Accounting is the language of business. People use it to make decisions about the past and devise a plan to carry them forward. With the continuing emergence of fair value reporting on financial instruments, accounting no longer just looks back at what you paid, it values those assets today.
“Say you’re putting money into your 401(k). What if you didn’t know the current values? How do you evaluate your prior investment selections and how to move forward?” says Bryan Cartwright, financial services assurance partner at Moss Adams LLP.
“Likewise, if you’re on a company’s board of directors and you have no idea how much management is awarding in stock options because the options have no assigned value, it makes it hard to be an effective board member.”
Smart Business spoke with Cartwright about the increased requirements for fair value reporting.
How has fair value reporting intensified?
Privately-held and thinly-traded securities often have no observable market activity to provide current value information. Loans, bonds, companies, or preferred or common stock are, in increasing measure, being reported at fair value.
The Financial Accounting Standards Board (FASB) and the Securities Exchange Commission (SEC) continue to drive accounting standards and requirements toward the use of fair value, rather than cost, as the basis of value for financial assets. They have gone from requiring companies to disclose fair value in the back of financial statements to including them in the statements with strong support from financial statement users.
The latest push is for companies to disclose the way they’ve ‘fair-valued’ the information for each class of security or asset, and the significant inputs or variables upon which the fair values hinge. For example, instead of simply reporting that a loan has a fair value of $1 million, the disclosures are providing supporting information about the ‘unobservable inputs’ used by management to determine that value, such as a discounted cash flow technique or an unobservable input for the discount rate such as ‘Libor plus 500 basis points.’
Does this just apply to public companies?
It applies to any company or organization reporting fair values for assets or liabilities on a recurring basis, including public and private commercial enterprises, or anyone with financial assets or liabilities on their balance sheets reported at fair value on a recurring basis.
The pressure for accuracy is mounting from the top down. The SEC has been taking action against board of directors and management that it feels haven’t taken fair reporting requirements seriously, or have shown indications of intentionally misstating values. This has been particularly true in investment management, where the SEC has jurisdiction over registered financial advisers. It has been looking into the policies and procedures used by these advisers when setting values for private-equity and other securities, which play so big a role in investment strategies used by pension and profit sharing fiduciaries.
What advantage does more fair value bring?
Regulatory authorities want fair valuations to be accurate, supportable, and based on market information when available. With better information, whether modeled (unobservable inputs) or market-based, people are more accountable for assets they use and deploy.
For example, in 2005, after nearly 10 years of delay, the value of employee stock options began to be recognized in income statements. Executives, board members and shareholders gained much better visibility into the real cost of this compensation, which heightened the understanding of their use. It’s widely believed that the migration to more balanced compensation packages emphasizing both short-term and long-term rewards were due in part to this change in accounting.
How should executives react to this trend?
Everybody can agree on what something costs, but not everyone always agrees on its fair value. Accordingly, you need to be ready to defend your approach. Companies are building systems to document how they select their chosen valuation techniques among alternatives. The work needs to incorporate validation concepts including using ‘look backs’ to determine if selected techniques and procedures are still appropriate. Based on feedback from the SEC and others, companies really need to focus on market-based information when selecting valuation techniques and determining valuation inputs — it’s becoming more of a science.
Whether fair values are determined with internal resources or outsourced, your company is ultimately responsible for the assigned values. Currently, it seems that regulators are showing higher thresholds for proving that the values you select are appropriate. You can acquire valuation models, but a model is only as good as its inputs. Someone in your organization must have the education and skill to understand valuation requirements and communicate your approach, even if you outsource the work.
Overall, fair value is improving financial reporting, although it’s certainly uncovering more differences of opinion and subjectivity than we are accustomed to dealing with. But as people begin to believe in the reliability of fair values, more decisions will be made based upon them, making them more important still. •
Bryan Cartwright is a financial services assurance partner at Moss Adams LLP. Reach him at (415) 677-8331 or firstname.lastname@example.org.
