When Steven W. Berglund joined Trimble Navigation Ltd. in 1999 as president and CEO, the company had just finished two years of losses, had more than 30 percent turnover and had lost its focus since going public in 1990.
Berglund quickly reset the company’s focus by creating a clear strategy and focusing on the commercial markets. He also took on a major acquisition to consolidate Trimble’s offerings in the engineering and construction segment. While this was risky at the time, it worked out well, as the engineering and construction business became No. 1 in market share and its revenue grew 600 percent from 1999 to 2007.
On top of that, Berglund has led the company through 30 small technology acquisitions in the last eight years. All of these are aligned with Trimble’s core strategy of using technology to transform processes and impact users’ capabilities and economics.
His efforts have paid off, as he’s led the company through nine straight years of 20 percent growth and increased revenue by 1,200 percent from 1999 through 2007. Trimble is now No. 1 in all of its business segments, and to stay that way, it spends more money on research and development than any of its competitors and owns more than 700 patents. As Berglund looks toward the future, he looks to grow more by taking new products to existing customers and expanding new technologies to new customers.
HOW TO REACH: Trimble Navigation Ltd., (408) 481-8000 or www.trimble.com
When Clinton Severson arrived as CEO of Abaxis Inc. in 1996, the company’s future looked bleak.
The company makes small, portable blood analyzers for physicians and veterinarians that require minimal training and yield results in less than 12 minutes. Despite this remarkable product, it was trying to do something that hadn’t been done yet in marketing these devices for use in physicians’ offices. In the veterinary realm, it was also up against a much larger company that controlled 90 percent of the market. If those weren’t big enough hurdles to jump, Abaxis was also losing money and barely had enough cash to stay afloat.
Despite all of this, Severson had confidence in the product. He found more investors in less traditional investment firms and raised capital from 1996 to 2002. With the cash he needed, he transformed Abaxis from a losing company to a force in health care. He asked his manufacturing director to reduce the cost of making one component of the product from $22 to $4, and he was told this was impossible. He disagreed and found a new director and management team to make this and other improvements. Today, that part costs $4.13 to make.
Under Severson’s leadership, Abaxis has grown from margins of negative 50 percent to positive 65 percent and now has 20 percent of the veterinary market, proving that sometimes you just can’t take no for an answer.
HOW TO REACH: Abaxis Inc., (510) 675-6500 or www.abaxis.com
In 1994, John G. Varel saw an opportunity in the marketplace. At that time, customers would purchase hardware, software and the consulting services needed to integrate solutions all separately. Varel realized that if there was one company that could create a fusion of the best products in all three of these areas, he could cut expenses and build long-term relationships with customers and vendors.
With that realization, he founded FusionStorm, but he didn’t have any money only his good credit and name. In the beginning, he did all of the selling himself, and within a few months, he began adding sales representatives as fast as he could. He continued expanding rapidly, and sales grew significantly by 2000. Then the dot-com bust hit. Revenue plummeted during the next few years, but once information technology spending started to go up again, so did FusionStorm’s revenue. Between 2003 and 2004, the company’s revenue grew by 260 percent, which spurred VARBusiness magazine to recognize it as the second-fastest-growing company in the industry.
Under Varel’s leadership and commitment to success, FusionStorm has also grown to more than 21 offices throughout the country with more than 320 employees. While there were setbacks along the way, this chairman and CEO has proven that with a solid idea, sound vision and being true to your word, you can and will succeed.
HOW TO REACH: FusionStorm, (415) 623-2626 or www.fusionstorm.com
Ashu Roy co-founded eGain Communications Corp. in 1998, and he had a vision for his infant business.
He and his co-founder envisioned a world where customers would demand instant service through any device. To get to that vision, the journey was met with challenges.
Roy recognized the company needed to strengthen its platform with core technologies, so in its first year, it acquired Sitebridge, a leader in Web collaboration software. Then in 2000, Roy led the acquisition of Big Science, a leader in virtual agent technology. Then he completed the company’s acquisitions by buying Inference, the pioneer in knowledge management software for contact centers. Now strengthened, Roy set out to rebuild eGain’s platform and incorporate all these technologies into one common platform.
The dot-com bust also hit eGain, and while the company probably should have died during this time like many of its competitors did, he took the necessary means to keep it afloat. First, he chose not to take a salary during this time because he could afford not to and thought the money should go to the company first, and if that survived, then he would be rewarded later. Always the example for his employees, several other executives on the management team followed his lead without even being asked because they believed that much in Roy and the business.
