Ravi Kathuria is president of Cohegic Corp., a management consulting and executive coaching firm that he founded in 2002. His objective is to make business leaders think about and implement ways to make their companies more coherent. That objective is what made Kathuria write his book, “The Coherent Company: The Struggle for the Next Level – A Business Parable.” The book follows a fictional senior sales executive, Trent Wertheimer, as he becomes CEO within a business intelligence company, Hintec. Trent quickly digs himself into a hole because he thinks he knows how to lead a company, but doesn’t. With the help of a mentor, Trent learns how to transform the company and himself by implementing the Cohegic method to give Hintec coherence and clarity. “The Coherent Company” is a look at leadership in practice as Trent implements the Cohegic method and tries to turn around the company in his new role as CEO.
What is the message of the book?
This book offers the road map for business transformation. Most business books focus on one aspect such as strategy, execution or work processes. Few business books tie them all together. This book connects mission, vision, philosophies, work processes, strategies, goals, roles and responsibilities, culture, execution and measurement.
What business problems are addressed in the book?
The primary reason that the book was written was because companies lack clarity and coherence. The issue that companies have is that they are not really crystallized in their business spirit. Their mission statements are not well-written and they have not crystallized very clearly their business model. When you look at a majority of mid-level companies, you’ll find that their mission statements and core philosophies are not crystal clear. Because they don’t have clarity around that, it creates a lot of confusion in the organization.
Companies get confused between mission and vision. They are confused about what vision should stand for. Companies have to connect their strategies, goals and visions together so that they drive clarity in the organization.
What makes the book different from other business books about leadership methods?
It’s the fact that the book is presented in the backdrop of a very intense and realistic story. It shows leadership in the real world, leadership in practice as opposed to leadership in theory. Leadership in theory is very easy to talk about. Nobody is challenging you. Leadership in practice is very difficult. Your ego, your self-awareness, your inhibitions, your preferences, your tendencies, your habits, all comes into play. Overcoming all of that is a huge challenge and as a leader you have to really perform at a much higher level and you have to help the organization succeed in spite of yourself.
What would a new leader or entrepreneur take away versus what an experienced leader would take away from the book?
I think a new leader and an entrepreneur must understand that the core of their business is the most important. They must seek to drive very clear thinking in their business model and define why they are creating that business and that company. They have to ask, ‘Do I have clarity about what I am doing and why I am doing it?’ If they don’t have that, success will be a little harder.
Experienced leaders need to understand that clarity cannot exist just in their mind. Clarity has to exist in everyone in the organization and they have to make sure that that clarity is consistent and coherent.
If a leader cannot connect all those strategic aspects, a company cannot perform. The questions that the book raises are not easy questions to answer. Those questions are difficult and take time to answer. If companies can go through and ask themselves these questions, it will make a powerful impact.
HOW TO REACH: Ravi Kathuria, 281-403-0250, or www.cohegic.com
It’s not everyday that the founders of a company go around and make employees ice cream sundaes. However, that’s exactly what Bob and Marcie Zlotnik did for their employees at StarTex Power, an energy reseller. The co-founders got an ice cream cart and bought supplies for sundaes and served employees decadent treats at their desks.
The Zlotnik’s strive for StarTex Power to be one of the best energy service providers in the industry and to do that, they focus on a corporate culture that fosters employees who enjoy what they do and provide great customer service.
“One of our philosophies is that in order to be a superior customer service company, you have to have superior employees,” says Marcie Zlotnik, chairman and co-founder. “In order to have superior employees, you really have to have an environment that fosters a great working culture.”
By focusing on a corporate culture that gives back to employees and promises to deliver energy service without surprises, the company saw annual revenue of $407 million in 2010.
“When we started, we were focused on customer service,” says Bob Zlotnik, president, CEO and co-founder. “In our industry, there is a lot of competition. We decided to sell by doing people right.”
That business model has helped the company achieve rapid growth since being founded in 2004.
Here’s how the Zlotnik’s use a strong corporate culture to grow StarTex Power.
Define your culture
Privy to the fact that numerous energy resellers don’t tell their customers everything they need to know or everything that they are being charged for, Bob and Marcie decided that they would deliver exactly what they promised.
“Energy is a very complex product and there’s a lot of different ways you can present it and a lot of different ways you can sell it,” Bob says. “We’ve always taken the view that we weren’t going to surprise our customers. So when they entered into an agreement with us, they got what they thought they got. With some of our competitors, they didn’t necessarily get what they thought they were going to get.”
That focus on service translated into creating a corporate culture that employees found helpful to their jobs.
“The key is corporate culture,” Marcie says. “I think that’s really where it starts. If you don’t have a place where people want to come to work, where they want to do their best, your end product will not be the best. Without the best product, in the end you won’t be successful.”
Part of offering the best product is being able to deliver things to a customer that the customer actually values and things they can’t get anywhere else.
“We’ve always compared ourselves to Southwest Airlines,” Bob says. “They take a lot of pride in their corporate culture and how they treat their customers and employees. They are running a lot of ads about bags fly free, no change fees, and we started thinking, ‘We need to do some of those same things.’”
Offering products or services that the competition isn’t is a good start, but you have to make sure that your employees enjoy the work you have for them. If employees don’t think they are contributing to something worthwhile, they won’t do their best and your company will suffer.
“You want to make sure you have employees that have passion,” Marcie says. “It’s not about paying people the most amount of money. Certainly as a start-up you can’t do that. It’s about really caring about people. The more you trust people, the more they want to do well for you.”
You have to set an example and show that you value your employees at all levels.
“You need to understand that it’s not about you,” she says. “It’s really about the people and your employees. As you build your employees and you show them what success is, they want to do that. They want to follow the lead. You’ve got to do whatever it takes.”
As you develop employees and hire new ones from varying backgrounds, you have to make sure each and every employee understands the culture within the organization.
“When we see those employees coming from other companies, they’re very much trained to not go outside their department, to not talk to people that are more senior and we are really insistent about breaking down those types of barriers,” she says. “That creates inefficiency. If you want to go talk to a senior manager with a good idea, go, don’t stop, do it.”
Defining your corporate culture is critical for success. You have to show employees that your company cares about them.
