and computers and business background in accounting, it made a lot of sense with what the Valley was going through in the early ’90s,” says Karavadra, managing principal of EY’s San Jose office. “So I came here, and I loved it, and have been here ever since.”

Karavadra has been with EY for more than 20 years, but it was in early 2012 that he was named managing principal for the 750-employee San Jose office, an announcement that coincided with the firm’s 50th anniversary of its presence in Silicon Valley.

“When we wake up every day and we put on our EY uniform and we come to work, our heart and soul is in building a better working world,” Karavadra says. “Over the past year I’ve had the chance to talk to almost every one of our employees, from our partners to our staff, and connect with them and listen to what’s on their minds and understand some of the complexities and challenges we work with.”

Karavadra has been focused on continuing to foster a strong culture at EY as well as continuing to recruit and retain top talent that will help the firm in its goal to build a better working world.

Here’s how Karavadra is making sure EY San Jose is prepared for the future.

 

Start with culture

Karavadra has been with EY for 23 years. He’s been with the firm for so long that when he speaks with young professionals today they’ll say, ‘Twenty-three years! Aren’t you bored?’

“I laugh because I have never had a single boring day,” Karavadra says. “The one differentiator is our culture and our people value that a lot.”

EY has been named to Fortune’s best companies to work for list for 15 consecutive years. 

“That comes from our inclusiveness and flexibility and that we really empower our people,” he says. “For our employees, every day they show up for work it’s about choices. What we try to do is cultivate a culture that empowers them to make the right decisions, leverage the information that’s available in our culture and have diverse thinking to do the right things when serving our clients and our firm.”

Karavadra and the San Jose office encourage and empower employees to drive their own bus. “There are so many opportunities within our firm to drive their careers, to learn so many things, to be able to experience many things, and that’s the culture we want them to be able to feel,” he says. “Our employees are excited, they’re energized, they’re enthusiastic, and they’re passionate about what we do.”

One of the things that EY is very proud of is inclusiveness and that is something that Karavadra heard loud and clear from his people as something they value.

“This isn’t just about ethnicity and gender and those things that many organizations like ours do a great job around, but it’s the diversity of thought,” he says. “We encourage our people to bring that diversity of thought, to bring the different thinking and look at the problems we’re trying to solve for our clients and the value we’re trying to add to our clients in different ways.”

Developing a culture such as what Karavadra has in San Jose and what EY has bred around the globe hasn’t happened overnight.

“There’s a great saying out there that I personally believe in, which is, ‘People don’t care what you know until they know you care,’” he says. “At the foundation of our culture is the caring. We treat ourselves as family.

“One way we foster that culture is through our alumni and our retired partners. We did several events last year where we bring our retired partners back, and it’s amazing to me the pride, passion and excitement they have for our firm. We have almost 1 million alumni that have gone through the EY culture. During these events we invite our alumni to reconnect with each other, as well as reconnect with current employees.”

Another way Karavadra helps foster EY’s culture and helps to build a better working world is through five things that he constantly talks about with his team.

“No. 1 is that we really do contribute to the success of the capital market,” he says. “No. 2 is that we truly help and improve as well as grow businesses. The third is we support entrepreneurs. Fourth is we are incubators for leaders. Fifth is giving back to the community.”

 

Find and retain top talent

Those five things are important aspects of the EY culture, but they also help drive why employees love to work for the firm and why potential employees are attracted to working there as well.

“There’s a saying by John F. Kennedy Jr., ‘Some people see the world the way it is and say why, others see it differently and say why not,’” Karavadra says. “When we go on campuses we see a lot of very young, talented people who want to make a difference, who want to contribute and have a sense of belonging.”

Karavadra makes sure to talk a lot about the firm’s family culture, team atmosphere and sense of empowerment.

“We also bring our current employees because we want them to be the voice and they will shoot from the hip and give an honest view and opinion of what it’s like working here,” he says.

Karavadra also goes on these campus visits to speak with potential hires. He wants to make sure he understands what those candidates are looking for in a company and in a job.

“What they tell me is they want to work in a dynamic environment,” he says. “They love the innovation, entrepreneurial spirit and the teaming aspect of an organization.”

Focusing on recruiting strong talent is important, but all that energy is wasted if you don’t also focus on retaining those great candidates once you have them.

“It’s not only important to hire good talent and keep them here, but for our clients in the markets at-large it means that when people have energy, enthusiasm and they believe that we’re doing the right thing, they’re going to provide exceptional client service,” Karavadra says.

“They’re going to be a part of the highest performing teams and when you add our global strength and structure to the local empowerment in our local offices, that’s a real strong recipe for people to have a successful career.”

Karavadra believes that above all else, trust is one of the biggest factors for retaining talent in an organization.

“I truly believe in my DNA, that trust is at the heart of it,” he says. “Young people these days are incredibly smart, incredibly connected and talented.

“But when we’re out there talking to people, the most important thing that I share, whether it’s for recruiting or with employees, there is nothing more important than making sure you hold the ethics, reputation and integrity of yourself and our firm at the highest level. Nothing should compromise that.”

Whether you’re on campus recruiting or trying to attract experienced hires, establishing trust is the most important thing.

“They need to feel that this is an organization with honesty, trust, integrity and teaming. Where employees feel there are common goals and we work together,” he says.

While trust is a big reason employees will remain with a company, a second big reason is training and the ability to develop new skill sets.

“We put in 2.7 million hours of training last year for our people,” Karavadra says. “We really want our people to be the very best they can be. It is important for us to make sure we provide all of the latest and relevant insights to them, whether it’s classroom training, industry training or leveraging our web-based technology tools. The San Jose office is the global technology center, so we have a lot of our thought leadership around the world that we develop right here for our technology clients.”

Training at EY is not the only formal training team members get, they also get to take advantage of the firm’s apprenticeship model.

“What I learned when I started as a staff member 23 years ago is that I looked at people around me and there were mentors and coaches who took an interest in me and cared about me,” he says. “They would take me aside and say, ‘You just did this inventory account, this cash reconciliation, and looked at this tax document. Here’s why it’s important for us, why it’s valuable to the client and the impact it could have.’

“Right away from the first day, the training climatizes you to understanding the importance and the accountability that we have on the work that we do. It’s not just showing up every day to put in your number of hours and then we clock out. There’s a real importance to that training.”

How to reach: EY San Jose, (408) 947-5500 or www.ey.com

 

Takeaways

Work on establishing a culture that is attractive to employees.

Devote time to recruiting the best talent for your organization.

Provide training resources to help retain your best talent.

 

The Karavadra File

Kailesh Karavadra

Managing principal

EY San Jose

Born: Kampala, Uganda

Education: He studied electronic engineering and received a master’s degree in engineering from University College of North Wales in Bangor.

What was the first job you had and what did you learn from it?

I delivered newspapers. I used to get up at 5:30 a.m. before school and do it again after school. So it was twice a day, six days a week. I was always inspired by working hard and taking my responsibilities seriously, because you’re accountable for the things you are doing. Hard work will always get you a reward.

Who do you look up to?

I have five mentors that I am in constant connection with who are across five different continents. That has happened because of the years of experience here and the networking. I can call them anytime and pick their brains and they try and make sure they support what I am doing.

If you could speak with anyone from the past or present, with whom would you want to speak with?

The one person who has shaped me more than others is Mahatma Gandhi. I have always been incredibly inspired by the willpower he had. He was someone who realized that something needed to change and he was willing to take the first step.