Insights Accounting & Consulting is brought to you by Moss Adams LLP
Twelve years ago, EY decided to go global with its Entrepreneur Of The Year awards and establish the World Entrepreneur Of The Year program — and the results have been, shall we say, an international success. The conference, held annually in Monaco, features Entrepreneur Of The Year country winners competing for the World Entrepreneur Of The Year title.
Assembling business leaders from around the world in one place to be honored is a huge accomplishment — the wealth of experience, as well as the variety of successful leadership styles, is outstanding.
Here are some thoughts from the collection of the world’s most accomplished entrepreneurs — innovators, futurists, turnaround specialists and problem-solvers — about leadership styles. ●
“I built the company based on people, not on experience from before. They were willing to learn and try anything. We had a bunch of people who 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. Chobani not only became a business that grew, but Chobani was like a school to us, including myself.”
founder, president and CEO
Entrepreneur Of The Year 2012 United States
2013 Entrepreneur Of The World
“Early on, the business was centered on me, and I had to make all the decisions alone. Now I share those decisions with my 10 main directors. If there are differences in opinion, I make the last decision.
The other thing is that I have had to ensure that the people who are invited to work here are people with principles, values, integrity, responsibility and passion. If I don’t see a person with passion, they don’t hang around the company very long.”
Lorenzo Barrera Segovia
founder and CEO
Entrepreneur Of The Year 2012 Mexico
“I’m a very passionate person, which will never change. When you grow, you gain more experience and the kind of problems you face change. As you grow, you need to grow with your organization.”
Entrepreneur Of The Year 2012 Argentina
“In the startup days, you have to be very innovative, hire and retain talent, refine your business as you deploy in the marketplace, and you learn things from it. Today, with a solid track record of business success, I can focus on what’s next and think more strategic and long-term than you’re allowed to in the early days. My style has evolved as the business has matured.”
Chevron Energy Solutions
“Entrepreneurship and leadership is about always having ideas, knowing that it is possible even though everyone says it is too difficult. Maintain the positive and always have new ideas.”
Mario Hernandez, founder and president, Marroquinera
Entrepreneur Of The Year 2012 Colombia
“To keep the entrepreneurial spirit and entrepreneurship alive once you've got past the startup base, I think it is making sure people understand why they are there. There are always things you can do to improve your business. You should be rethinking and retooling it every chance you get. The key thing is to make sure everybody in the organization understands the story, where are you going — how are you going to get there? And the belief that you are doing the right thing —people want to know their purpose. Keep the energy going, keep a strong sense of purpose.”
Dr. Alan Ulsifer
CEO, president and chair
Entrepreneur Of The Year 2012 Canada
“The skill sets of an entrepreneur involve understanding how to create business. Why not work with kids who need it the most and actually teach them and help them to be entrepreneurs? That’s what is going to grow our economy and create stability where otherwise we’re going to have a lot of social unrest.”
President and CEO
Network for Teaching Entrepreneurship
“I like to be involved. I want to know everything that is going on. But I have to delegate to my team. That was the biggest adjustment for me, and it’s not an easy thing to do. It’s that delegating to others, trusting them and reinventing yourself. Now that we’ve grown, I put more responsibility on my team and rely on my team more than I once did.”
President and founder
SME Entertainment Group
“If someone makes a mistake, what do you do? You laugh with them. You don’t yell at them. You laugh. It just keeps things light and lively and people want to do their very best. You let them know they screwed up, but you also let them know it’s OK.”
National Heritage Academies
Leaders often talk about how the traits of accountability and transparency helped make them who they are, but to retired Navy Adm. Mike Mullen, who served as the chairman of the Joint Chiefs of Staff for four years under President George W. Bush and President Barack Obama, leadership is quite simply how you listen, learn and lead.
It’s not just a coincidence that communication is as important in the war zone as it is in an organization — and that’s where Mullen emphasizes listening to what his team members have on their minds.
Smart Business talked with Mullen about the challenges of being in command:
Q. What do you see as the most important trait that any leader must possess?
A. Integrity. Be true to yourself, and obviously true to your values. The value of integrity intrinsically has been a driver for me since I was a midshipman at the U.S. Naval Academy. It has served me exceptionally well.