“People have to feel that their ideas are welcome, that they can have a long-term track to success and that they are truly part of the company,” Marcie says.
Creating a corporate culture that empowers employees and contributes positively to your company will only work if you put in the effort to make it work.
“It’s really the ideas and the time and effort that’s put in that people appreciate,” Bob says. “It’s really not the money. Marcie and her group in HR, a lot of what they do is the thought and effort that I think people appreciate.”
Thought and effort can go a long way toward building a strong team and developing the results you want to see in your company.
“To me it’s the little things that you do,” Marcie says. “It took a lot of hard work to not just develop a corporate culture, but to feed it and make sure it continues.”
Once you find a culture that works best for your company and your employees, you have to work continuously to keep it.
“The key is when you try to create that culture, you can’t back down from it,” Bob says. “For instance, there was some debate on whether to have a TV in the break room, but the promise was made, so we have a TV set being installed in the break room.”
Part of keeping a corporate culture alive is making sure that it stays consistent with everything your company does.
“You know when you walk in the office and the culture feels different,” Marcie says. “You can’t get away from it. It’s about being vigilant.”
Bob and Marcie give their employees much more than just a TV to watch. They implemented an employee stock-option program to give employees a bigger incentive to do well. They also make the work environment fun and rewarding by putting on different competitions, activities and programs.
“Most people say when they walk in the office that it looks so much fun and so lively,” Marcie says. “When we were smaller, we had a company scavenger hunt. When we hit a certain mark we put a $100 bill on everybody’s desk. Just outside of my office we have a wall and…when employees have been here for six months…I ask that they take a star and they decorate it to reflect their personality. It shows how we are all individuals that make up the company.”
From personalized decorations to scavenger hunts, ice cream parties, and various friendly competitions, the employees at StarTex Power work hard and play hard.
“You’ve got to be flexible,” Marcie says. “The way that Bob and I came out of work and the work environment that we were raised in is not going to work with today’s group. If you’re not flexible, you’re going to wake up one day and realize, ‘Why are we not communicating with our employees?’”
To keep in touch with their employees and to make sure that everyone in the company is staying happy, StarTex Power administers surveys and does research to gauge what employees are feeling.
“It turns out that the Gen Y group is a different group,” Marcie says. “I read any article I can find on Gen Y and from what I have researched, I found out Gen Y likes team competition and peer recognition. So what we have done is tailored our rewards. That’s how we determine the different things that we do by researching. You don’t know what you don’t know unless you seek guidance from those that do know.”
You have to make use of the resources available to you today. Read articles about other businesses and their practices and look online to see what experts are saying about corporate culture and today’s work environment.
“There was a recent Fortune magazine that talked about the best places to work,” she says. “I pulled that and read every one of them to see what new ideas there are. You have to read. Read about best-places-to-work companies and see what they are doing.
“If you don’t ask, you’re never going to find out. Don’t be afraid to ask, throw things out there. There is so much information and so many companies that are on the forefront of a strong corporate culture that you don’t have to reinvent the wheel. But it certainly is about reading and you’ve got to embrace it.”
That research and application of their findings has given StarTex Power recognition and won them awards for being one of the best places to work.
“When you do that, you start getting third-party validation,” she says. “In an industry with so many competitors, people are kind of looking for that. By being a Better Business Bureau Pinnacle award winner, by being a J.D. Power award winner, it really gives the customer the feeling that, ‘Hey, I may not of heard of this company’s name, but they have a great reputation and they do right by their customers and their employees.’”
Make employees comfortable
No matter how effective your corporate culture is at providing your employees with an enjoyable work environment, a CEO must make a commitment to get to know his or her employees and make sure they are getting what they need.
“You have to listen,” Marcie says. “You have to develop a relationship where people feel comfortable telling you the good and the bad, where there’s open communication and where you’re flexible.”
It’s easy to overlook the impact that a conversation with an employee can have. You have to connect with your employees.
“It’s being a person,” she says. “It’s being able to walk around the office and saying hello to people. Know as many people’s names as you can.”
You have to be visible and available to employees in order to create a relationship and make them feel comfortable coming to you.
“It’s going and pulling up a chair next to them and sitting down and talking with them,” she says. “I don’t think people see us coming down the hall and say, ‘Oh my God, the bosses are coming.’ If they have something to say they are comfortable talking.”
If you can open up to employees and speak with them on a personal level, it can make a huge difference in the work environment.
“You’re not any better than they are and you’re not any worse than they are, you’re just like they are,” Bob says. “Don’t expect things from them that you don’t expect from yourself. I show them that I’m a nice guy and I think that they believe that I have concern for them and if people view that you’re concerned about them, I think they feel open that you’ll try to help them.”
Getting to know your employees also means getting to know their jobs and what it is they do to help the business.
“The other thing is that we know their business, we know what they are doing,” Marcie says. “If you can go by somebody’s desk and see what they’re doing and be able to say, ‘Hey, have you tried this?’ You get a lot of respect out of that. Bob and I are here to make our employees look good. It’s not about me winning. I’d rather turn around and make it feel like they won. That’s how you develop a good corporate culture.”
HOW TO REACH: StarTex Power, 713-357-2800, or www.startexpower.com
The Zlotnik File
Co-founder, president and CEO
Co-founder and Chairman
Born: Marcie – Montreal, Quebec; Bob – El Campo, Texas
Education: Both attended the University of Texas at Austin. They both received BA’s in accounting and Bob has an MBA in finance.
What was your first job and what did it teach you?
Bob – My first job was working for my dad at a family business. I cleaned the bathrooms and mopped the floors. I learned that there was a lot of benefit to owning your own business but there is also a whole lot of hard work. And I knew that I didn’t want to spend my life cleaning the commode.
Marcie – My first job was as a day camp counselor. I took away from that that you can do an average job but you don’t get anything out of it. You don’t have to sign up to be the coordinator of the play or a swim counselor, but that’s how you get the passion is by doing those other things.
What is the best business advice you have ever received?
Marcie – You’ve got to know your business.
Bob – Even when things are going bad, you have to stick to your principles.
What is your favorite or most fun event that you have done for your employees?
