Since founding the company that is now Outdoor Hub LLC in 2007, CEO David Farbman has been in growth mode. His efforts have paid off, as the online platform for outdoor enthusiasts generated $10 million in 2010 revenue.
But growth can be a dou
ble-edged sword, providing challenges along with opportunity. Farbman has had to keep his leadership team a step ahead of growth, by structuring the organization to better react to the needs of growth.
Smart Business spoke with Farbman about how he’s maintained room to grow and how you can stay ready for growth at your business.
How has your company’s management structure positioned it for growth?
Historically, as we were starting to kind of grow the business, people were wearing multiple hats on a regular basis. As we were growing the business, we did get recapitalized in April 2010. After that, we really started to staff up and hire more experienced, specialized talent. So the weight of the management structure is set up today, it’s actually unlike anything I’ve run in the businesses in my career. We have people that are what we call a T1 and T2 responsibility.
T1 implies our leadership team, and that leadership team meets on a weekly basis with a very strong cadence that is focused on doing that every Monday, first thing before the day kicks off.
We have seven people on that leadership team, and each person is responsible for what we call T2, which is essentially their pillar of the business. It could be metrics and financials. It could be sales, it could be trafficking and ad operations, it could be new revenue, it could be content. Those people report up to me.
How does that setup help things run more efficiently?
It does two things. It creates an allegiance at the T1 level that basically says to someone on the T1 team, your first allegiance is to this leadership team, there is no ego on this leadership team, there is an ability to make decisions as a team and push things forward. It allows for us to work in a cohesive way on a regular basis, where synergistically we can take an issue to the other people on that team and get a technology perspective, get a marketing and research perspective. It allows us to be able to hash out an issue and then keep moving.
How do you foster a collaborative mindset within a team?
It has to start with the person at the top of the organization. You have to believe in a very authentic style of leadership with a lot of transparency, and you can’t believe ego is very productive for results. It does start there.
You’re looking for people that want to work toward a greater cause and put their energy toward creating something great, and not looking for self-fulfillment at each turn. At the same time, it always has to be regularly coached, and you have to have a very open table. If someone has an issue with me, they can just about tell me to ‘F-off,’ and I wouldn’t care, as long as it was moving the company forward. We try to clear issues quickly, and having that T1 level allows you to clear issues quickly.
What would you tell other business leaders about managing a high-growth company?
No. 1 is, providing you can afford to do it, you need to staff slightly ahead of the growth. You need to begin to do your all to specialize people more, so that the company becomes more scalable and areas can be molded as the company grows. You need to upgrade your systems, both from a technical level as well as a procedural level. We’re trying to do that each day. By no means are we in a perfect place, but we always have a constant desire to try and improve that.
How to reach: Outdoor Hub LLC, (248) 663-4440 or www.outdoorhubmedia.com
At Ceradyne Inc., chairman, president and CEO Joel Moskowitz has seen firsthand the need to constantly grow and evolve his business, which he co-founded in 1967 and has built into a company that generated $402 million in 2010 sales. Ceradyne started as a defense contractor, using advanced technical ceramics in military applications, including nuclear weapons.
“We were a classified facility, and doing a lot of work with nuclear weapons,” Moskowitz says. “That really gave the company its start, but it quickly became evident that were relying very heavily on defense work. But at the time, we were too small to do much about it.”
As the company matured, Moskowitz and his leadership team saw the need to look outside the military and defense sphere for new customers and began to seek strategic partnerships and acquisitions that would allow Ceradyne to leverage its expertise in technical ceramics in new markets.
After several failed strategic alliances in the 1970s, Moskowitz forged a partnership with Ford Motor Co. in the mid-1980s that allowed Ceradyne to broach the automotive market. This was followed by a partnership with a division of 3M that had the company producing a line of ceramic orthodontic brackets. After that, several acquisitions followed, allowing Ceradyne to stretch its products’ reach into the satellite communications and glass and metal fabrication industries.
“We also acquired a company that developed the fused silica ceramic crucible for solar cells, which is going to be 30 percent of Ceradyne this year,” Moskowitz says.
To find acquisitions that can add value to your business, you need to know what your business does well and how you can take that competency and apply it in new ways. It’s an approach that takes the development of and adherence to a well-defined strategic plan, but the creativity and flexibility to be willing to try something new — and the discipline to know a good move from a bad move.
Attack new markets
To seek out and effectively integrate new companies into Ceradyne, Moskowitz and his leadership defined an area of focus for the company’s technological muscle.
“We’ve always had a very clear idea that we make generally large structural ceramics,” Moskowitz says. “That’s different from the high-volume electronic ceramics that are used in ceramic capacitors, microwaves and semiconductor packaging.”
With those boundaries set, Moskowitz has empowered his key decision makers to scan different industries looking for potential targets of opportunity.
“We have a clear, pragmatic culture that starts with me,” he says. “I founded the company in 1967, and a lot of the process starts from that point going forward. Now that we’re a diversified global advanced materials company, every person in a key position is keeping their eyes open. In addition, we have myself and our president of North American operations working with our vice president of business development, and the goal is for us to get to a point where we’re acting in consensus on a given project.”
If consensus on a acquisition cannot be reached, if there are too many questions from key players that aren’t adequately answered, Ceradyne will often scrap the idea and rapidly discard the opportunity, coming to the decision within weeks. If Moskowitz and his team are encouraged by their initial research, it will often take up to six months before Ceradyne is ready to invest money and make the acquisition happen.
“First, you have to be interested in doing the deal,” Moskowitz says. “You have to like it, simply put. Second, the company we’re acquiring has to really want to be a part of the company. We still have a very collegial, entrepreneurial culture, so we never do a hostile deal. There has to be a rationale for the sale, and the people who are going to stay with the company, we have to feel like they like us. After that, you start to get into the things that every acquiring company does — five-year projections, due diligence, speaking to key customers and opening an ongoing dialogue with key employees.”
Moskowitz says it is almost always prudent to approach any acquisition with caution. Stay conservative regarding the type of business you’re willing to buy and the amount of money you’re willing to spend. There will always be another opportunity to make a strategic addition to your company. But digging out from a poorly vetted or poorly financed acquisition could take years. In a worst-case scenario, it could endanger your company.
“Never bet the farm,” he says. “It has to be within reason of your resources. That is the first thing we always try to remember. The second is that, generally speaking, we want it to be within the framework of our core competencies in the areas of advanced technical ceramics and high temperature materials. Third, at least in our case, we want it to add value almost from the beginning. We’re not looking to complete somebody else’s research. We’re not looking for a turnaround. We’re looking to pay a fair price, generally in cash, and have the entity that we acquire add value from the beginning.”
But finding an acquisition that will add value to your company doesn’t mean that you’re not going to have work to do to once the purchase is completed. Acquisitions are almost always a scratch-and-dent sale, and even if you find a company that is a great fit, you will still need to spend some time under the hood. How much time you’re willing to spend is a good indicator of how much risk you’re willing to take.
“If you’re really reaching and going into debt, you’re leaving no room for problems,” Moskowitz says. “And acquisitions are problems. There is a reason somebody is selling it. People don’t sell companies that are going to turn around with phenomenal results in the next 48 hours. So you have do a lot of due diligence, don’t reach beyond your means or theirs, and keep in mind that the people involved in the acquisition are important.”
Lead the people
You might make an acquisition to bring a new area of expertise to your company, a new product or for other strategic reasons. But you can’t lose sight of the people involved. When you’re acquiring any company, you’re almost certainly going to have to handle the people who had been operating the company. You’ll have to decide how to best employ them, or if you can’t move forward with them, how to part ways.
As the acquisition process is progressing, Moskowitz and his leadership team have a simple method for getting on the same page with Ceradyne’s potential new employees: They talk to them. The information gleaned from casual lunches and dinners can be, on some level, more valuable than what you learn through your formal due diligence process.