Today, this chairman and CEO’s business is not only healthy but growing. eGain is also seen as a trusted choice of global enterprise for customer interaction hub solutions, and Roy and his team couldn’t be prouder.
HOW TO REACH: eGain Communications Corp., (650) 230-7500 or www.egain.com
It has nothing to do with her demeanor the students at Mills College, where Holmgren has been president since 1991, can attest to the fact that she’s actually quite pleasant. Rather, it’s something a friend once told her about progress.
“He said to me, ‘Remember, Jan, all progress is crablike; you take one step forward, one step to the side and then, hopefully, another step forward,’” she says.
Holmgren thinks of that often at Mills, an independent liberal arts college for women that also offers graduate programs for both women and men. With students, faculty and community members constantly at her door trying to get the college to take on different causes with its $74 million budget, Holmgren’s role is to act as the driving force to make the decisions that will allow Mills to take its next forward step.
Smart Business spoke with Holmgren about how to clear up confusion about who is in charge and why you have to lead communications.
Pick a direction and articulate it. First of all, you make sure that you have gotten a full picture; you have to inform yourself first.
Picking a strategic direction and sticking to that direction is a process for the leader, and you have to know your community that you’re working with, you have to know your budget, you have to know your market. Then you have to have the opportunity to really talk and talk and talk and reiterate and point out the advantages for the whole community to moving forward in a single direction or at least a direction that everyone understands or is a part of.
So it bears complex analysis and straightforward and repeated explanation. And sometimes I get a little mixed up there, sometimes any leader sees so clearly where an institution or an organization should go that you don’t necessarily take the time to articulate why that is and get people behind you.
One of the things that I often say as president of Mills is it’s as important for the public safety officer at the front gate to know the college’s mission and its goals as it is for me as president.
Create clear lines of leadership. There also has to be honesty in interaction and no confusion about who takes responsibility and who has authority because sometimes trust is based on a false assumption of democratic leadership, and that’s not true.
A leader must be willing not only to, in the end, have listened and attended to the concerns of everyone but also be willing to make the decision and take responsibility for it.
Sometimes, you have to use different modes in different contexts. So early on in my presidency, occasionally, I would find myself in a situation where I would have groups of people whether they were students or faculty or alumnae saying to me that such and such a decision had to be overturned or changed, and I would say, ‘You know, I’ve listened, and I understand your concerns, and I have reconsidered, but the fact is, this is a good decision, and we’re going to go forward with it.’
I have yet in my career at Mills to find one of those that I wasn’t successful in addressing that way. But sometimes, you have to be pretty tough; you may have to be even stronger than you anticipated in order to simply make the lines clear so no one steps over the line, either.
It’s like being the mayor of a town. You’re listening to everyone’s concerns, and you want to meet them if you possibly can, but you have to think about where the resources are best put.
Understand that you lead the communications. In terms of the leadership at the top, there has to be a real appreciation and respect for everyone who is part of the community and, again, it’s very important for the president to appreciate and talk to the cashier in the bookstore and to talk to the professor of mathematics.
And, to the best of one’s ability, also know yourself and know that you’re one of that team and people look to you to set an example and also to have the opportunity to be recognized by the leader, as well.
I honestly believe that one’s capacity to reflect civil and respectful behavior is a key element for everyone in every context, but certainly for a leader.
Find out about the desire of potential employees. What I’m looking for often is a real desire to be in the position that I’m interviewing for that is the person who has done her or his homework and has really clearly projected him or herself into that role and has an interest in it and an engagement with it.
You can do it very straightforwardly by saying, ‘What interests you about this work, and what will be some of the challenges? What will make it exciting for you to come to work every day; what will be the difficulties?’ Some people tend to be a little more reserved than others, and often, if I sense that there’s an issue about how enthusiastic they seem, I tend to talk about why I like being in the role that I’m in and what inspires me to go to work every day and that that’s a quality I’m looking for in members of my senior team.
If I don’t get a response on that one, it’s probably not as good a fit.
HOW TO REACH: Mills College, (510) 430-2255 or www.mills.edu
New payment solutions are enabling companies to trim costs while improving efficiencies. Designed as an alternative to checks and petty cash, the commercial card is a payment solution that streamlines the payment process for all types of business expenses. Workplace card solutions are stored value (similar to prepaid) cards that can be used to pay employees or customers on an ongoing or temporary basis.
Companies that utilize such offerings can improve their control and reporting of expenses while taking advantage of the flexibility that the cards provide.
“During uncertain economic times, work-place and commercial card solutions give companies the ultimate in flexibility,” says Paul Lewis, vice president of Treasury Management at Comerica Bank. “You can extend payment terms if you need to, or if you’re cash rich, you can take advantage of discounts by paying early.”