Marcie – My favorite was the scavenger hunt. I didn’t tell people what we were doing. I told them to bring jackets, bathing suits and I even told them we were going to a concert one day so they wouldn’t catch on. We got limos to take them around the city to do a scavenger hunt. All the departments were mixed up and people had so much fun.
Bob – My favorite was serving the ice cream because I think it took the employees by surprise to see us making sundaes.
In the early ’90s, Neil Hoynes and some college buddies wanted to tour the country following the Grateful Dead. To do it, they needed money, and that discussion sparked what would become Ripple Junction, a manufacturer and licensee of apparel.
“We discussed different options to pay for it like veggie burritos, grilled cheese and then T-shirts came up,” says Hoynes, founder and president. “We figured that T-shirts would be best, and we did the math on it, and the goal was to sell 15 T-shirts at every show to pay our way around for the summer.”
They sold all 80 shirts they brought to that first show, and from there, the company took off. Today, Ripple Junction is a leader in its industry and employs more than 40 people.
Smart Business spoke to Hoynes about how he grew Ripple Junction from the ground up.
How do you find the niche that your company serves best?
You’ve got to be able to adapt, and you’ve got to be able to adjust quickly to things that aren’t working and change them. If you don’t feel like you’ve found your niche, you’ve got to keep trying new things.
Also, finding something that generates cash flow while you’re looking for that niche is really important. That cash will let you live on for another day so you can find that one thing that you’re going to do and do well.
What challenges did you face growing from an entrepreneurial business to the next level?
The first thing is policies. When you’re a small company, you don’t have a lot of them. You try to balance policies and procedures without having too many of them because you don’t want to become bureaucratic. You also need to have standard operating procedures for everybody who’s doing any repetitive task or any sort of job. That’s the kind of stuff you have to get ironed out, and you’ve got to have a way to do it that everybody knows how to do.
It’s also determining specializations. As you grow, you’re going to need to start hiring specific individuals to take ownership of what you identify as a key success. If it’s a key success factor, there has to be somebody that owns it so they can really drive it forward. When somebody’s in charge of something and it’s not a natural part of their job, if it’s a small thing, that’s OK. If it’s a big thing and it’s crucial to your company’s success, you’ve got to have somebody that owns that and can drive on that.
How do you plan and hire for growth?
As you grow you start seeing the gaps that just kind of naturally present themselves. You start realizing that this isn’t happening, this isn’t getting done and you ask yourself, ‘Can we get this done with the people we have?’ When you’re growing, the answer is usually no.
You have to go out and hire somebody to do that specific thing. The quicker you can identify that gap and fill it, the better off you are.
More important than the timing is making sure it’s the right person. We’ve done the snap-hire before and it almost never works out. It’s better to be thorough and find the right person who is comfortable in your environment and also you’re comfortable with them. You spend more time upfront, but then a year later, you’re not filling the position again.
How do you find new hires and areas where your company can grow?
You have to hire people that round you out. You don’t want a bunch of people that have the same skill sets. I’m always trying to hire people that can shore up my short-comings or shore up someone else’s short-comings. You have to look to find that person that will complement other skill sets.
That’s my big thing is trying to chart the strategy of where we’re going looking at what our business is right now and then identifying how we are going to keep growing.
You look at who you’re selling to now and then look at that customer and find out what their needs are. Find out if there is an opportunity for a new product that nobody’s selling them or if there’s a new way to do things. Then try to put the pieces together and create a great product for them.
HOW TO REACH: Ripple Junction, (513) 559-3900 or www.ripplejunction.com
When Tom Keckeis took over as chairman, president and CEO of Messer Construction Co. last year, he took on a six-month initiative to visit with some of the construction company’s customers. With more than 30 years in the company, Keckeis knew the ins and outs of the business but wanted to gauge customer’s reactions to how Messer had been doing. So he went to Nashville, Knoxville and Indianapolis and met with CEOs and owners with whom Messer had worked.
“I looked at myself and said, ‘Where’s my biggest void?’” Keckeis says. “I grew up in the organization, I understand our culture, I understand our people, and I understand our building process. Where I haven’t been is been the face of Messer out in front and I haven’t been out talking to the customers, so I tried to lead with that.”
What he learned from those conversations was that customers were impressed with the company and, specifically, the culture of Messer. The culture and the quality of its more than 800 employees has been the driving force behind the $530 million company’s success.
Here’s how Keckeis continues to build Messer by listening to customers and focusing on culture.
Find your strengths
When Keckeis set out to meet with customers, he had one main thing in mind: Listen for what he didn’t know about the company and then get to work on understanding it.
“I spent a lot of time really focusing externally listening to our customers,” Keckeis says. “I thought it was a very good experience for me. What I heard was some of what I expected. I talked about our technology and all the technical tools that we use and they all said, ‘Yeah, that’s important.’ But they always came back to, ‘Your people are really what’s different.’ The culture of our company really is a little bit unique and it came out in those six months of listening to the customer.”
Because customers were impressed by the culture, Keckeis knew he had to continue to make that a prominent part of the company. When stepping into a CEO role, it is important to reach out to customers and understand what it is they like or don’t like about your business.
“You have to make sure you spend time talking to your customers and make sure you listen to them and make sure you deliver on that,” he says. “You gain a lot of knowledge by listening to the customer. You can’t just go in and say, ‘Tell me what you think.’ You have to tell them what you think is important and what you’re investing in and then let them react to it.”
Keckeis had the advantage of knowing the business well before he was put in charge as CEO and had an area he wanted to focus on. That’s not always the case if a CEO is new to the company. There are some similarities and many differences to how a CEO would look to drive his company based on where they are coming from.
“[Where to start] would vary based on where the person is coming from and what they are stepping into,” Keckeis says. “It would be a totally different concept if you were coming in from the outside. You would need to understand the strengths and weaknesses of the company and the people inside the company as well as know the outside. You kind of have a double whammy there. I had the advantage of growing from the inside. I understand the strengths of the organization. The difficulty would be if I would be blinded by that, thinking that everything we’re doing is great. You’ve got to be careful with that.
“Each person would have to attack this differently,” he says. “You would say, ‘What do I know and what don’t I know?’ You need to understand your business development and how you’re selling the work and what’s valuable to your customers. You’ve got to understand that. Then you have to look at the way you’re delivering that value and whether you really are delivering it.”