“First off, you just ask them what they think about your company,” Moskowitz says. “We did an acquisition not so long ago, and at one of the early dinners in the whole process, one of the key people in the company we were acquiring said to us, ‘You know, this investment banker is the one actually doing the deal, but we’d like to express that we would like to be a part of Ceradyne.’ Although these people didn’t have the final say because most of the key management was not a part of the company’s ownership, their desire was made clear.”
If there is dissension on the team of the acquiring company, the more you interact with them, the sooner it should become evident. Acquisitions aren’t popularity contests, but if high-ranking members of the acquiring company have genuine reasons for hesitation, you need to quickly identify and address the issue, or your purchase could be in danger before it ever gets off the ground.
“We’re always talking to the people who are selling, because we want to really see if they like us,” Moskowitz says. “We want them to like us, we want to like them, we want to have a very collegial relationship. Deals often sour because of individuals. They didn’t want to make a deal or they didn’t want to be a part of it. There are a lot of personalities involved when you get into making acquisitions.”
Know when to run
In acquisitions, size does matter. Size equates to risk. The larger the company you’re looking to bring aboard usually means the more money paid out for the purchase, the more people involved and the more complexity involved in piecing the two companies together.
Ultimately, you need to set a level of risk tolerance that is right for your business and not stray over that line, no matter how tempting the purchase may be. You need to know what you can spend and what your company is capable of handling in terms of growth and new areas of practice.
At Ceradyne, Moskowitz doesn’t draw a definite line in the sand, but the red flags start going up once an acquisition surpasses the $100 million mark.
“We’re very cautious past that point,” he says. “We’ve only done one acquisition over $100 million. And it does take a level of discipline to walk away. I always point out to my team the number of deals we’ve walked away from, because it’s as important as the number of deals we’ve actually made.
“Often times, a company we’re looking to acquire has investment bankers, and their job is to get the highest price, and sometimes they can act in a manner where we make up our mind that we’re just not going to do it. If they create an auction type of atmosphere, we’ll say, ‘This is the number we’re going to pay, and if you can get more money, then do it.’ And that becomes the walk-away point.”
Years of watching the aftermath of bidding-war acquisitions has solidified Moskowitz’s belief that it’s the wrong way to do business.
“In the times we’ve been outbid or are not going to the next round of the bidding, in a percentage of those times, things have not worked out for the company that ultimately made the acquisition,” he says. “There might be other reasons it didn’t work out — we just had one of the worst recessions — but for some reason, it didn’t work out.”
And if an acquisition doesn’t work out, you might have your moment of frustration. But then, you have to get back to work figuring out what happened, and your course of action moving forward.
“If an acquisition isn’t working out, you cry,” Moskowitz says with a laugh. “But after you finish crying, you start to think about where you want to go from here. You do your best to mitigate thee problem. For us, that usually means we take a look at reducing resources or maybe reducing people, and try to understand why things are so different than they were a month or two before you said you were going to do the deal. It’s usually a money issue, but it could be an issue with culture. We haven’t found that, because we work so hard before a deal to try and ensure that we’re all on the same page or at least close enough.”
How to reach: Ceradyne Inc., (800) 839-2189 or www.ceradyne.com
The Moskowitz file
Born: New York City
Education: B.S. in ceramic engineering, Alfred University, Alfred N.Y.; MBA, University of Southern California
History: Moskowitz co-founded Ceradyne (NASDAQ: CRDN) in 1967 in order to develop, manufacture and market a new product line of advanced technology, structural ceramics for defense, industrial and consumer applications. The company has grown from a founding investment of $5,000 to become an international, publicly held corporation with research and manufacturing facilities in the United States, Germany, Canada, China and India.
What is the best business lesson you’ve learned?
To create a culture that recognizes the contributions of individuals and to be very clear in recognizing that contribution not only with words or praise but with compensation and other recognition. Without the key people, there is no company.
What traits or skills are essential for a business leader?
The business leader often has to look inside the company, as well as outside to its customers and shareholders. Inside, there must be a concept of collegiality and building consensus with a reasonable focus on objectives and performance. To the outside world, the business leader must be professional and calm, and as a public company, always truthful and transparent.
Marc Graham has seen it all unfold. He knows where the automotive industry stands.
If you’ve listened to any of the news coming out of Detroit in the past two-plus years, you know the automotive industry has seen better days. And it’s not just the automakers; it’s the service providers and component suppliers that rely on the automakers for their business.
So when you find out that Graham is the president and CEO of AAMCO Transmissions Inc., in charge of piloting 5,000 employees and franchisees through the recession, you might think he’s been bailing water in earnest, just like the rest of the industry.
You’d be wrong. AAMCO is actually growing, for a very simple reason: It service the cars that increasing numbers of consumers are keeping in lieu of making new auto purchases.
“This is one of the few areas that actually lives quite well in a recession,” says Graham, who also heads AAMCO’s parent company, American Driveline Systems Inc. “As we’ve gone through the last couple of years, in a situation where consumers cannot or do not buy new cars, they’re leaning back toward an area where they’re taking care of an older car. In the past, when they reached a certain point with maintenance costs, they’d just buy a new car. Today, they’re investing in that vehicle and bringing it back to an as-new mechanical condition. That works extremely well for the automotive aftermarket, and specifically AAMCO.”
But converting AAMCO into a full-service aftermarket auto repair brand has been the prevailing challenge that Graham has faced over the past several years. For more than 40 years of its existence, AAMCO specialized in transmission repair. But as transmissions started to resemble computers instead of mechanical components, Graham began to realize that his company needed more than transmission repair to sustain itself.
“If you’ve driven an older car, you might remember a transmission slipping or feeling a clunk or a grind,” he says. “But in recent years, transmission failures have become more electronic. You might have a light come on in the dashboard or a symptom that feels more like a fuel starvation. So as we looked at that, we said that we really have to start covering the entire car if we’re going to protect our transmission business.”
Graham needed to convert AAMCO from a niche player in auto repair to a comprehensive auto maintenance company. He had to build the case and convince thousands of franchisees — most of whom were running successful AAMCO stores under the old model — that it was a necessary move for the long-term health of the company.
Build your case
This wasn’t Graham’s first business transformation. As the head of Jiffy Lube, Graham oversaw a similar diversification from a core oil change business to a preventative auto maintenance business.
“We were quite successful with that, years ago,” Graham says. “We added about half a billion dollars of profitable revenue to their franchises.”
But AAMCO was even bigger, and even more entrenched in their market niche, with almost half a century of living by a successful transmission-based business model. Graham had to meet his 5,000 employees and franchisees head on, with some corporate vision-based evangelism — though based far more on data than cheerleading.
“What we did, and what we continue to do now, is maintain that constant exposure to doubters of what is working and what is not working, what the successes are, and doing it in a very factual formula,” Graham says. “For me to sit in front of an AAMCO franchisee and say, ‘This is the right thing to do, just believe me,’ works for some situations. But when you talk about the true dissenters, they need to see facts. I’ve dealt a significant portion of my life with the mantra, ‘You can’t hide from facts.’ So as you look at your successes and you’re able to show increases in revenue and strong return on investment, show strong profitability, and continue to show that to the doubters and dissenters, little by little that group erodes into a group that is now the adopter.”
But hammering away on the facts is one thing. Showing your people how your planned company shift will benefit them is something else. You have to put the new business model in a frame of reference that shows each person the benefit on an individual level.
Graham could see the revenue-based benefits that awaited a diversified AAMCO brand. But what his franchisees wanted to see was how the change would affect profit at the store-operator level.
“All of us at the CEO level, we talk about revenue, revenue, revenue,” he says. “But one of the things you hear a lot from the AAMCO team is profit, profit, profit at the operator level. So I’m not showing them revenue. I’m showing them an income that they can attain, and I’m also showing them how this strategic direction supports them in an eventual sale, in the increase and equity of their business.”