Smart Business spoke with Lewis about some of the advantages of workplace and commercial card solutions.
What is the commercial card?
The commerical card is used by business customers to pay for a variety of goods and services. The most common categories are business travel, maintenance, repair and operation (MRO) expenses, low-value procurement expenses, and vehicle expenses. One way to configure a commercial card offering is that on one card a company can customize the permissions or controls according to its various employees’ job responsibilities. For example, the card could be controlled for just travel expenses, just purchasing expenses, just vehicle expenses or any combination of those categories.
How does this payment solution help streamline business expenses?
The two big features on a commercial card program are the control you can customize it to fit the specific needs of an employee or department and the reporting, as you get a tremendous amount of data on the back end. In addition to managing expenses, customers can use this data to track supplier expense and negotiate better payment terms and better discounts. For example, you can use the data associated with a travel card program to aggregate your company’s expenditures at a specific hotel chain and then try to negotiate better rates based on your volume.
For virtually all transactions, the commercial card allows you to extend payment terms, which can increase cash flow. Based on the settlement you have with your bank, you can enjoy terms up to 30 to 45 days. Also, you can enjoy discounts from your suppliers associated with faster payments because they receive their money within two days after the transaction is approved.
What type of online management and reporting tools are available?
In terms of reporting, there is a product called Smart Data, which allows a company to manage all of its card transactions and associate a transaction down to a specific merchant. It also automates the posting and the reconciliation of those transactions directly into a general ledger system. A program administrator, which is the individual at a company that is responsible for managing the company’s card program, can use an online account maintenance (OLAM) solution. OLAM allows the program administrator to provision cards, approve authorizations and essentially manage all of the transactions that cardholders perform. Card-holders themselves can use an online statement to review pending and posted transactions. All of these are online Web-based tools.
What are some of the challenges associated with payroll exceptions?
Challenges of payroll exceptions include disbursing the first pay to a new hire or the last pay to an employee who is leaving, disbursing pay when a check is lost or was not issued and disbursing pay or per diems between normal payroll cycles.
How can workplace card solutions address these issues?
Using a payroll exception card helps businesses comply with local laws and union issues. For example, with production shoots, which are so prevalent in the entertainment industry here in California, production companies have to follow very specific rules in relation to payroll. Of course, it’s not just the entertainment industry; the rules are in place to protect the rank and file across all sectors. If you are an hourly employee, on your last day, your employer has to provide your compensation before you leave. Sometimes, cutting a check and finding somebody to sign it can be difficult. By replacing the traditional paper process with a workplace card, a company can alleviate a lot of concerns.
What types of companies stand to benefit the most from these card solutions?
Any company that spends money on anything can benefit. Whether a company is paying suppliers, paying employees, paying contractors or paying customers, there is a card solution that meets its needs. Each card solution offers the benefits of ease of use, greater access to data and improved processing efficiencies. There really isn’t a company out there that can’t benefit. We work with entities of all sizes, in all business segments, with all types of expenditure requirements.
PAUL LEWIS is vice president of Treasury Management at Comerica Bank. Reach him at email@example.com.
Brian NeSmith has seen his industry change, change and change again. From feeling helpless during the technology bust at the turn of the century, to watching his company, Blue Coat Systems Inc., explode to roughly 900 employees with nearly 400 percent growth in the last five years, NeSmith is constantly adjusting his strategy on the fly.
It’s no surprise, then, that NeSmith, Blue Coat’s president and CEO, works nonstop on ways to get the right employees for that adaptation and to prepare them to evolve with the changing industry at the company, which secures Web communications and accelerates business applications across the distributed enterprise. To do that, NeSmith has developed a system of informing employees about the development of the business and then letting them help redesign the company’s path, a tack that has pushed Blue Coat to $177.7 million in revenue in fiscal 2007.
Smart Business spoke with NeSmith about why you need to make sure you’re hiring someone who really wants the job you’re offering and how to get people motivated for change.
Involve employees in change. It always starts with explaining the context, why the change needs to take place, the vision of where you’re going not with complete clarity but that we’re going to figure it out together and then articulating that.
It works most by saying it. You get your managers to say it, you say it every chance you can even to the extent people are poking a little fun at you, like, ‘I’ve heard this speech before, Brian.’ OK, good, can you repeat it back?
You explain what you think you know, you explain what you think we need to answer together, and you challenge people. Say, ‘I think this is right, but I’m looking to you to provide leadership in this area.’ Then ideas come from all over and the picture evolves. It’s being as honest as you can and not presenting what you don’t know but something you think to be true and why.