Build a unique culture
Messer’s value is in the way it does business every day, and that’s a direct result of its culture and the employees that make it all possible. Messer is an employee-owned company and customers liked how the employees embrace that aspect.
“That ownership mentality came across when I talked to the customers,” Keckeis says. “They realized that our people are out there thinking about the long term — and they are — because their futures are tied to the long-term benefit of this company. Everybody has the ability to have the same ownership as myself or anybody else. If you stay here long enough in the company, you get so many shares of stock every year, and it builds up over time.”
Having an ESOP has turned Messer into what it is today, and there are numerous reasons a company would want to go down that path.
“If you’re a company that’s getting ready to go through a succession, you want to sell the company or move out, there are some real advantages,” Keckeis says. “It really is about succession planning. If you’ve got a strong leadership team that is carrying the day and they are interested in taking on that role and responsibility of owning a company, there are some real tax advantages for the person that wants to sell the company and there are tax advantages for the people that are buying the company.”
An ESOP, if it’s 100 percent owned by the employees through an S corporation structure, allows you to be tax exempt from federal tax. Taxes would be due when retirements are paid out. An ESOP can also be a big help to forming a stronger culture and can also help boost morale and job performance for the employees who have ownership. Customers liked that about Messer.
“To have an opportunity to own a piece of the pie and be able to set your own futures based on what you do every day is huge for morale because you can take the charge with it,” he says. “It leaves your company intact and leaves your employees intact to be able to carry on the day, and there’s a lot of pride there.”
An ESOP isn’t for everyone, but once employees understand it and realize the potential it has, it can be very beneficial.
“People that start with our company, we sell the ESOP and tell them what it means, but until they get in here, it usually takes about five or six years before they build up an account and realize that everything they do helps drive the bottom line and start to feel that,” Keckeis says. “I think people that would be buying the company would realize, ‘Wow, I’m going to own a certain percentage of this company and my future is tied to what I do every day.’ Not everybody would be into that, but the people that are leading the company surely would be.”
Messer’s employees are very in tune with the company and realize what their actions can make or break. Keckeis empowers his employees and makes sure what they do every day translates into the results that the customer wants.
“I think you’ve got to make sure that what [employees] do on a daily basis ties together with your metrics,” he says. “You’ve got to make sure that you measure the right things and publicly say what you’re measuring and how you’re doing on it. Make sure the things that you measure tie directly to what you want to be successful on. You have to allow employees to see those metrics on a regular basis.”
Allowing employees to see how their efforts play a direct result in driving what customers are looking for will help performance. It is crucial that you are making sure the right metrics are being measured.
“You have to ask yourself if you are measuring the right things that drive value for your customers and are they things that people can feel on a daily basis?” Keckeis says. “Finding a way to connect the things that you measure with what people pay attention to is very important and as a CEO you’ve got to pay attention to those things.”
Making sure you’re doing what customers have expressed interest in is critical, but you also want to make sure that what you’re doing is helpful to your culture and your employees.
“You also want it to be something that ties to what the employees do every day so they can see that what they are doing affects that metric,” he says. “You have to make sure what you’re measuring is going to drive performance.”
Empowering employees is a big part of increasing morale and making corporate culture stronger within your company. Keeping culture at the forefront of your business and making sure you have people who believe in the company is crucial.
“Your culture will beat everything else if you’ve got people that care and want the company to grow,” Keckeis says. “Empowerment and culture is critical if you want to be different in any industry. You have to focus a lot on your culture. You have to communicate with your people regularly about your bottom line, your finances, what you’re doing. You have to get them involved in all of that and get input back from them.”
You have to make sure that you pay attention to your employees in order to keep corporate culture strong.
“You have to listen to your employees first,” he says. “You need to focus on your people and you need to care about your people … that are doing the work on a day-to-day basis.”
Communicating with more than 800 employees can be a tough task, but it is vital to keeping the culture united. Messer has a group of 108 senior managers who act as a system of communication from the executives to the employees.
“We created a system of responsibility to make that communication,” Keckeis says. “I obviously cannot talk to 800 people. We created the senior management position that is the voice and the direction for the company directly. They share that and drive it out to the rest of the organization.
“You’ve got to have a leadership team that you trust and you’ve got to be able to communicate and then you’ve got to be able to have a way that the word gets out. If you’re a small enough company and you’re just in Cincinnati, you can pull everybody together and talk to them regularly. In our case, we can’t do that. You’ve got to create a way where the leaders of the company are identified and are helping drive that and listening to the employees.”
It can be very easy to get tied up with numerous daily tasks and other things on your agenda, but if customers find your culture helpful to how you do business, you have keep track of it and you have to care for your employees.
“Caring is a tough thing,” he says. “It isn’t looking down on them, it is actually feeling every day what they feel so that you can understand that. It’s easy for a CEO to step back and say, ‘Well, I’ve got different problems and I’ve got different issues that I’ve got to deal with. They’ve got to worry about their own problems.’ If you do that you’re going to be in trouble.
“You really do need to understand that what’s driving you isn’t you at the top, it’s the group of people that are there doing the work every day,” he says. “If you can figure out how to stay in tune with that and help nurture it and be attentive to it, I think you’ll be successful no matter what the business. You’ve got to know that they go home and they have kids and they have families and the way you’re treating them makes a big difference. You need to inform them, you need to communicate with them, and you need to make them feel like they are empowered. That’s what you have to create. We spend a lot to create the culture. It isn’t something you just go out and get.”
HOW TO REACH: Messer Construction Co., (513) 242-1541 or www.messer.com
The Keckeis File
Chairman, president and CEO
Messer Construction Co.
Education: Attended the University of Cincinnati, degree in civil engineering. He went to work at Messer straight out of school.
What was your first job, and what did you take away from it?
My very first job was working for a flooring contractor. I was 15 when I started. I was a laborer, cleaning up and helping scrap and lay floors. The one thing I got out of it was the person I worked for was a true craftsman. That instilled in me a lot of respect for what a craftsperson brings to the job.
What has been the hardest part about being a CEO?
Being disconnected at times, yet still wanting to drive the organization in a direction and how do you make that connection. I feel one step removed from where I was.