Graham and his leadership team constructed the message by breaking down AAMCO’s business from the standpoint of sales, revenue and profit elements as it pertained to their core business of transmissions. Then Graham took the new business and did the same dissection.
“We proved to them that there is a significant amount of volume in the new business, and that volume could be transferred at an equal income rate as the core business,” Graham says. “On a global level, we showed that the opportunity was significant, and underneath that, we showed that it wasn’t just revenue, it was profit. And the last part of the message was underscoring that this great transmission business could be enhanced by total car care. If you take total car care, here are all the reasons why it is going to support and grow the transmission business. That is the hardest thing to hear and understand when, after 40-plus years, they’ve been running a business in a very specialized, one-method platform.”
Work with the stragglers
Graham had to get his franchisees to think about the business in new ways, which meant getting them to realize that each store could utilize its resources in new ways. For most simple auto repairs, such as brakes, AAMCO stores were already outfitted with the tools and manpower to take on the added responsibility, meaning very little in the way of capital investment. But for more complicated repairs, such as air conditioning, investment was required on the store level, increasing the skepticism of some franchisees regarding Graham’s plan.
“If you look at what you have to have in a facility, first of all they already have an average of six or so bays, and they have the technicians with the skills to service a complicated part like a transmission. So for them to transition to brakes, it requires almost nothing in the way of investment,” Graham says. “But some areas do require an investment, and I tried to emphasize that it’s purely a cash issue. If you can get a quick return, that cash issue goes away pretty quickly. So ultimately, it’s a fairly low capital investment to get hundreds of thousands of dollars in new revenue.”
In communicating with reluctant franchisees, Graham kept coming back to the concept of return on investment, and holding up some of the early franchise successes as examples.
“Something we communicate to every franchisee, and something that I’d tell all CEOs, comes back to return on investment,” he says. “Capital, in and of itself, looks like nothing more than cash. When put against the opportunity of profitability and ROI, it becomes far more measurable.”
To leverage his leading-edge franchise successes with the new business model, Graham started to create a dialogue among franchisees, and dispatched members of the company’s franchise support group to maintain personal contact with franchise owners.
“You have to expose everyone to your successes,” Graham says. “Our franchisees came to a website called myaamco.com, which only the AAMCO centers can access. They can see the exposure of the successes. They can see the top 50 and top 100 stores, and how much they’re doing, how beneficial it is to those centers. It drives them harder to get out to those same levels of achievement.”
The franchise support group has been retrained on the sales and marketing, and profit and loss aspects of the company’s business, so that when they go into an AAMCO store and talk to the franchise owner, they can talk about the ways in which revenue and profit can be improved.
“They can sit down with the owner, walk them through the improvements in revenue, items that can improve the revenue, how they can attain profitability and how they can market,” Graham says. “That is a big separation from how it has been done in the past.”
Graham says that currently, most AAMCO centers are involved in the service items that required a more substantial capital investment, and are showing the returns on investment that Graham initially projected.
“Now we have a great story to tell from the standpoint of ROI,” Graham says.
Continue to set goals
Sometimes, Graham’s operations heads do a double take when Graham comes to them with a new opportunity. But for Graham, it comes back to setting goals for the company that are aggressive yet attainable. You find that sweet spot outside of your comfort zone but within your company’s capabilities, by looking at the metrics of the situation.
“Here is how I lay out the metrics, and then I sit with my operators and they lay out back to me how they see the metrics,” Graham says. “What comes from that is the believability that the opportunity is scalable. Then, back to the question of goals and what is palatable on an annual basis.”
When setting goals by which to advance a new plan, you can find yourself tempted to lose patience. There is a new market that needs conquering, and you don’t want to wait. But the data you collect, and the process by which you analyze it, can go a long way toward restoring your nice, steady pace.
“When you see a business that you can grow at a 4x or 5x level, and an existing business that can grow at a nice number, your patience level as a CEO isn’t high,” Graham says. “So a lot of the goal setting, at least in my experience, is offset by an understanding of what is palatable and achievable.
“I was asked years and years ago how I looked at a company that I was getting ready to operate, and I said, ‘I’ll look at a wall, and on that wall are all these different knobs I can turn. Every single knob can create a dynamic that would give us more opportunity and profitability, but I know that if I turn too many, we flood.’ So that whole idea of goal setting, it comes more to an understanding of what level of patience should be applied. You make sure that you’re accelerating the opportunity, but the people in the facilities are able to keep up and enjoy it at an appropriate rate.”
Several years into the new business model, AAMCO is succeeding in becoming known for more than just transmissions.
“On our whole strategy, our franchisees were quite engaged, are still quite engaged, and we have gotten adoption on it,” Graham says. “The big key is to step back and look at the entire landscape. Don’t dive into it. See what the other side thinks, and then try to re-convince yourself from the standpoint of, in our case, the franchisee. Why should I believe this plan? As you break it apart and dissect the landscape, you should be able to convince yourself whether this is the right path to take. Then, you have to listen to your constituency and make sure you are working with them to knock down the barriers to the opportunity.”
How to reach: AAMCO Transmissions Inc., (800) 292-8500 or www.aamco.com
The Graham file
Born: Monterrey, Calif.
Education: Stanford Business School
What is the best business lesson you’ve learned?
Step back, stand in the corner and watch what is going on around you. It’s a fantastic business lesson because the people who are high performers do all the work, but they could perform at an even higher level if someone in your position would be able to mentor them.
What traits or skills are essential for a business leader?
The biggest skill is going to be an open mind. It’s so simple for someone in my position to mandate what I think is right, but you have to refuse to impart direction in that way. You want the entire team pushing forward, which you get far more as a collaborator than as someone who is only dictating rules.
What is your definition of success?
Success means everybody in the process understands what they are doing, they’re driving toward a common goal, can explain the goal and perform at a level that is satisfactory to everyone involved in the process.
Fundamentals. Vision. Strategy.
Nancy Schlichting knows they’re all business buzzwords. You execute on fundamentals, you strive for your vision, and you focus on your strategy. You teach your team about it, you reinforce it to them all the time. After some time, just hearing those words is enough to make your eyes glaze over.
But before you dismiss them as a few others in a long list of business clichés, Schlichting thinks you should reconsider. Every business needs guidelines, beliefs and practices that provide a template for how management and employees should operate on a day-to-day basis.
Without some kind of outline, a business has no direction. Which is why Schlichting structured her strategy and vision around the fundamentals that she wants to promote at Henry Ford Health System, the $4 billion health care network where she serves as president and CEO.
“We always start with our fundamentals,” Schlichting says. “We have seven pillars of performance that are really constant for us. Every year, we have to focus on our people, patient safety, service, growth strategies, our academic mission with research and medical education, a strong focus on the community and a strong focus on continuing to be stable financially. Those pillars really form our base. If we don’t perform well on those, there isn’t going to be money to make new investments and new strategic changes for the better.”
To allow everyone at Henry Ford Health System to execute on those pillars, Schlichting needs to put them at the center of all of her strategic planning, her vision for the future, and make them evident throughout her day-to-day interactions with her executive staff, physicians, nurses and other staff members throughout the 23,000-employee system.
What follows are some of the ways in which Schlichting promotes the system’s vision and strategy through all the avenues available to her, and some of the lessons she has learned along the way.
Though she runs a medical system, the way Schlichting and her leadership team form a strategic plan isn’t much different than the way a retailer or manufacturer might. Schlichting’s team identifies areas of competitive advantage, and tries to leverage as many ways as possible to accentuate those areas.