Integrity encompasses being honest, truthful and consistent — both publicly and privately in leadership positions — and representing that in every situation. It is most evident in the toughest decisions you have to make.
Q. And how can you ensure integrity is present in leadership?
A. What I loved about command was the responsibility and authority that came with it. But more than anything else, the other piece was accountability — accountable leadership. That is not just having someone hold you accountable, but having enough strength yourself as a leader to hold yourself accountable.
I just found that even with those decisions that can be very unpopular, if you are true to that value of integrity, even if it may not seem to some to be the best decision, it [integrity] holds you in the best stead as a leader over the long term. And because of that, it becomes incredibly supportive of those very, very tough decisions.
Q. So what can help a leader make those tough decisions more effectively?
A. As a more senior leader, I learned to keep a diversity of views around me. The more senior I got, the more diverse the people, the recommendations and the discussions had to be in order for me to make the right decision.
I had people around me who were willing to say, ‘Hey, this is when you got it wrong,’ as opposed to the opposite, which is isolation, where nobody will tell the emperor [he] doesn’t have any clothes on.
Q. You’ve mentioned the importance of listening to others in order to help you become a better leader. How did you do that?
A. Everywhere I went, whether we had a town hall meeting or we could call an all-hands meeting, I would take questions from the audience. So, for example, when a young enlisted man would give me a question of which I didn’t know the answer, I said, “I don’t know the answer, but give me your email address. I will go research it and get back to you.”
I did that. I went back and looked at whatever their concern was. And some of those concerns generated significant changes in the military, or in the particular service they were in. For me, as chairman, that was a vital part of trying to understand what I was asking them to do, and then taking that feedback and trying to fix the problem that they raised — if it made sense to do it.
A good leader can make such a difference, and create something out of nothing, whereas a bad leader is unable to do that. The ingredient that makes a difference is leadership. ●
Retired Navy Adm. Mike Mullen served more than 43 years in the Navy, having served as the chairman of the Joint Chiefs of Staff from 2007 to 2011, and as chief of naval operations from 2005 to 2007. He will be the keynote speaker at the Dec. 5 American Red Cross Hero Awards. Learn more about the Hero Awards at www.clevelandheroes.com.
Consider this business scenario: You’ve landed a big account for your company by converting a highly prized prospect into a valuable client. The new client has hired you to handle a specific scope of work and is counting on your team’s ability to deliver work that goes above and beyond.
While nothing is more important than delivering great customer service to satisfy the client, you may not realize that you’re probably overlooking unrealized opportunities to forge a stronger relationship with your customer.
In today’s business landscape, most large companies offer an array of products and services. More often than not, however, your clients use you for a specific service or skill set. And unfortunately, in this scenario, most companies focus solely on the task at hand — delivering what they’ve been contracted to deliver — failing to take ample time to think about the bond they’re creating with the client and what could be next.
In more simple terms, it is one thing to provide service that keeps a customer; it is another to keep that customer and expand the relationship to become a trusted partner.
Provide value in a deliberate way
The good news is that this is an easy fix. Establish a content marketing program that allows you to distribute thought leadership to your clients.
A content marketing program will help you provide value that other service providers may not, and when clients see you as an informational resource and partner, it will be easier to expand the relationship.
Take this example into consideration: You are an insurance provider and your main product is life insurance, therefore most of the communication you have with your clients surrounds that topic.
With a comprehensive content marketing program in place, however, you can educate your clients on the recent trends in the insurance industry and how that affects the individual. At the same time, you can give them an overview of your company’s wellness program and let them know that if they joined, they could reduce their monthly premiums.
As you can see, you’re not just providing your client with the original service, you’re also providing them with both your thought leadership — aka value — and additional offerings.
Personal connections payoff
Aside from providing value to the client with the content you distribute, a strong content marketing program allows you to showcase your brand’s personality. Clients will be able to connect with your brand on a more personal level.
Providing continually updated content through the right channels to the right clients enhances your day-to-day communications. Clients start seeing you as thought leaders and partners instead of just service providers.
It will help you expand relationships and, as a result, generate new business through more products and services.