What has been the best part about being a CEO?
Seeing the growth of the people. The people who have stepped into my role and other roles and watching them grow has been fun and inspiring.
What is the best business advice you’ve ever received?
Treat others the way you want to be treated. Put yourself in someone else’s shoes. When you ask people to do things you want to be able to make sure you would do them yourself.
If you could do something dangerous one time without consequences, what would you do and why?
I have always wanted to be a pilot and fly a plane or maybe skydive. I always wanted to be able to feel that freedom.
Eric Graf, president and CEO of Ritzman Pharmacies Inc., had to make the tough decision to close a store and combine two others because of the economy. However, Graf didn’t turn his back on those employees and found ways to retain them for when good times returned.
Graf, who leads 160 employees at the pharmaceutical company, understands sacrifices have to be made in business. He also knows that when times are tough you have to be strong and resilient.
“Like everyone else, we had to look at our business units and look where there was profitability and where there was not and where we could make better use of that,” Graf says. “Fortunately, we had some positive solutions to those challenges.”
Graf says the process wasn’t easy, but his decisions paid off in the end.
Smart Business spoke to Graf about how to handle the good and the bad in business.
How did you keep morale up as you were eliminating stores?
We were very cognizant of the impact to our employee morale within the company. Fortunately, as we downsized, we also knew that we had this startup, cold-start opportunity in a new location. So we bit the bullet and retained all those associates from the closed business unit from December until April when we opened the new business unit. That was huge in speaking to our people. You try to be upfront. You try to be present and not sitting way in the back so that you’re available and putting your face on things. You have to express things to them one on one rather than through memos. You have to make sure you have a presence with the associates.
What is important to keep in mind during tough times?
You have to stay with your core beliefs, your vision, mission and your core values. You try to live those as best you can. Those values serve you well in positive times when you’re asking for more because you’re short-staffed because growth is coming faster than you can keep up with. But it also serves you well in the negative times when you are making adjustments that can impact you negatively.
How do you keep employees informed about what’s going on within the company?
One of the things we do … is we publish our financial information throughout the organization. Everybody sees our revenue, our cost of goods, all of our top-line issues compared to budget, compared to prior year — they see those on a weekly basis. When it came time to close that store, there was no mystery. Everybody had seen the sales taking a dive and had seen that how could the store become financially viable. When they see that trend compared to other trends or other stores, they realize that something needs to happen there. That openness with financial information is very critical and people knowing and understanding why you’re making the decisions that you’re making is important.
What helped you recover from tough times?
It’s always key, especially as times get tighter and tougher, that you have strong vendor relationships. A vendor relationship is very much a two-way interaction. Whether it’s a good day or a bad day … you need to negotiate smart, not just strong. I recently read a quote from Indira Gandi that said, ‘Old leadership used to be about muscles and new leadership is about people and relationships.’ So while you’re striving to get a good cost and a fair deal, you need to be bringing value to them in terms of what you’re seeing in the marketplace. You need to be giving them feedback to improve themselves.
When you started seeing success again, how did you maintain it?
You have to build on that foundation. You have a heritage of different key strengths and that goes back to your mission, vision and core values. You look at the reasons for success and it comes down to your associates and how you serve your customers and what your priorities are there and how you deploy your assets.
Even though things are a little tougher, you have to look for those people who can get out there and find more opportunity and develop more business for you instead of pulling back on that.
HOW TO REACH: Ritzman Pharmacies Inc., (330) 335-2318 or www.ritzmanrx.com
Chris Ryan, president of Geo-Solutions Inc. has been experiencing a problem all businesses would like to have. His soil and groundwater construction solutions company has been experiencing rapid growth. Growth is what every business wants to achieve, but with growth comes a lot of added responsibilities.
“We have experienced some very rapid growth,” says Ryan whose company saw revenue of $18 million in 2010. “The biggest [challenge] has been trying to manage growth and get personnel into the company.”
The company’s rapid expansion over the past few years has kept Ryan looking for ways to continue the success.
Smart Business spoke to Ryan about how he manages to keep up with the growth his company has seen.
How do you plan for growth?
You have to take stock of your resources in every level that you need to achieve the types of work that you’re planning to do. You have to determine where your weaknesses are and fill those weaknesses before you try and do the work.
You have to have good communication within your company and with your senior people. You have to determine what your needs are and plan ahead before you’re in a crunch of having to do something.
How do you grow within a niche market?
We’ve set our vision in a certain niche market, which is the treatment of soil and groundwater. Anything that’s in that niche, we will take on.
Your niche has to match the expertise of the key people in your company. Anybody who is looking to get into a business or grow a business needs to determine what it is that distinguishes them from the majority of the competition. That will improve your chances of making a dent in the marketplace.
The businesses that do well in our market are the ones that identify what they’re good at and perform it well and gain reputations to get people to come back over and over again.
Do you hire before you grow in anticipation of it or after growth?
The first scenario is obviously preferable that you’ve planned properly and you’re prepared. We have done a certain amount of that and I have certainly experienced the second scenario where you’re completely out of people, and it’s really not a good situation. Everybody becomes busy, that’s for sure.
We had that situation a few years ago and what really scared me was if anybody had any major issue like an illness to themselves or their family or anything that would put somebody out of the mix for an extended period of time, it would have been a disaster for us.
How do you prepare yourself or guard against that?
You have to try and foresee what is happening in your marketplace. You have to make some kind of judgment as to what the level of business will be.
What do you look for when you’re hiring people?
You have to find what’s important in terms of skills and education for the person you’re trying to hire. Then you have to try and find a person that matches those requirements. With companies like ours and others that are in a niche market, all those similar companies are competing for the same people.
How do you attract those people and beat the competition?
The best way is to be the leader in your business or to be the market leader. If you do that, you become the place that people want to work, because they want to work for the best company. That would be number one, but obviously competitive pay and opportunity to participate in ownership and all those benefits are very important to attracting people to a job as well.
What are some other struggles of rapid growth?
As you grow rapidly you’re constantly changing your profile with your lending institution. You have to maintain good relationships with your bank and keep them well advised of what’s going on. It’s really about maintaining good communication.