“When we focus on those areas of excellence, we try to take advantage of what we think are our areas of competitive advantage,” she says. “Frankly, it’s what any organization does — create a competitive advantage by trying to design and execute on strategies that others can’t copy easily. Then we try to take advantage of that model continually, always trying to figure out new ways to meet consumer needs, employer needs and community needs. It really gives us a great platform on which to build.”
For Schlichting and her staff, the market differentiators include the system’s medical group and insurance structure. Schlichting says Henry Ford is unique among area health systems in that it employs a salaried group of physicians in addition to private practice physicians under the organizational umbrella. The system also owns a health insurance plan with about half a million members, which gives Schlichting’s team an avenue to get closer to customers, major employers and community entities on the plan.
All of the information that the leadership team receives from the front lines helps the entire health system continue to identify and pursue the differentiators that will continue to ensure Henry Ford’s place as a leader in the regional health care field.
It’s a universal lesson that any business leader needs to learn when it comes to strategic planning: Stay in tune with what the market wants, and figure out new ways to give the consumers of your products and services what they need. That is how you turn customers into repeat customers.
“It’s isn’t just looking at the environment, it’s really looking at what is needed in the industry, looking at quality issues, service issues and access to the product,” Schlichting says. “It’s trying to focus on being comprehensive in your approach to business. That allows you to hopefully be proactive, as opposed to reactive, to the environment around you.
“You have to ask yourself what is specifically unique about your business, what you can create with the assets you have, what you can really try to achieve that is right for your organization. You have to have a vision for what has to be accomplished. If you have that vision, you can start to get creative around the strategies you need to form in order to get there. From my perspective, that is what we do here. We try to take full advantage of our organizational assets.”
Create a vision
Before you can plan to get somewhere, you have to know where you want to go. In that sense, a well-defined vision is the single foundational key to executing on fundamental principles.
The vision needs to outline goals that are ambitious yet attainable, and needs to be something that can link back to each person in the organization, so that everyone under your umbrella can feel a connection to it, and feel like their job contributes to the overall goal of realizing the vision.
Schlichting says corporate visions also need to have staying power. You can’t scrap a long-term vision for your company and reinvent the wheel every few months. Major crises, like the recession of the past few years, might force you to alter your goals. But unless your hand is forced to an extreme degree, you should strive to keep your vision consistent.
“The vision is hopefully something you can stay with for a period of time,” Schlichting says. “That’s because it has to be both inspirational and aspirational. The vision is typically not something you’ve already achieved. It’s something you’re working toward.”
At Henry Ford, Schlichting makes her vision personal for each employee by doing something very basic in concept, yet large in scale: She relates the customer experience to each employee.
“We’ve had a vision here for 10 years, and that vision is to provide the same quality of care and comfort that we want for ourselves and our family members,” she says. “What that has allowed us to do over the past 10 years was to really have a personal connection to a vision of excellence for every single person in the health system. There is not one individual working here at Henry Ford who doesn’t understand what it’s like to be a patient, or be a family member of a patient. It has allowed our housekeepers and dietary workers, our nurses and doctors, to all connect around that vision. It has been a highly motivating vision for us.”
As foundational as your long-term vision might be, there will be opportunities to take an alternate path and explore a new opportunity. You can’t get so locked in on your goals that you can’t see an opportunity. The key is to know when to make a detour and when to stay the course.
Schlichting says the opportunities you act upon should ultimately help you realize your goals, though maybe via a slightly different route.
“You have to have perseverance and commitment to what your strategy is, but you also have to have some agility,” she says. “There are things we’ve done over the past 10 years that have been strategic — what we wanted to do is what we did — and other things that were more opportunistic, such as the acquisitions of Henry Ford Macomb Hospital and Henry Ford Medical Center – Cottage. Those were things that emerged as opportunities, and based on us having our antenna up, and us being agile and flexible in terms of things we thought would help the organization.”
Your ability to remain opportunistic is largely reliant on having an open mind and, within reason, an open wallet. If you want to have the latitude to make an opportunistic move, you need to save enough in other areas to develop a financial reserve.
“You have to be open to those types of opportunities, and some leaders are often not as able to be open like that,” Schlichting says. “So you do need to have a financial position that gives you some latitude to be able to finance these opportunities as they come along. The financial structure and the leadership position both need to have strategic and opportunistic elements, and afford you the ability to react and move quickly as the opportunity arises. You need the frame of mind along with the financial resources that are available.”
Learn to say yes
It’s one thing to have fundamentals. It’s one thing to develop core values, a vision and a strategic plan. It’s one thing to say you’re going to execute on all of it. But it’s entirely another to get all of your employees to buy in and work alongside you.
“Engagement” is another business buzzword that you’ve likely heard countless times before, but no matter the terminology you want to use, the need to have employees on board and moving in the same direction with you is a universal need in business. If you don’t have your employees with you, you won’t be successful.
You get your employees on board by enabling them to have a hand in helping your organization to realize your vision. And there is a three-letter Swiss Army knife of a word that you can use to empower employees in a variety of situations.
“I always tell our leadership that the most important word in my vocabulary is ‘yes,’” Schlichting says. “You don’t want to create a culture that is supposed to embrace innovation, or a culture that allows you to take advantage of important opportunities, unless you have that kind of view of the world. Because people don’t come to you twice. If they come to you with their exciting new idea that they thought through and are committed to and you say no enough times, people aren’t going to come forward anymore. You’re also not going to have people in the outside community think that you’re an organization that is open to new ideas and opportunities. It’s those kinds of messages that are important.”
That doesn’t mean you let everyone run free with their ideas. You still need your people to innovate in the same general direction. “No” is still an option, but one you should use only when the idea or suggestion does not fit. And if you tell someone ‘no,’ show them why you can’t use the suggestion.
“At the same time, you need to have discipline around the operating metrics, around performance strategies. You still need to have that fundamental discipline, but it’s also helpful to have an attitude that says ‘yes’ more than ‘no,’” Schlichting says.
How to reach: Henry Ford Health System, (800) 436-7936 or www.henryford.com
The Schlichting file
Education: Bachelor’s degree in public policy studies, Duke University; MBA in hospital administration and accounting, Cornell University
Schlichting on having a positive attitude: We all wake up in the morning with either an attitude of optimism or pessimism. I think it has to come from within. As an individual, you really have to be a positive person. And there are days when I act a bit more, come in on stage and perhaps acting more than I believe it. But you have to do that some days. Not to be unbelievable, but to be encouraging to others. We all have those points when things don’t go well, and those are the true tests for leadership. Because how leaders handle those tough times frankly are your defining moments. People watch us.
Schlichting on building a leadership team: It is probably the most important job of a leader, making sure they have the right team around them. And with the right team, it can make your life a lot easier, it can make things go very well and smooth. But with a team that is not engaged in that way, it can be very challenging. I think it starts with the values of the individuals. When I interview people for my leadership team, one of the first questions I ask them is ‘What do you stand for as a leader?’ Sometimes they look at me like I’m a little nuts, like they’ve never thought of it that way, and that tells me something.
Schlichting on internal communication: The direct manager is the most important person from a communication standpoint. We create tool kits and cascading information in the organization, and we have a communications team that I meet with every month. So we strategize about the messaging, about how we’re helping managers, supporting them, doing often with videos and tools that help them communicate effectively.
Like most business leaders, Frank Napolitano Jr. has a recession story.
His company, Global Affiliates Inc. — which does business as GlobalFit — saw a decrease in the number of consumer products sold. So the $20 million fitness solutions company, which Napolitano heads as president and CEO, needed to pull back from the consumer market and find new ways to provide fitness-oriented services.
Natpolitano’s company didn’t completely reinvent itself, but it certainly developed a new perspective on driving revenue.
Smart Business spoke with Napolitano about how to get creative when it comes to finding customers in a challenging economic climate.
How did you minimize the negative effects and capitalize on the positives?