Show them more than just what they see on the surface — show them how active you are in the community, or how much fun you had during a recent company outing. If may sound trivial, but your clients do similar things, and seeing you connect with the community and/or employees will help forge a more personal connection. You never know; you and your client may support the same charity, organization or team.
Open communication also will help strengthen relationships to the point where you can capture a premium price and eliminate price-jumping clients. Clients will pay more for a valuable relationship than simply look to get the lowest price elsewhere. ●
David Fazekas is vice president of marketing services for SBN Interactive. Reach him at email@example.com or (440) 250-7056.
You would think someone like Douglas Merrill would be a heavy multitasker, with multiple devices in hand, fielding several conversations — both real and virtual — simultaneously.
But you would be wrong.
Merrill, who was the CIO at Google until 2008, doesn’t like to multitask. He says that when you do it, you aren’t using your brain’s full capacity and aren’t as effective. He recommends focusing on one thing at a time.
Billionaire Mark Cuban has his own time management strategy. Cuban, owner of the NBA’s Dallas Mavericks, says you should completely avoid meetings unless you are closing a deal. Otherwise, he says, they are a waste of time.
Both of these proven leaders have learned that how you manage your time is paramount to your effectiveness.
As a CEO, you are swamped every day with calls and emails from people wanting a piece of your time. Some are internal, some are charity requests, some are from friends or family members and others are from service providers.
To help wade through this sea of information, it’s important to have a system in place to help you free up time to think about your business and the things that matter most in life. These open times are what author Richard Swenson refers to as “margin.” They are the spaces between ourselves and our limits that are reserved for emergencies.
But for many business leaders, there are no spaces left.
The way out of this trap is to set clear goals and values for yourself and your organization. Once you do that, you will have a filter through which to evaluate everything. Everything will have an immediate yes or no answer, eliminating the “let me think about it” category completely.
The key is to establish what your goals are first and then prioritize what is important. With your priorities straight, you will find more time to put toward important things on your goals list, but don’t forget to leave time on your daily schedule. There is no way to foresee all emergencies, so by leaving yourself some margin, when something unexpected happens, you already have time built in to deal with it.
Once you have margin built into your life, you have to have the discipline to stick to it. There will always be the temptation to take every meeting or answer every email. But if you use your goals and priorities as a filter, those requests are easily either accepted or declined based on where they fall on your priority list.
If you want a life where you can experience more peace and joy and less anxiety, start looking at your priorities and establish some margin in your daily schedule. ●
Deny, deny, deny; fall, tuck and roll; or put your head in the sand?
The quick answer to this headline is none of the above. A leader, by definition, must do exactly that — lead, which means being in front of a variety of audiences, including employees, investors and customers. Not everyone is going to be a gung-ho supporter. Sooner or later you’ll encounter a naysayer who either has a point to prove or is on a mission to make you and your company look bad.
Many of these verbal confrontations come out of nowhere and when least expected. As the representative of your organization, it is your responsibility to manage these situations and recognize that sometimes a “win” can simply minimize the damage.
When under siege, it’s human instinct to fight, flee or freeze. Typically these behavioral responses aren’t particularly productive in a war of words. Engaging in verbal fisticuffs could simply escalate the encounter, giving more credence to the matter than deserved.
If you flee by ignoring the negative assertions, you’ll immediately be presumed guilty as charged. It’s hard to make your side of the story known if you put your head in the sand.
By freezing, you’ll appear intellectually impotent. Worse yet, pooh-poohing a question will only fuel the aggressor’s determination to disrupt the proceedings. You could use a SWAT-type police and military technique to elude a confronter by falling, tucking and rolling to safety, but that usually only works on the silver screen.
Perhaps the best method to manage unwelcome adversaries is to be prepared prior to taking center stage. This applies to live audiences or a virtual gathering when you’re speaking to multiple participants, which is common practice for public company CEOs during quarterly analyst conference calls.
Most gatherings of this nature include a Q&A segment where the tables are turned on the speaker who must be prepared to respond to inquiries both positive and negative.
Before any such meeting, it is critical to contemplate and rehearse how you would respond to thorny or adverse statements or questions.