HOW TO REACH: Geo-Solutions Inc., (724) 335-7273 or www.geo-solutions.com
Jack Ouellette knows that he is fortunate to be in charge of a company with rich history and he takes pride in celebrating that fact. In 2010, American Textile Co. celebrated 85 years of business. The company made a day out of it. Employees at the Pittsburgh facility brought their families and they enjoyed food, costumes and false store fronts that would have been in vogue in 1925. While celebrating where you came from is certainly important, looking forward is critical, as well. Ouellette, CEO of the 325-employee company, knows that he has to keep his eye on the future in order to stay in business for another 85 years and beyond.
In 2005, Ouellette saw that the company was becoming too one-dimensional. So he did what any CEO would do: He looked for ways to expand the business and break out of a stagnant slump by focusing on the company’s core competencies.
“We have intentionally been looking to grow the business,” Ouellette says. “We did that by looking around and asking ourselves, ‘What products are similar to the ones that we currently are involved in?’ It’s using all of the same skills that we have in basic mattress covers and pillow covers to make these items. We felt that there was a tremendous tie-in and a high correlation between those items and sleeping pillows.”
Here’s how Ouellette expanded into a new market by utilizing existing competencies and more than tripled revenue between 2007 and today.
Do the research
Making the decision to create a new product or enter a new market can make or break you. It can’t be taken lightly or done too quickly before knowing how and if you can do it.
“You have to make certain that you’re doing your homework upfront,” Ouellette says. “When we were first trying to determine what products we wanted to expand into, we checked with our customers to find out if some of the items we were looking at would have enough room for a new supplier. When we went to the retailers and said we’re interested in getting into the pillow business, they welcomed that idea. They said the industry does need another supplier.”
In American Textile’s case, the company had good products and an audience buying them. The company wanted to expand its business of making mattress and pillowcases by manufacturing something that wouldn’t require a huge change in the company, and pillows were a perfect fit.
“For us, the question became what product do you want to get involved in?” Ouellette says. “We are in the textile business and we make things that protect mattresses and pillows. The one thing that we required of ourselves was we didn’t want to write a plan that saw ourselves making batteries for automobiles two years from now. We wanted to make certain that whatever we did we utilized our existing core competencies the best we could.
“I would suggest that any company that wants to grow should look around and ask themselves, ‘What are similar types of products that can be manufactured or distributed?’ You have to look at who the competition is and understand what the market looks like. Is the market ready for another manufacturer or distributor of those products? You also have to be honest with yourself and ask whether you’re just going to be me-too or will you be able to provide some innovation in that category that will differentiate you from the competition?”
Build your plans
Entering a new market, whether it’s a new product or a new geography, takes time and careful planning in order to do it successfully. You must be willing to listen to the advice of your team members.
“When it comes to identifying a new area in which to grow, you have to trust your executive management,” Ouellette says. “When they are giving their expert opinion on where to go, you have to believe in them. People who have been in a leadership position for a long time, I think their real expertise comes in being the experts in what has happened in the past, but that may not be the path to the future. To be able to listen to and not have all the answers on where you want to go in the future and trust those people who might have a better vision of the future is really critical.”
Because of a big pillow company going out of business, there was plenty of room for American Textile to come in and pick up the slack.
“When we first had an opportunity to ship some pillows in 2005, we knew that there would be some good growth opportunities — or assumed that there would and that turned out to be true,” Ouellette says. “An important ingredient in identifying when and how you want to grow is making sure you talk to your customers. Identifying an area that might suit your competencies is only really good if the customers are ready for another company to come into that market.”
Once it is clear that you can expand into a new market, planning must be the next priority. You have to have the ability to plan for further out than just your initial launch.
“I think the biggest thing is to have a strategic plan,” Ouellette says. “You generally plan for just one year and you have to force yourself to look out further than that, like three years. To look out any further than that is difficult to really come up with good, solid ideas. I would advise actually following that strategic plan and making certain that there’s the right group of people. Once you have that plan, you have to make certain that everybody in the company knows what your goals are.”
Once a strategic plan is in place, it is to your advantage to continue to follow and update that plan. If you create it and never look at it again, there is little point to it.
“I know a lot of people talk about strategic planning. I think there’s a couple of ways a company can go,” Ouellette says. “One is to have a plan and just (put) it away. The other, which I highly recommend, is having a plan and really working it every single month. It requires an individual in the company to have responsibility for that plan and have responsibility for making certain that everybody’s working toward it. Finding the time to work on the longer-term strategy takes a lot of discipline.”
Communicate and monitor your plan
Strategic plans can get complex and will help guide your company for a long time. It is very important that the CEO be out in front communicating the direction of the company and how that plan is coming along.
“A strategic plan can be kind of complicated, because it touches all of the company and it goes out for an extended period of time,” Ouellette says. “The thing that we did was boil it down into a very concise statement. Ours is called ‘Focus on five.’ The five means the five letters in focus and each of those letters means something. The F stands for ‘first to market.’ The O stands for ‘optimizing sales.’ The C is ‘channel expansion.’ The U stands for ‘us or the employees’ and the S stands for ‘systems and processes.’ Every month, we have an event where we pull the company together and we call it a ‘Focus on five’ meeting. The first thing we do is to have one of the sponsors of each of those initiatives talk about what they have been doing in that area. It’s that constant reinforcement. With our planning team we have quarterly updates where we get in a room and spend two hours going over the strategic plan.”
When your plan takes effect, you have to continue to monitor the growth you are seeing. Check your growth against your plan and communicate the results as you go.
“In the long term, you have to absolutely set goals,” Ouellette says. “You have to make sure people understand those goals, and you have to make certain that you’re tracking those goals on at least a quarterly basis. That shows everybody a commitment to it and makes certain that everybody is making a contribution to that plan on a regular basis. Otherwise it’s kind of like college where you go to the classes but the only time you study is for the final. We don’t want that. We want people studying for the final every single month.”
When new initiatives are created it is easy to forget about other areas of your business. It is important to keep tabs on the core areas of your organization.
“You should also make certain that you don’t take your eye off of the core business,” Ouellette says. “Oftentimes because something is new and exciting in the developmental stages, a lot of the resources that you apply to your core business can be siphoned off to go to the new venture. Growing another product line is not an additional duty for the people who are involved in your core business. You have to keep that core business funded properly and the proper attention on it. You have to make the investment in people and in resources to fund that new business.”