The only thing you can really do when outside forces are driving prices down is sell fewer of those products and more of the others. We certainly worked to expand the number of gyms we worked with that gave us an opportunity to sell more, even though we were making less on each.
That is the way we mitigated the negative. On the positive, consumers were not so excited about spending money, and while prices on consumer products were largely declining, we found that companies were more interested in buying programs for their employees. We shifted our focus toward getting companies engaged in buying products that would help prevent employees from getting sick, injured or overweight in the first place.
What would you tell other business leaders about mitigating the negative and focusing on what the business does well?
The lesson every leader learns is that when you’re in the middle of battle, when things like a major recession occur, sometimes it’s hard to think strategically because you’re just trying to keep your head above water. If you do look at any of those situations from a strategic perspective, there is pretty much always something good mixed in with all the bad. The key is to find it, grab it and make the most of it.
How do you scan the market to figure out the best way to serve it?
Accumulating information about what is going on in your market is absolutely critical. It is important that you never lose sight of the competition, but it’s also important that you don’t let them drive your strategy.
You can’t put your head solely in your business. You have to be out there participating in the community, and in the community of your business. There are a fair number of organizations that bring together industry leaders trying to establish what they want and what they need, to help their employee populations and their insured populations be the healthiest they can be. It’s by participating in those outside activities that you learn a great deal about what they want and need. From there, you develop products and programs to meet those needs in order to have the greatest chance of success.
But you don’t want to be a lemming. Just because everyone is heading in one direction doesn’t mean it’s the right one, and it’s usually the creative idea, the one that is not the same as everyone else’s, that produces the greatest return on investment.
How do you lead the market instead of following?
That has to be the hardest question in the history of the world. The reason why there is always one person that has to end up making the final decision when the many options are presented to them by their senior staff is because part of that decision is made based on the facts available. But part of it is always based on your instincts, and you rely on your instincts. As imprecise as that answer is, it’s probably as good as it gets.
How to reach: Global Affiliates Inc., (215) 751-1992 or www.globalfit.com
It was the year 2000, and John Scardapane was in his salad days leading Saladworks LLC.
The phrase “salad days” derives from a line in the first act of William Shakespeare’s “Antony and Cleopatra,” in which Cleopatra laments her earlier involvement with Julius Caesar:
“My salad days, when I was green in judgment, cold in blood…”
Scardapane isn’t cold-blooded, but the former chef was green in judgment as he led the restaurant chain he founded in 1986 toward a franchising concept that could serve as a springboard to rapid growth, but required the corporate leadership to provide a strong, stable support system for prospective store owners. It was something Scardapane had yet to address.
“I was very green about multi-unit operating,” he says. “We had no structure, we had no core values, we had no manuals, no training programs. We were doing extremely well, but our volume was covering a lot of our seams.”
Scardapane — also the chairman and CEO — decided to begin franchising the stores to family members and friends, hoping they would take the restaurant concept and run with it the way he had. Scardapane’s family and friends had expanded Saladworks to 25 locations as the century turned, but nothing was standardized except for the restaurant name.
“It got to the point where I either had to start building an infrastructure to support them properly, or find someone who could do it,” Scardapane says. “I had no success finding anyone else, so I decided to start building the infrastructure.”
In 2002, Scardapane began selling franchises to the public, and now Saladworks is a chain of more than 100 stores with locations in the New York, Philadelphia, Washington, D.C. and Atlanta areas, along with locations in California, Florida and Missouri. The company employs 2,500 between corporate and franchised locations.
But to get there, Scardapane had to build a growth plan, a strategy for the future and a culture. In short, Scardapane needed a system that worked.
Define your culture
In the early years of the previous decade, as Scardapane began franchising Saladworks locations to family and friends, he knew something was missing from the business equation. But he wasn’t sure what it was.
Scardapane sought out the assistance of executives at Commerce Bank and Wawa Inc., two companies he admires. Through those companies, he found a pair of experienced executives who were willing to mentor him and help grow Saladworks.
“We found a banking executive at Commerce Bank who showed me how Commerce developed their culture and strategies,” Scardapane says. “The gentleman from Wawa came in as a consultant. I asked him to spend a couple of days in the company, go around to every employee and talk to them, come back and give me your opinion on what is happening. He came back to me after a few days, and told me he was extremely impressed. He felt we were running a company structure like you’d have for 500 stores, but he felt the one thing that was missing was a culture.”
Scardapane wanted to know the reasoning behind the need to develop a culture, and why it was critical to his company’s success.
“I asked him, ‘What is a culture and why do I need it?’” he says. “We talked about it, he helped me put everything in writing, and everything else evolved from there. I found out that once you have that culture in place, that is when you can start empowering everyone in the company to make decisions because you know they’re all going down the same path.”
Scardapane decided to craft five core values that would serve as the foundation of Saladworks moving forward: customer service, a passion to be the best, valuing other team members, doing what is necessary to get the job done, and hiring the best people. Those five principles became Saladworks’ DNA, and something at the heart of the vetting process when Scardapane and his team are searching for new franchisees.
“Whenever we’re interviewing potential new franchisees, we want to see if they match our culture,” he says. “We’re really interviewing them concerning whether they have the passion to be the best, are they willing to do the right thing, do they have integrity and honesty. Are they going to do whatever it takes to get things done, and are they going to grow future leaders? Each department has specific questions that pertain to their area, but they all follow those guidelines.”
But even if you hire the right people, you won’t be able to fully engage them in your company’s culture without involving them in the process of shaping your plans for the future. Each year, Scardapane involves his corporate staff in the strategic planning process. Involving the corporate staff allows the home-office work force to better reinforce the culture among the franchisees.
“Everybody has a chance to ask whether we have lived up to our values in the past year,” Scardapane says. “And we look at whether those values are reflected in our programs for the next year. So it’s basically us asking ourselves, ‘Do we still believe in our values?’”
Scardapane drives the discussion down to the franchisee level by taking selected franchise owners and putting them through the same process. To make a truly open forum where no opinion is off limits, he bans members of corporate leadership from the franchisee discussion.
“Nobody from the home office is there,” he says. “I have a consultant help them get through the process, but anything they say never gets back to the home office regarding who said it. Then we compare their strategic plan and what the franchisees think the strategic plan should be for the coming year to the one we did for the home office.
“That way, we have a home office strategy and a strategy from the field, from the people who are actually out there working in the stores. It does two things: It helps us understand what is going on in the field, and it gets the franchisees to buy into the company culture. We share the information in a PowerPoint presentation every year at our convention for all of the franchisees.”
If you need to build or revamp your culture, Scardapane suggests you do what he did: find a mentor and have that person analyze your business.
“There are a couple of books out there, like ‘Good to Great,’ but they won’t give you the details and development, how to actually put a plan together,” he says. “You really need some support and structure and someone to take you through the process. Once they’ve gone through once or twice and shown you how, you and your team can take the ball and run with it.”
Maintain your momentum
Scardapane has learned that without an established culture and empowered, educated work force, you’re going to find growing your company to be a difficult prospect. You may have the capital and manpower to grow, but you won’t be able to harness it in any meaningful way.
Once you’ve established a culture and have the right people on board, however, you need to become something of a maintenance man, with team members constantly on the ground in all of your locations, offering support and promoting accountability.
Scardapane keeps his cultural momentum strong with a team of business coaches who each oversee a handful of Saladworks franchises. It’s the coach’s job to maintain contact with their franchise owners and address any issues they might be having.
Finding business coaches and training them is an involved process in and of itself.
“We’ve found that even if you have experience in your field, even if I bring in a guy who has 15 years of experience in the restaurant, it takes about six months before he can go out and support franchises. He has to know everything possible about owning and operating a Saladworks store. He can’t just read the manual. You have to spend a lot of time in the store working as a business coach before you can adequately support the franchisees. It takes a lot longer than most companies realize.”