A good practice is to put the possible questions in writing and then craft your responses, hoping, of course, that they won’t be needed. This is no different from what the President of the United States or the head of any city council does prior to a press conference or presentation. The advantage of this exercise is that it tends to sharpen your thinking and causes you to explore issues from the other perspective.
In some cases you’ll find yourself in an awkward or difficult situation where there is no suitable yes or no answer, or when the subject of the interrogatory is so specific it is applicable to only a very few.
The one-off question is easiest to handle by stating that you or your representative will answer the question following the session rather than squander the remaining time on something that does not interest or affect the majority.
The more difficult question is one that will take further investigation and deliberation, in which case the best course of action is to say exactly that. Answer by asserting that rather than giving a less-than-thoughtful response to a question that deserves more research, you or your vicar will get back with the appropriate response in short order. This helps to protect you from shooting from the hip only to later regret something that can come back to haunt you.
Effective speakers and leaders have learned that the best way to counter antagonism is through diplomacy. It’s much more difficult for the antagonist to continue to fight with a polite, unwilling opponent.
Finally, when being challenged, never personalize your response against your questioner; always control your temper; and don’t linger on a negative. Keep the proceedings moving forward and at the conclusion keep your promise to follow up with an answer. This will build your credibility and allow you to do what you do best, lead. ●
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 firstname.lastname@example.org.
My 7-year-old son Cole recently gave me a Rainbow Loom bracelet, which is made of linked rubber bands. It is today’s school-age children’s craze, and Novi, Michigan-based Choon’s Design LLC is churning out the kits at a record pace.
With more than 1 million units sold in the last 24 months, Rainbow Loom is the brainchild of Choon Ng, a former Nissan crash safety engineer who invented it while working on a craft project for his daughters.
And Rainbow Loom, it turns out, isn’t its original name. When it was created, it was called Twistz Bandz.
Timing is everything, and Twistz Bandz may have sounded a bit too much like Silly Bandz — the last “wrist” craze that swept the nation. Between November 2008 and early 2011, every school-age child in sight was wearing layer upon layer of Silly Bandz on their wrists. It was as hot a product as anything since Beanie Babies.
Twistz Bandz’s arrival, it seems, happened just as Silly Bandz ran into what every hot new product eventually faces: competition. Look-a-likes with similar-sounding names began flooding the market. They were cheaper, and you could buy them more readily at more retail locations. The core brand quickly diluted. So Ng did what any smart businessperson would: He changed the dynamics of the situation.
Thus, Rainbow Loom was born.
Enter social media
Within a few months, the product — which allows its young owners to custom-create bracelets — was gaining attention. Much of this was due to a full-tilt social media blitz, including videos on YouTube and an engaging Facebook page, where users could share their designs.
More recently, Ng has become vigilant in protecting his patent and U.S. trademark — battling all wannabe competitors from launching similar-sounding products and flooding the market to dilute his own brand.
His success — or failure — is yet-to-be determined. But his efforts will prove fruitless if he’s not already looking ahead to the next product. This is the dirty little secret to any hot toy craze and the core dilemma every business leaders faces: How do you remain relevant as consumers’ wants, needs and desires ebb and flow — sometimes as swiftly as the wind changes direction.
Get beyond being a fad
Success in business relies upon building a sustainable operation that will outlast any cyclical “must have” product explosion.
There needs to be the creation of an idea continuum — an innovation factory, if you will. Innovative leaders must review, measure and adapt a company’s products, services and solutions to the changing whims of the marketplace. You need to talk to customers, vendors and prospects. And you need to regularly take the pulse of the market.
If you haven’t taken at least some of the gains from today’s success and invested it into research and development for tomorrow, you’re already losing ground. Today is today, and just like the disclaimers for financial investing warn — past performance does not indicate future results.
In the end, the only thing that matters is this: Is your next big thing built to last? Or, like every other craze that’s every hit the market, will your opportunities to remain relevant long into the future fade away after the competition creeps in and dilutes your market? ●
Dustin S. Klein is publisher and vice president of operations for Smart Business. Reach him at email@example.com or (440) 250-7026.