The more people who are involved in the creation of where we are, the stronger they get involved in the success of that outcome. The line between success and failure, both as individuals and companies is, yeah, there’s the elegant strategy, and we all admire that when we read Harvard Business Review, but there is nothing like a person passionate about a result.
That person, to some extent, could make poor decisions, but they’re so passionate about it that they inspire everyone around them, and you power through the mistakes you make.
Find those who know which job they want. During the interview, I try to find out if this is really the job this person wants. The majority of turnover is people say they want a certain job and then, when they actually start to live it, they start making a case why they should be doing a different job.
I spend time trying to understand why people change jobs, why did they leave a job, why did they go to a job, what did they learn and would they have done it the same way looking back. It’s not that there’s necessarily right or wrong in terms of how much time you spend at a company, but it helps me understand their thinking. If I don’t get good answers to why a person left, that causes me to question whether that person understands what they’re looking for.
I ask, ‘What is it you like about this job? Sell me on why you want this job, not why you’re qualified.’ And you have to wait because everybody will say, ‘I’m motivated by challenges and the reward.’ Well, OK, we’re all motivated by challenges, but I want to know about this job in particular.
It’s not that hard to figure out whether someone is qualified. Occasionally you’ll make a mistake there, but the bigger the issue is, a lot of times, someone who is qualified for the job but didn’t really want to do it ends up failing, and it looks like they weren’t qualified.
Reinforce change with positive examples. Say you expect people to change, then find examples and ways to reinforce that with individual behavior and reward people.
You can’t simply stand up, tell people to change and expect them to do so. You have to do that to start with, because you can’t expect them to change without telling them they need to, but it’s one of those, tell them, watch what they’re doing, then continue to tell them by finding individual cases where you find the behavior you’re looking for.
Always put your passion on display. You have to be careful as a senior executive when you go through periods where you are depressed or sad. Maybe it’s personal, maybe it’s business, but you have to do as much as you can to departmentalize that so that you are never really truly sad or pessimistic.
In situations where it’s too much for you to handle, take a break or step out. A lot of people aren’t going to go through the same basic analysis to figure out whether they should be interested in this and, to some extent, people take their measure of trust and confidence in something through you.
So maybe I woke up with a headache, but if I’m going to get up in front of a bunch of employees, I need to show that passion. If I can’t, I need to cancel the meeting or do something else. You have to understand that the more senior you are, the more critical it is that your passion be seen, shown and understood.
HOW TO REACH: Blue Coat Systems Inc., (866) 302-2628 or www.bluecoat.com
Born: Tyler, Minn.
Education: Bachelor of science, San Jose State University
What’s the best business lesson you’ve learned?
It’s really about people and getting the power of the people working for the organization. Let’s say you acquire two companies, and one is entirely made of robots with a central program, and one is made of people which integration is harder? The one with the people is harder, but also if you get those people aligned, they are going to outperform a set of robots, so it really is a difference in a company is people.
What’s your favorite board game and why?
My favorite game is probably Risk. It’s a kind of battle strategy game, and you have multiple opponents, but aside from the strategy, there’s always the luck of the dice in it, so it’s a good challenging game.
I grew up in the central-northern part of the Black Hills of South Dakota, so we would have long blizzards, and when I was young, we wouldn’t have school for days, and we would get together and play Risk, and you’d have games that would go on for days to bide the time.
What was your first job?
I was working on a construction crew building houses at age 15 or 16.
Whom do you admire most in business and why?
Andy Grove. A lot of it is because I was at Intel as an engineer when he was leading the company, and his clarity of vision and communicating to people and the methods Intel developed under his leadership is a lot of what I do today. I enjoy some of his books because some of the things he talks about in having been an engineer down on the front lines you can tie where I was mentally versus where he was in leading the company.
After the first set of case studies detailing the missteps of the banking industry prior to the recent avalanche of problems, there’s already one key lesson from the in-depth reviews of the industry’s sales management practices that should gain the immediate attention of all CEOs, says Scott Barton, Senior Consultant for the Sales Effectiveness and Compensation Practice at Watson Wyatt Worldwide. Barton’s top observation: Don’t wait until revenue growth stalls to review the ROI of your sales force.
“When the banking industry was in the midst of an unprecedented growth cycle, there just wasn’t much attention paid to sales force effectiveness,” he says. “Management was adding people and not caring about the return it was getting for its compensation expenditures, until net income plummeted. Now, there’s renewed interest in looking at what caused the disconnect between revenue and compensation expenditures.”