One of the continuous challenges facing Scardapane is how to maintain a growth support structure that can stay ahead of the rate of growth. He wants to have a system that is capable of continually absorbing new stores into the fold, which means committing people and dollars to support locations that haven’t opened yet, and doing it months in advance.
“You really have to bring in the structure before you expand,” Scardapane says. “If I know we’re opening 25 stores this year, I’ve already brought in two business coaches, and they’ve already been in the pipeline for four months. That’s why the whole system needs a lot of cash flow.
“Where companies fail is they go out and sell a lot of franchises, but they don’t have the infrastructure to support it. They’re trying to backfill the infrastructure, and they don’t have the people to support the stores that are opening.”
If you’ve built the system properly and everyone in your organization is adequately supported, your company will begin to develop its own momentum. Leaders will groom other leaders, the daily business of the company will be well-managed and you will be free to pull back and view your company’s course with a wide-angle lens.
“Once you’ve been doing it for a while, you can do more managing on a macro level,” Scardapane says. “Once you get used to the ideas of others paying off, and watch them start to grow future leaders, you start believing in people and you start giving them more responsibility. And you become more open because of that. You start to realize that you don’t have to do everything yourself. That’s important, because as a leader, you really have to recognize that you’re going to need the help of others, and that sometimes their ideas are going to be better than yours.”
Scardapane wants team members who are smarter than him in their area of practice. He doesn’t want to have to be the expert on everything in his company. He wants to know that once he’s defined the boundaries of the company playing field through the culture and strategic plan, he’ll have star performers on the field making plays.
It’s the only way to ensure the culture he established more than a decade ago remains strong and allows Saladworks to continue its rapid growth, carrying Scardapane well away from those salad days of old, when he was learning on the job.
“It’s about what the leader does once he’s built the infrastructure of core values and strategic planning,” Scardapane says. “Then, it’s time to let people grow and make their own decisions. My entire team knows that the only time I get upset is when they don’t make a decision. I don’t get upset over a wrong decision. I get upset when they make no decision.”
How to reach: Saladworks LLC, (610) 825-3080 or www.saladworks.com
The Scardapane file
Born: Camden, N.J.
History: I was a chef at a New Jersey country club in 1985 or so, and I could see our golfers were eating more salads than burgers. We had a section of the kitchen that would make these very attractive salads with various vegetables, and I started to have an idea for putting the salad concept into a food court environment. An opportunity came up to buy a location at the Cherry Hill Mall, and I brought the idea in there. But the people who ran the mall told me that salads wouldn’t be successful enough to pay the rent. They asked me to find another concept.
On the third try, they agreed to give me a chance if I’d sell sandwiches as well. They thought sandwiches would be strong enough in sales. I agreed, and opened my first store in 1986. The salads were so successful, we became the highest-grossing counter in the food court.
What is the best business lesson you’ve learned?
Our major tipping point as a business was bringing the culture into the corporate office and franchise system. So my most valuable lesson is you need to have a culture.
What is your definition of success?
Realizing our vision would be our success, and that vision is to be the greatest restaurant brand. What I love to do is build something great. I get a sense of satisfaction watching our home office people rise through the ranks and watching our franchisees become successful.
Patrick Sanders has more than 100 business partners. And that’s not including the people in the front office of Max Muscle.
Sanders is the president of Peak Franchising Inc., the franchising business for fitness and nutrition company Max Muscle. He is in charge of finding and coaching new owners for Max Muscle stores, which generated nearly $50 million in revenue last year. The company has grown to more than 140 franchised locations, meaning there are more than 140 people who need to get on the same page with regard to Max Muscle’s mission and vision.
Smart Business spoke with Sanders about how he finds, trains and communicates with all of the franchisees under his umbrella.
What is the biggest franchising challenge you have had?
Franchising has its challenges because franchisees are your partners. In our case, there are hundreds of individual store owners out there. We don’t view it as an employer-employee relationship. That’s not the way franchising works. So as you ask the question, what is the biggest challenge in leading this organization, I’ve got hundreds of independent store owners that we have to try and get on the same page as you talked about. How do we set goals for them, how do we set a vision, how do we get them all going in the same direction?
That has been my biggest challenge, and we effectively overcome that through communication. We communicate with our franchisees and corporate employees on an ongoing basis. Certain segments are weekly; other segments are daily.
How do you facilitate dialogue among employees and franchisees?
I’m really pleased that every week, we have a systemwide conference call with all of our franchisees. Every week, a franchisee dials an 800 number and the whole system gets on the call, and we discuss every issue that we’re attacking that week.
In addition, there are subsidiary groups of franchisees and corporate employees that. We also dialogue with every week in a conference call forum. I find these to be really our primary vehicle because it’s a discussion. You can hear people talking back and forth; you can hear inflections in their voice and passion, and all of the things that make people so great at communicating.
What would you tell other business leaders about bringing people together in a company?
It is a bit challenging. I centered it around a value proposition. I don’t believe I can get both employees and franchisees to grasp and accept our vision, and thusly our goals and objectives, if they don’t see that as a positive in their particular area of interest. For franchisees, as with many people, we need to make sure the value we’re bringing them is making them more profitable. I have a tendency to overcome those challenges by showing people the value that this particular initiative or program or concept has, showing them the value of how that benefits them. That facilitates that dialogue. Suddenly, they’re asking questions, they’re saying ‘Wait, here is a viewpoint.’ That suddenly opens up the floodgates and you get this interactivity, which when you’ve had a chance to do that with them, then they understand what you’re trying to accomplish, we understand their reality. And by understanding both of those components, understanding the reality and challenges that each of us have there.
How do you set boundaries in discussions to keep people focused on end goals?
It’s interesting, because can you imagine having 200 people on one conference call? It can get really interesting. What we’ll do for each of these opportunities to communicate is we do publish an agenda for each of those calls. We’ll send out an agenda via e-mail, and everyone is pretty trained to know they need to stick with the agenda. If they have other issues they need to bring up, they go back to us independently, knowing that we’re going to try to get it into one of these conference call forums.
How to reach: Max Muscle, (714) 456-0700 or www.maxmuscle.com
If you follow baseball in the Los Angeles area, Dennis Kuhl, chairman of the Los Angeles Angels of Anaheim, wants you to know one thing:
“The Dodgers are not my competition,” he says. “When I go out and speak, people ask me about the Dodgers being my competition. But my competition is Southern California sunshine. You have to talk a family of four into coming to the ballgame instead of going to the beach. So you’d better have some things going on that are exciting.”
Kuhl came on board with the Los Angeles Angels of Anaheim shortly after owner Arte Moreno purchased the club in 2003. The team’s 2002 World Series title predates Moreno’s ownership, but under the leadership of Moreno and Kuhl, the Angels have become a perennial playoff contender and one of the leading attendance draws in Major League Baseball.
Moreno has bankrolled the talent that has led to the team’s on-field success, but Kuhl says it has been a group effort to keep fans in the stands at Angels Stadium of Anaheim, from the front office all the way down to the janitors, ushers and parking attendants that interact with fans before, during and after games.
It’s really no different from any other business: a respected brand plus great customer service leads to repeat customers.
“Our brand itself is well-known, but we also wanted to demonstrate great customer service,” says Kuhl, who served as the team’s president until 2009. “But that is only part of it. You have to reach out to the community in which you live. We have to let our fans know they’re a big part of us being here in Orange County and Los Angeles. That means you still constantly have to promote your brand, even with a well-known image. I tell everyone in the organization that they’re a salesman. You’re representing the Angels and you’re selling Angels everywhere you go.”
Know your colors
Kuhl and the Angels leadership team picked three items to serve as the outward identity of the organization: the color red, the name “Angels” and the club’s capital “A” logo. The use and appearance of all three factors is carefully managed to promote brand association throughout the fan base.