For most people, becoming general manager of a $1 billion division of Clorox might be the pinnacle of their career. But for Joy Chen, it was an event that made her see she wanted something more.
With 20 years’ experience in consumer-packaged goods, Chen hoped to work with a smaller, more entrepreneurial, high-growth company. She met with two equity investors, San Francisco Equity Partners and Simon Equity Partners, and really liked the portfolio of companies the firms had in natural products. The two firms saw her as a good fit for a natural beauty products company called Yes To Inc.
“The Yes To brand has been around for close to six years, so it is a very, very young brand,” Chen says. “When this opportunity came up with Yes To, they called me and I started as CEO 3 ½ years ago.”
Yes To is a manufacturer of natural skin and hair care products with annual revenue of more than $50 million. The company had a great mission and a great product, but there were a few matters that Chen saw as obstacles the company would need to overcome if it wanted to be among the top brands on the market.
“I knew that the brand had tons of potential just from looking from the outside,” Chen says.
Here’s how Chen helped open new doors to lift Yes To Inc. into the upper echelon of natural beauty product brands.
When Chen first arrived at Yes To, she wasted no time in creating a plan of attack for the company. She made a conscious choice to get something done quickly.
“During my first 30 days, I assessed the business to see what’s working and what’s not, and assessed the team to see who would add value to what we want to do and who won’t be part of the team,” she says. “It was a lot of assessment of the strengths and opportunities of the business and how we address those in the 30-day plan.”
The thing that was clear to Chen in those first 30 days was a need to focus on product quality. The brand’s products were being manufactured overseas.
“I moved all of our manufacturing to the U.S.,” she says. “This was a U.S. brand and I wanted it to be made in the U.S. and be able to manage the quality a lot better. When I did that I saw it as an opportunity to relaunch the brand under all new positioning.”
Yes To has six different product lines branded under different fruits and vegetables such as Yes To Carrots, Yes To Cucumbers and Yes To Tomatoes. Over the past three years Chen has repositioned and relaunched the entire brand.
“We positioned the product lines to be more benefit-based lines in the brand, whereas in the past they were viewed as flavor and scent differences,” she says. “The cucumber line is now a sensitive line and the tomato line is for acne.
“That repositioning really helped bring a lot of growth to the brand,” she says.
The company also launched new product lines — blueberry, an anti-aging line, and grapefruit, an even-color complexion facial line.
“We repositioned the entire business and launched the blueberry line all within the first nine months I was there,” Chen says. “I coupled that with the manufacturing piece because I thought it was an opportunity to do it all in one big package. From there we were able to get a lot more distribution and our business really grew.”
As Yes To kept climbing the ranks in the natural beauty product segment, the company began to have challenges keeping up with and forecasting growth.
“It was really hard for us to forecast how high is high,” Chen says. “For a small company you can’t just buy all the inventory you need to support that, so we inadvertently had supply issues because our growth was higher than what we projected, and we couldn’t deliver the product as well as we would have liked to some of our retailers.
“That happens when you’re in a small company because you have to manage your cash flow while you’re growing. You really have to balance those trade-offs in a smaller company.”
The second challenge Chen faced was realizing over time that the needs for talent within the team change. What you need sometimes when you first start the company is different from what you need three years later.
“You have to make sure that the people you have on your team a year ago are still the same you need moving forward,” she says. “The skills that you need change as the company changes and grows.”
Aside from tracking talent needs, anyone who runs a small company will undoubtedly get caught up in the day-to-day, but to be successful you must make it a point to look ahead.
“You have to make time to do that and think about what is required to continue to grow the company,” Chen says. “You can’t get complacent.”
With the new positioning, launch of new products and a focus on higher quality, Chen has helped Yes To become the No. 2 natural skin care brand in the U.S. It was previously No. 5. Yes To is also the No. 1 natural facial skin care brand.
“We have opened a lot of doors,” Chen says. “We’ve increased our distribution over the last couple of years with major mass and drug retailers. We’re No. 2 and it’s great, but there’s so much more to do. How do we get to No. 1 or get to be a stronger No. 2?”
Chen’s goal for Yes To is to double the business in the next two or three years. In the last three years, Yes To has quadrupled the business in size and increased the value of the company by five times.