A big reason that Ouellette and American Textile have been successful is because they stuck to what they were good at, but they have also been innovative in how they improved upon their core competencies. Having people who can foster innovation is important to be able to continue to grow your company.
“Innovation plays a significant part in our company,” Ouellette says. “We were once told by a major retailer in this country that ‘new’ sells, and it does, provided that ‘new’ makes sense to the customer. Having a group of people responsible for product development is a major ingredient in being able to grow. If you come out with a product that’s just the same as everybody else’s, it becomes a commodity and a price war. When you come out with a product that is new and different, that’s what the retailers are looking for and that’s what the consumers are looking for. Have a group of people who are trying to develop ideas based upon where trends are going, what the consumer is doing, how people live today and how that differs from how they lived last year. If you can find products that can solve their problems or fit their newer lifestyle, that’s a way you have an opportunity to grow more rapidly.”
It’s very difficult to just create innovation out of thin air. You have to work at it and create a culture that will support innovation within your organization.
“You really need to create and invest in developing an innovative culture,” Ouellette says. “When most people think of Pittsburgh, they think of steel. We tried to get people from Pittsburgh who knew the textile industry, but unfortunately, most of the people who know textiles are located in the southeastern part of the country. You can either try to move the talent to where you are, or you can move where you are the talent. The latter has really worked for us. The major catalyst is getting the experienced people in the industry.”
Having people that understand your industry in and out is crucial for growth. If you are unable to properly understand your market you will lose to the competition. You have to be willing to do what it takes to get the right people.
“The first dollar spent on the right talent is so critical,” Ouellette says. “If you don’t have the right people who are charged with the responsibility and know how to execute the plan, not just have the desire but the know-how, that makes all the difference in the world. You’ve got to get the right talent and you’ve got to pay for that talent. They have to have all the right experience and background, not just 80 percent of it. You’ve got to have the whole thing in our opinion.”
HOW TO REACH: American Textile Co., (412) 948-1020 or www.americantextile.com
The Ouellette file
American Textile Co.
Born: Springfield, Mass.
Education: Bachelor of science degree from West Point; MBA from Duquesne University
What was the first job you had out of college, and what did you learn from it?
My first job after college was second lieutenant of the United States Army. I was a fire direction officer. I was responsible for computing the data required to fire 155 millimeter artillery weapons. I learned the importance of how to manage a small team, and I’ve found that those same skills for managing a small team apply to larger organizations. It’s all about people.
Did you see any action?
I was a pilot in Vietnam for one year between 1970 and 1971. I flew an army reconnaissance plane on the Cambodian border for six months, and then I flew a twin-engine transport plane for the last six months all over Vietnam, Cambodia and Thailand.
What is the best business advice you’ve ever received?
It is taking care of the people whom you work with. You have to always be aware of that.
If you could invite any three people to dinner, whom would you invite and why?
I would invite Dwight D. Eisenhower because it would be fascinating to hear about the Normandy invasion. I would love to invite [George] Herbert Walker Bush to dinner because I think he had one of the most interesting resumes of any president. And I would like to invite Arnold Palmer to dinner. Not only was he a tremendous golfer, but he had the ability to excite people and motivate people and anybody with those types of skills would be worth talking to.
Since Sushil Jain, founder, president and CEO of Empyrean Services LLC, started his engineering management and technical consulting business in 2000, he has had a very collaborative and consultative leadership style. Using that style to build trust and respect with his employees and clients, Jain has developed a culture that puts people first.
“The more participative culture with focus on teamwork makes people feel more involved, more empowered and they feel more a part of the company versus just being an employee,” Jain says. “That quality is very important particularly in a small business.”
That culture has helped Jain grow Empyrean Services LLC to annual revenue of $20 million in 2010.
Smart Business spoke with Jain about how he focuses on people to grow his business.
What have been key factors behind your company’s growth?
Fifty to 60 percent of growth in the business over the last several years is attributed to the people that have worked for me. We go out of our way to treat them with respect. Whatever their needs are, we fulfill them. You have to work with people and work for people. Be firm and fair. Lay out the cards the way they are and people will understand that you are treating them with respect.
How can someone make their culture people-oriented?
If people are working together, it makes for a very cost-effective and efficient organization. You should have an open-door policy and make sure people feel comfortable that they can come and talk to you about anything. You have to build the level of respect and trust in the organization so that people trust not only you as a leader but also trust each other. You have to really take the time to listen to the employees. Everybody talks about having an open-door policy, but people have to really see that in action. You have to take the time to walk the floors and sit down at people’s cubicles and start to talk to them. Talk to them about what’s going well and what’s not going well.
How do you get employees to come to you?
When people come and talk to you and they have an issue, you listen and you do something about it. In a majority of cases, you’re able to do something about it, but in some cases, you’re not. You have to go back to them and say, “I know you had told me this or you had talked about this or you requested this, but this is the reason I cannot do it or this is where I am with this and it may or may not happen because of this or that.” People really appreciate that. You have to explain the reason for your decision.
As you grow up in management as you become a CEO, you are faced with making a lot of decisions on a daily basis. Some of those decisions are going to be unpopular. You have to communicate to the affected department or individuals why you are deciding it that way. Some folks may not fully agree or endorse that decision, but they respect the fact that you took the time to explain why you came to that decision. You have to take full ownership and accountability in your decision. That goes a long way toward building trust and respect in the organization.
How do you align culture with who you look to hire?
I think chemistry is very important. You don’t want to bring in a person who has a very different management style than what the organizational culture is because that can be very disruptive. The person may have the best work ethics, the person may have the best intelligence and knowledge, but they do not fit with the team and it could be like a bull in a china shop. That can create a lot of disruption with the team and their contributions could actually be negative rather than positive. The fit with the organizational culture is very important.
How to reach: Empyrean Services LLC, (412) 528-1573 or www.empyreanonline.com
Bryan Ward, founder and CEO of Giant Ideas, knows there are many important aspects of developing a business. An often overlooked, yet vitally important aspect is the branding of your business. The full-service advertising agency helps develop and drive brand awareness for its clients.