Smart Business spoke with Barton about learning from the banking industry’s renewed rigor around sales force effectiveness.
What was the first problem you found?
The first issues that created sub-par sales performance in the banking industry were poorly defined sales roles and a general lack of discipline in reviewing how the sales team was spending its time. We know from our research that top performing sales teams spend 20 percent more time in new business generation activities when compared to the time spent by average performing teams. This produces a much greater return for the associated compensation expenditure when compared with the cost for client maintenance or administrative duties. Management should review the sales staff’s time allocation between hunting and farming activities and make certain that variable compensation is calibrated to reward more generously for growth, and limit the staff’s activities that don’t directly correlate to new customer development and revenue growth.
Did adjusting the sales structure help?
Some banks are now breaking out their sales positions into roles that are strictly dedicated to either new business development or customer maintenance. What they found is that one person can handle larger volumes of existing customers, so the company achieves better revenue leverage for the allocated expenditure. Banking executives also found they could hire for specific attributes when hiring strictly for hunters or farmers, instead of hiring for a composite profile for blended roles, and they achieved better results from dedicated business development and customer maintenance personnel simply because of increased focus. This type of functional realignment also affords management greater visibility into the disparate cost detail and performance of the two groups.
Was there sufficient accountability for profitable business generation?
Many organizations wind up with a poor sales compensation ROI because the basis for variable compensation is business that does not contribute to profitable growth. Last year was a tough one for many commercial lending organizations, but you wouldn’t have known it by looking at some of their relationship managers’ pay checks. Relatively high base salaries and incentive metrics tied to overall asset volume meant a portfolio could be flat and unprofitable, but the relationship manager made good money. Similarly, new business development officers were paid on new loans, many of which ended up being bad bets for the bank. Management should ensure each sales person carries a goal that covers a portion of the company’s revenue or margin objectives. Commission-only plans, based purely on volume, are appropriate in some instances. But too often we see this disconnect between company objectives and sales rep pay, where goal-based plans at the rep level would have closed the gap.
What’s the best way to align sales compensation with company profitability?
Start by understanding how each sales role impacts revenue or margin. Establish individual goals based on these measures. For example, if a business development rep has considerable influence over revenue volume in an assigned territory, base the goal on revenue volume and the forecast of growth for the territory. Setting the goal on measures that do not impact revenue or margin, or financial measures over which the rep has little influence, won’t help the bottom line. Similarly, setting the goal too high, or providing only limited variable compensation opportunity, won’t sufficiently motivate the rep.
Does sales turnover impact profitability?
Some critical client-facing employee groups still churn at an alarming rate, which in turn creates customer churn. Low pay often results in poor morale and disengaged staff; we know from our research that profitable revenue growth is a function of having engaged and skilled staff. Develop and maintain an effective communication strategy that reinforces the alignment of business change with changes in customer preferences; offer junior-level employees career development and training to foster a longer-term perspective. Also, calculate the cost of lost customers and review your sales compensation levels to make certain it’s adequate for your exposure. It can be very expensive if a sales person leaves, taking a customer with him.
SCOTT BARTON is a Senior Consultant in the Sales Effectiveness and Compensation Practice at Watson Wyatt Worldwide. Reach him at (415) 733-4263 or firstname.lastname@example.org.
Education: Bachelor’s degree in physics and chemistry from Dartmouth College; master’s degree and Ph.D. in electrical engineering from Stanford University
What is the greatest business lesson you’ve learned?
Always strive to bring value to the marketplace, and you exist as a company only to serve your customers. If you want to think of a company that failed to do this, think Xerox.
What is the greatest business challenge you’ve faced, and how did you overcome it?
I’ve faced two crises, and they were both of equal magnitude. The first was in 1992, which was the first time the company had a revenue downturn resulting in layoffs, and the second crisis was the dot-com crash, and we just recovered from that this year. The first was a crisis really of our own making, and I learned that you must always maintain your identify in the market and your purpose in order to succeed. During the second crisis, we knew who we were, but we were impacted by the country’s financial crisis. We survived by reinventing ourselves, and I’ve learned to never let the company become a one-trick pony.
Whom have you admired most in business and why?
I think out of everyone, I’ve admired Jack Welch the most because he inherited a sick giant and restored it to a high standard of performance.
Accolades for T.J. Rodgers and Cypress have included:
- Encore Award from Stanford University Business School as entrepreneurial company of the year in 1988
- Entrepreneur of the Year award from Ernst & Young in 1991
- CEO of the year in 1996 as named by Financial World Magazine
- Inducted into the Silicon Valley Engineering Council Hall of Fame in 2006?’