“Doubling the business sounds easy, but it’s going to be a different kind of growth,” she says. “We opened a lot of doors over the last 3 ½ years, and we still have opportunity to open more doors, but we’re going to be more selective about what doors we open.”
For any small business driving awareness is really important for the brand. It’s important for Yes To that consumers are able to find its product.
“One way to drive a lot of awareness in the beginning is making sure that your consumers can find you in the different channels that they shop in,” Chen says. “The various channels and various doors that we’ve opened allow consumers to be able to find us and have experience with our brand.”
From there the growth relies upon the quality of the product and the continued innovation within the company’s various product lines.
“It’s hard for one set of products to do everything, so that’s why we have built them into families,” she says. “Innovation is really important for us because in beauty people love to try new things. They’re always looking for the next, new, better thing. In beauty people have different skin needs and hair needs, so innovation and bringing new technology to your brand is really important.”
The most important thing that Yes To has done for itself is to clearly define what the brand stands for.
“That is a sandbox that we need to find ourselves,” she says. “That’s something that we need to define as our right to win. I don’t believe in the consumer telling us to go somewhere when we don’t believe the brand should go there. You’re trying to create the brand and the equity behind it and you have to define what that is. From there you innovate within that space.”
Since Yes To is still a small, growing company, it doesn’t have large amounts of research dollars, so it relies on the marketplace.
“We tend to look at larger companies to see what’s successful and we rely on data to show how successful certain products are,” she says. “That’s how we saw a huge void in anti-aging in our product family. Anti-aging was a huge segment we were not playing in and it has seen a tremendous amount of growth year after year.”
Once Yes To defined the segment, it looked at who was already doing it well.
“We look at competitors, we talk to our consumers and then we look at what we want the brand to stand for,” Chen says. “The combination of those things is how we come up with innovation.”
Innovation will continue to be a huge part of Yes To’s growth moving forward, and its innovation will have to differentiate the company from other competitors.
“First-to-market innovations that really matter are really important,” she says. “We know that once people try our product they like it. So our biggest challenge is driving more people to try it.” ●
- Find the obstacles holding back your company’s growth.
- Implement solutions and focus on where to grow next.
- Find ways to improve your brand and market share.
The Chen File
Name: Joy Chen
Company: Yes To Inc.
Born: Hong Kong. Chen came to the U.S. when she was 9.
Education: Attended U.C. Berkeley and earned a degree in business administration. She went to Harvard Business School for her master’s in business administration.
What was your first job and what did you learn from that experience? I helped manage five maternity clothing retail stores. I took away the fact that as long as you put your mind to it you can get it done. It was fun to help merchandise the clothing and manage the stores.
Who do you look up to in the business world? Jack Welch. He never settled for complacency, always had really high standards and pushed his leadership team to think outside the box delivering extraordinary performance.
What do you like to do outside of work? My husband and I really enjoy adventure travel. We like to travel to less developed places. We recently went to Bhutan. What we like about going to those places is it brings us back to what really matters in life and away from material things.
Do you have a favorite Yes To product? Blueberry eye cream
How to reach: Yes To Inc., (888) 929-3786 or www.yestocarrots.com
When my corporate giveaways company Branders was first getting off the ground, I asked many people, “What would our customers have to believe about Branders for us to get as big as we would like?”
The answer to this question was what I came to think of as our “success statement” — a simple, sentence-length promise that if believed by customers and profitably delivered by us, would keep Branders growing and gaining market share.
Articulate your success
I learned from experience how challenging and valuable articulating such a success statement could be. Why? Because, while grasping the concept of a success statement is simple, actually crafting one is hard. To create ours, we needed an accurate understanding of many variables simultaneously: what drives our customers’ purchase decisions, our customers’ options as they see them and our company’s current and potential capabilities.
But the hard work paid off. When we found the words, it felt like a “eureka” moment. Our success statement — “Whatever line of business you’re in, whatever your occasion, you’ll find the giveaway that excites and delights you here, every time” — gave my Branders team and I strategic clarity. It told us who we were, what made us special and how we could keep getting better.