“It’s about creating a connection between a product or service and a brand and creating that connection in people’s minds so it’s something they can remember easily,” Ward says.
With a corporate identity focused around Easter Island iconography, Giant Ideas has a name and logo people don’t forget. Ward’s branding tactics have made his agency one of the best in the area at what they do and led to 2009 revenue just shy of $10 million.
Smart Business spoke to Ward about how to develop a brand and why it is an important business aspect.
Define your brand. One thing that people often don’t seem to realize about a brand and it’s often a misunderstood word and misused many times … is that they already have one, there’s no creation of a brand. You can push it in a different direction, but you already have one. We all have a brand. It’s how people see us. It’s the way we dress, the type of car we drive, the way we speak. Everything that we do goes into building our own personal brand and the same thing is true for a company or a product or service. The way that the phones are answered, the way the employees treat people, the way employees dress. All of that is part of a brand.
You have to ask yourself, ‘Is that brand doing anything to help my company excel its product and services, or is the brand helping my product reach new customers? Am I utilizing it in the best way possible or not?’ If not, then something needs to be done to fix that.
From a CEO’s perspective, where do you want your company to be … two years from now, five years from now? You then backtrack from that goal. CEOs spend a tremendous amount of effort and time on supply chain logistics and all these other business processes that are important to get there and often overlooked is the brand marketing execution communication side of things. It’s part of that stream of business and is just as important as the others. Getting products from point A to point Z is important but also how is your brand working for you and how best can it do that job. Maximizing the amount of added benefit and added value that brand is bringing to that chain is just as important as the others.
Establish brand awareness. You have to clearly establish why you are who you are and why that matters to the consumer or the customer and why they should pay attention to you. We all have competition and you have to stand out from the crowd because it is a very competitive market.
A new brand has nothing. There’s zero name recognition, zero brand recognition, zero information in the consumer’s or customer’s mind about that. It’s a great time, too, because you have an opportunity to drive that story, to be in control of that story for a long time. The sooner and better that you can do that and establish what that story is going to be and drive that conversation yourself, the better off you’re going to be.
Drive your brand. You have to talk to customers, talk to employees and really get a sense of what is going on. You need to also have an understanding of the market. What are the other competitors in the space doing? How are they branding themselves? What tools are they using? All of that goes into building a picture of where your brand needs to be and where its optimal space is going to be. Once you start down this path you start to see common threads. It almost becomes self-evident at a point where your brand is going to live and what tools it needs to survive and flourish.
I can’t tell you the number of clients, the number of businesses that I talk to who had bad experiences in the past with branding. It is just as important as any other aspect of your business and it needs to be given the same attention and care and expertise that you would give to any other part of your business. If you don’t do due diligence when you have the opportunity it won’t serve you well in years to come and you will regret having gone in that direction.
HOW TO REACH: Giant Ideas, (412) 566-5756, or www.giantideas.com
After losing his job as an airplane pilot following the Sept. 11 attacks, Jerry Lasco turned to his hobby of food and wine for answers. With a desire to start his own business, Lasco brainstormed for a business idea that solved a problem people were experiencing.
“The problem that we wanted to solve was fear,” says Lasco, CEO of Lasco Enterprises LLC, the management company of The Tasting Room, Max’s Wine Dive and The Black Door. “The fear of not knowing how to navigate a wine store and not knowing how to navigate a wine list was a big fear that we wanted to solve.”
Helping average consumers understand a vast wine selection and taste the wine before they buy proved to be a good solution to the problem. Today, Lasco operates seven wine locations in three cities and had revenue of $12.5 million in 2010.
Smart Business spoke to Lasco about what it takes to get an entrepreneurial company off the ground.
Solve a problem. The question that I think is important for entrepreneurs is, ‘What’s the void in the market or what problem can you solve?’ Whether it’s starting a new company or a business initiative, what problem is it solving? You need to ask yourself a lot of questions and you need to do a very thorough analysis. Everybody has to go through some sort of due diligence process and gain a confidence level that their idea has legs. Then you take a leap of faith and put everything on the line to test whether or not you’re right. Due diligence is critical, and it’s specific to whatever industry or idea you have.
Prepare for growth. You don’t want to grow before you’ve got everything taken care of in your own backyard on your first business. You’ve got to have that down pat and you have to feel very confident in your initial business because that becomes your backbone. Secondly, the skill set that made you a successful entrepreneur — the risk taking, the idea, the strategic thinking — isn’t necessarily the skill set you need to be a growth company, which has a lot more to do with strong management abilities, organizational abilities, systems abilities, and visionary and motivational leadership. I think of entrepreneurs as inventors, but that doesn’t mean you can manage a complex organization and a complex system. You have to look in the mirror and figure out whether or not you personally have those skill sets or you need to bring those skill sets into your company. You have to make sure that you’ve got a complementary skill set or tool kit.
Manage your cash flow. There is a mindset that you have to have if growth is your goal. That means you’re going to have to reinvest and you’re going to have to hire more brainpower and manpower to allow you to grow. You have to have really good cash flow management. Running out of capital or running into financial troubles can devastate everything. There are countless stories about businesses that have had great ideas and probably would have succeeded except for a small mismanagement of cash flow. You never know when something unforeseen could come about. It’s challenging for small businesses because you don’t want to invest in accounting, a controller or a CFO because most small businesses can’t afford that. Whatever you do you have to know what’s going on in your books and in your cash flow situation, even if that means you’re staying up at night and doing it yourself.
Hire the right people. As you grow, it becomes much less about the entrepreneur and much more about the leader of the company. I think a great leader’s strongest asset is having the wherewithal to bring great people into the company. Get people that you can trust that have complementary skills. The greatest variable that is going to affect your growth positively or negatively is that you have the wrong people on board, a bunch of yes-people or people that aren’t contributing or aren’t complementary in strengths. If you put the right group together and you have a good idea, you have an excellent opportunity to get to where you are going. To be a good leader you really have to understand yourself and know what your motivations are and know what your strengths are. You have to hire people that have strengths in areas that you don’t have strengths in. Once you decide to grow, that’s when you have to specialize. You have to bring people in that are really good in those specialty areas.
How to reach: Lasco Enterprises LLC, www.lascoenterprises.com