“You’ll never see our ‘A’ in camouflage or a different color,” Kuhl says. “It’s always red. We specifically picked the color red, and in our merchandise store, everything is red. Everything we give away is red. And the third item is the name ‘Angels.’ We don’t put ‘Los Angeles Angels’ on our stuff. We put ‘Angels.’”
The goal was to create a distinctive brand image, one that employees want to support and promote, and one that fans want to embrace. The Angels nickname and the club’s capital ‘A’ logo have been around for decades, but the club’s transfer to a red-dominated color scheme in 2002 is something Angels management views as the final ingredient, what makes the whole branding recipe work.
“Too many organizations tinker with their logo, change it every year, and we have not. We have taken that brand into the market and kept it the same, kept our uniforms the same. People have responded, because when you come to a game, you see a sea of red. They’re getting it.”
Kuhl says it’s counterproductive for a business to focusing on being many different things to many different people. You have to zero in on what it is you are trying to be as an organization, and work hard to put those essential elements in front of your customers on a constant basis.
It might be exciting to revise your company’s image and try new looks on for size. But if you water down your image with too many differing messages, you’re going to confuse your customers as to what you really stand for as a business.
“You can’t focus on 20 different things,” Kuhl says. “You have to focus on a small number of things and work hard on branding that name. When we go to a dinner or to a Rotary Club meeting, we take a bunch of inexpensive hats with us, and every kid there gets a hat. A lot of people think if you give away hats, they won’t buy them in the store. We don’t care right now. We want to see every kid in Orange County, in the whole Los Angeles area, wearing an Angels hat. You start with the kids, and if you walk into a store around here now, you see more red than you ever have before. It’s because we’ve stuck with our image and focused on it.”
Kuhl says the Angels aren’t looking to other baseball teams for branding inspiration. They’re looking at companies like IBM.
“You have to focus and pick your brand, and develop your mission,” he says. “Like with us, our mission is youth. You have to, as an organization, pick what your goals and brand are, and tie it in with the surrounding community. And you have to develop the culture within the organization. We have to have people buying in to what we are doing, what Arte’s goals are. That has to come internally.
“I’ve seen other great organization do that. In college, I watched what IBM had done, how they built their brand, and their brand is as strong as it gets. Nike is the same way. They believe in their culture, and that’s what we want from our people.”
Project your culture
One of the oldest axioms in the business how-to book says your culture isn’t what you say it is — it’s what your people believe it is. It’s also what your people project to your customers.
Even though the Angels have carved out a large and loyal fan base throughout Orange County and the Los Angeles area, they can’t take that as an indicator that they’ll reap the benefits of bumper-crop ticket and merchandise sales. As with other businesses, it still takes diligent work to constantly improve customer service and enhance customer experience. A guy in Orange County might have an Angels pennant hanging in his house, but Kuhl still needs that guy to take the step of driving to the stadium, buying tickets and taking in a game with his family.
To make it happen, Angels games need to be a customer-focused experience from the parking lot to the stadium and back. Which means everyone who works at an Angels game is an ambassador for the team.
“The people in the office, like myself, we might touch the fans, but we don’t touch them like the ushers, like the parking lot attendants, janitorial people and concessionaires,” Kuhl says. “Those are the people who have direct contact. We need to educate them on the service we want to see from our employees. We want them to smile, say thank you and look customers in the eye. We want them to know if customers aren’t getting good service. That’s why I say we have team ambassadors.”
Turning employees into ambassadors for your organization takes training. But as part of the training, it takes a great deal of dialogue. Employees won’t feel empowered to represent the business if they don’t feel engaged in the process.
Kuhl wants his employees to know how to provide a good customer experience. But he also wants the people who work at the many customer interface points at an Angels game to tell the management team what needs to be done better, and where new ideas could potentially flourish.
“When we meet with game day employees, the first thing I do is go talk to them,” he says. “I thank them for the job they did the previous year, I ask them if they have any questions about the organization. It’s important that those questions come from the top. But then, we let them speak out, and we want to hear some of the problems that they’ve had and some of the areas where they think we could be doing a better job.
“When you let people speak out and give them the opportunity to tell you what is going on in the stadium, you can find out what is missing, what else we need to do. If someone in the stadium needs a wheelchair, we don’t want them to find you. You go get it, and you don’t have to ask. Just go do it. That gives them a sense of belonging. That gives them a sense that ‘I belong to this organization, I am a representative of this organization, and I’m going to do the best I can.’”
Feed yourself some feedback
Fans write letters to Kuhl all the time. He takes the time to read them all, but he’s particularly interested in letters that provide some sort of constructive criticism regarding how the Angels can make the game day experience better.
“Last year, one of our issues was that there were not enough healthy alternative foods at the games,” Kuhl says. “So we go together with our food service partners and put together a menu selection with some more gluten-free choices and other health-food alternatives. We developed it, we’ll promote it on the scoreboard and we’ll see how it goes over the course of the season. You have to take a look at what people are looking for.”
And if people aren’t finding what they’re looking for and they’re taking their dollars elsewhere, you need to find out why.
If a season ticket holder doesn’t renew for the following year, Kuhl and his staff want to know the reasons why. It might be related to the recession, or it might be something that the Angels could have done better.
“Our customer service representatives call every season ticket holder after the season, then again around Christmastime,” he says. “It’s amazing the feedback you get. But you have to make the effort to go out and reach out to these people. If somebody didn’t renew their season tickets, we want to know why. We want to know what we could have done better. If you’re not interested in season tickets, would you be interested in a mini plan? Things like that. But you have to go out to the market; the market is not going to come to you. You need to set up a customer service organization within the company, go out and seek them.”
In the end, Kuhl says, you’ll probably find that customers want a good product that doesn’t break their budget. If you have those two factors, you’re off to a good start.
“You sit down and say ‘OK, what do the fans want?’” he says. “In baseball, people want a winner, and Arte’s been working to put a good product on the field. Off the field, you want to get the people into the seats. And once they’re in the seats, maybe they buy a hot dog. And if you get them in here and they enjoy the experience, maybe they come back again. That’s why you concentrate on having that good fan experience, good customer experience. We have to focus on giving them value for their dollar. That’s the way I feel, and that’s how our plans are constructed.”
How to reach: Los Angeles Angels of Anaheim, (714) 940-2000 or losangeles.angels.mlb.com
The Kuhl file
Born: Boonton, N.J.
Education: Business administration degree, University of Arizona
First job: I was a caddy in a country club in Boonton when I was a kid. It was interesting being around a lot of successful people. They had money and belonged to a country club, and you kind of looked up to them. You respected them. And they always treated us very well. I was always impressed with the way most of them treated the caddies. And what I learned was that you always treat people with respect. That made an impression on me at age 12 or 13, and I’ve always carried that with me.
What is the best business lesson you’ve learned?
One of the things I wished I was better at was being more of a visionary. I’ve been working a lot of years with Arte Moreno, and he’s a very visionary person. One of the lessons I’ve learned from him is to never make decisions looking at the past. Always make decisions for the future. Don’t look to the past; always move forward as you’re running a business.
What traits or skills are essential for a business leader?
A real business leader has to see four or five years down the line, and then communicate a plan to the employees. You have to hire the right people and know who to put in charge. You need to really believe in your vision and communicate it to your team.
Kuhl on changing the club name to Los Angeles Angels of Anaheim in 2005:
We believe our baseball team is in a big time market. We want to make sure we acted like a big market team, not small market. We wanted our advertisers to know we live in a very large metropolitan area. We felt this was one of our steps that we needed to take to let everyone know that we are a part of the Greater Los Angeles area, and it has helped us to be recognized as a big market team.
As a kid, Alan Kaufman wasn’t focused on playing games. Instead, he was busy chasing new business ventures.