From that point forward, every decision we made and every action we took was measured against our success statement. Sometimes, developing a credible success statement requires you to change your product, pricing, promotions or distribution. In this way, it can focus your entire organization’s efforts.
For example, think of Visa’s tagline, “Everywhere you want to be.” Behind this tagline is Visa’s success statement. Your Visa card will be accepted everywhere you might want to use it. With that kind of clarity about what the customer needs to believe in order for Visa to be successful, the organization’s strategic priorities become clear.
Thrive in a crowded market
Smart success statements can also help multiple competitors thrive in a crowded market. Consider toothpaste, especially in the days before fluoridated water. One company’s success statement might have suggested, “When you brush every day with our product, you will have fewer cavities than if you did the same using any other toothpaste.”
Another’s might have been, “When you brush every day with our product, you will have fresher breath and whiter teeth than if you did the same using any other toothpaste.”
Both success statements would orient their respective company’s product development, distribution, pricing and advertising efforts — albeit in different directions. And, over time, each company would become increasingly distinct, which is a good thing on a crowded field. Both success statements could work as brand foundations — and evidently they did. Today we all know that Crest fights cavities and that Close-Up is best for kissing.
Develop a success statement of your own. It is not easy work, but it pays off both in the insights that come from doing it and in the focus the resulting success statement brings to all your operations. Ask yourself what statement about my product or service, if believed by customers, would cause my business to be more successful? Once you can answer this question, you’ll realize you’ve unlocked the answers to many more as well.
Think of your success statement as your magic words to success. ●
Jerry McLaughlin is CEO of Branders.com, the world’s largest and lowest-priced online promotional products company. He can be reached at JerryMcLaughlin@branders.com.
Albert Einstein once said, “The only real valuable thing is intuition.” While nobody can deny Einstein’s supreme intellect, I must respectfully disagree. Instinct is invaluable in many aspects of life, but I have learned throughout my career that it takes far more than instinct to be successful in sales.
In order to maximize effectiveness and profitability going forward, sales teams must rely less on intangible gut feelings in favor of big data and predictive analytics.
Art and science come together
There are roughly 1.8 million B2B sales people in the United States. Even with the advent of CRM solutions, which track progress against goals and remind salespeople when to call on prospects, many still depend heavily on intuition to negotiate and close deals.
This tactic works for some, but I would argue these sales people leave missed opportunities on the table. Big data and predictive analytics are changing all of this — infusing an art with a healthy dose of hard science.
One could argue that data scientists have been around for a long time to provide this kind of information. But not every company could afford one or had the foresight to employ one. Now, technologies entering the market leverage big data to provide salespeople access to sales history, customer performance, deal metrics and optimal target prices.
Armed with this historical and machine data, sales teams will become much more calculated in their decision-making. They will be able to predict the next product customers will buy, which customers are most likely to defect in the next 60 days, which prospects to call that day and perhaps most importantly, the right price to close a deal for maximum profitability. And, they will be able to do it all dynamically and in real time.
Look at history
We have seen the effect of data and analytics on organizations before. Twenty years ago, supply chain managers would come into warehouses with a pencil and clipboard to mark what supplies were low and then manually order needed stock.
Today, this would be unthinkable; any company that runs its supply chain like this will surely struggle to keep up with competitors. Instead, modern supply chain operations rely on historical data to know what to order and when.
The sales process is in the midst of a similar transformation. In the next five to 10 years sales people will increasingly leverage data in their craft. Customer relationship management and sales performance management tools replaced the briefcase and spreadsheet, bringing this age-old tradition into the 21st century.
Now, it is time for big data and predictive analytics to take us into the future. In addition to making salespeople more efficient and educated on the buying behaviors of their prospects, embracing a more scientific approach will also maximize their ability to close profitable deals and meet their quotas, no matter what industry they find themselves in. ●
Neil Lustig is CEO of Vendavo, the enterprise profitability solution of choice for more than 300 company divisions at some of the world’s biggest names in chemicals and process industries, consumer packaged goods, wholesale distribution, energy and utilities, technology, industrial manufacturing, and medical devices and consumables.