Since he was 10, Kaufman has had the drive of an entrepreneur. When other kids opened lemonade stands in front of their homes, Kaufman set up shop at the busiest intersection he could find to beat out the competition.
Today, the chairman, president and CEO of HW Kaufman Financial Group uses that same drive to lead the insurance company to the top of the industry. The perseverance and penchant for risk he showed as a young boy still exist in adulthood. The Kaufman Financial Group was founded by Kaufman’s father in 1969 as a holding company serving general agents and brokers of specialty insurance products and has matured into an unsurpassed network of corporations today.
Kaufman has built the network through mergers and acquisitions, which have fueled the fire of his personal and professional growth throughout his career. His vision of global client service came about in 1996 when he acquired the formerly public company led by his late father.
Kaufman has seen his organization grow to nearly 1,000 employees, and with that kind of growth come challenges. He has faced those challenges by adding management talent and creating a coordinated vision of growth for the many companies within the organization.
Kaufman has built a diversified business model, with the companies within the organization performing differently during certain points in the economic insurance cycle. That, in turn, has provided growth opportunities at all times in the marketplace. Kaufman plans to continue to expand the organization into a global player through the acquisition of companies and talent, increasing market share through innovative new product development and using the latest technology and organic revenue growth, expanding its reputation as a dominant leader in the insurance industry around the world.
HOW TO REACH: HW Kaufman Financial Group, (248) 932-9000 or kaufmanfinancialgroup.com
To Pierre Noack, a brand is more than a logo or slogan or something by which customers can quickly remember your company in a sea of competitors.
It is your company’s personality. It is the definition of what your company stands for.
When Aerzen USA Corp. outgrew its leased office space in the Philadelphia market recently, Noack — Aerzen USA’s president — was among those who wanted to see the company’s new headquarters make a statement about the Aerzen brand.
“The question was what we wanted the building to represent,” Noack says. “How did we want it to embody the brand? Answering that question, we decided to build a green building, which has been LEED Gold certified, the first in Pennsylvania and one of the first manufacturing buildings in the United States.”
It was an example of Aerzen’s leadership putting its money where its branding mouth is, and doing so in a very tangible way. To set a tone like Noack has set at Aerzen USA, a maker of air and gas moving equipment, compressors, blowers and vacuum pumps, you have to start with your own beliefs and actions.
“It starts really with the head of the company, really to embody what the brand is supposed to be,” Noack says. “If you’re going to build a strong brand, first you have to start with yourself. You have to make sure that the brand you want the organization to embody is also matching the values that you have.”
Get on the ground
To build your brand, you have to know how your customers and would-be customers interpret the brand, and you have to know how the people at the customer interface point are projecting your brand. To gain an accurate picture, you have to stay connected to what is happening at ground level.
Noack relies on his sales force to develop close relationships with customers and often has his leadership team interact with salespeople to get a better idea of what is happening in the world of Aerzen’s customers.
It’s critical for Noack’s approach, because he’s driving Aerzen toward becoming a solutions-focused company. Rather than focus on pushing products, Noack wants his sales and operations staff to collaborate with customers to find the best possible solution for a given situation.
“Our salespeople have close relationships with our customers, and it’s the same on the service side,” Noack says. “It’s a part of the people we hire, because our approach is not to so much impose our brand on other people and organizations, but to produce value. But that approach only works when you listen to customers. You have to seek opportunities to collaborate with customers and find solutions to their problems.”
To continually drive home to employees that solutions will remain an integral part of the company’s brand, Noack gets many of his people involved in creating solutions for customers.
“For example, a plant operator recently called and asked us if we made a machine that would perform a specific task,” he says. “We said, ‘Maybe we can do something, let’s talk about it. What do you need?’ We had some conversations about what they were looking to do, what they were looking to accomplish, and in the end, we worked with them on developing a solution that would work, based on what they were trying to do.”
Explore different strategies
In the modern business world, you have a many different avenues through which you can strengthen your brand. Building relationships on a personal level is still the most effective means. But you need to be able to utilize multiple avenues to develop and maintain your brand.
For Aerzen, that is where Ralph Wilton comes in. Wilton is the marketing manager on Noack’s team, and is in charge of building the company’s brand through a wide variety of avenues. Chief among them is the company’s website, which has become foundational to the branding strategy.
“Basically, for us, the online focus is really the core of our marketing program,” Wilton says. “That is where we have the most horsepower, the most attention. It all revolves around our website, which we try to constantly monitor, and keep fresh and updated. That is the face of our brand and our message to the world.”
In all of Aerzen’s online and offline activities, Wilton’s goal is to drive traffic back to the website and make the company’s brand synonymous with a resource-laden Internet presence. Providing readily available information on product specifications and corporate news helps enhance the brand by keeping customers knowledgeable about the company, what it produces and what it stands for.
“What I’ve found is that companies that provide information readily and make it a proactive approach, those are the companies that win, versus companies that try to hide stuff, where you have to call and jump through hoops to get things. That really doesn’t work so much anymore. We want to provide for them to get them what they need. If it’s a complex sale or engineered product solution, they’ll have to call somebody eventually anyways and talk about their situation. So we want to give them enough on the site to be effective and get them to that point.”
Branding and marketing with a focused purpose is a new frontier for Aerzen. The company used to work with what Wilton calls a “spray and pray” approach, relying on casting seeds to the wind, hoping that at least a few would take root with customers.
“We’d just launch in many different areas,” Wilton says. “Now we have several industry verticals that we target specifically. We want our customers to know who we are very intimately, so we do still have offline approaches like print advertising, trade shows and things like that. But now we combine it with the very robust online approach. We’re not going after everything out there that we think might be a sales lead. I think even if we had a lot of money to approach everything, we’d still take our current route because it’s far more effective.”
Whether your market differentiator is value or service, bulk sales or specialized solutions, the culture surrounding your brand will start with you and your leadership team.
Though terminology like “living the brand” might seem like something of a cliché, the concept still rings true, and it’s still critical to building a successful branding and marketing culture.
“This is a long-term, never-ending endeavor, and it is a commitment that the management team makes to keep building it, every day to live the brand and communicate it through your actions,” Noack says. “Through what you communicate, especially in times of crisis, in times of difficulties and challenges, that is when employees observe you the most and get the most out of your messages. It is driving it by example, constantly reminding everyone of our task to build that brand. You have to communicate that you don’t just fulfill the need we have today, that we all have the potential to build this vessel for the brand, for the personality of the organization.”
How to reach: Aerzen USA Corp., (610) 380-0244 or www.aerzenusa.com
The Aerzen zone
Thoughts on business leadership from President Pierre Noack and Marketing Manager Ralph Wilton of Aerzen USA Corp.
Wilton on finding the best customer service representatives:
There are what we call the touch points. The people who interact with the customer are the living, breathing people of the brand. So if you have a person who is very upbeat and caring, you are going to have a very good brand experience. We have all be in situations where we’ve seen the marketing material, we’ve gotten the feature benefits stuff, we go into a place to buy something, and we’re met by someone who is inept, doesn’t care or has a bad attitude. We might buy in spite of it, but we don’t come back.
Noack on points of customer contact:
We are trying to multiply points of contact. We have project managers, engineers, production planning and so on. We really encourage all of these people to have contact with our customers so there are as many touch points as possible between our customers and us. This way, we build resilience in the experience of the brand, because it is not tied to a single point of contact and it is built into the relationship.
Noack on being a solutions-driven company:
It’s not all about trying to sell, but as businesspeople, we are always there for others, whether it be buyers, people using our equipment, systems, it’s always for others. We have to think about them rather than us, and that’s the reality of it. It’s not real to think that building a brand and pushing it onto people is going to work. The other way around is true and much more rewarding. It takes some courage to get there. It’s not the traditional way of doing things, unfortunately.