A few years ago, when Mark Edmunds took the reins as vice chairman and managing partner for Deloitte LLP’s Northern Pacific region, he stood before all 4,000 of his employees with a single message for what they could expect of him.
“I wanted them to know that every day when I come to work, I’m going to focus on building trust,” Edmunds says. “Trust — when you think about it — it’s easy to say and it’s hard to earn. I told them that trust is the foundation of everything we do at Deloitte. If you build trust with your colleagues, you actually deliver better service to your clients.”
Over the last few years, Edmunds has lived out that mission of establishing trust by leading with a mindset that everyone matters, being straight with people and always listening.
“It’s all about living what you say, and it’s all about the actions that you take,” he says. “It’s providing leadership on it, so I really try to earn my colleagues’ trust every day when I come in.”
Here are some of the things Edmunds has learned about leadership through the years.
Growing up in southern Virginia in the ’60s and ’70s, Edmunds saw that his father, a successful lawyer, treated people differently than others in town. One evening, his father had a cocktail party, and he invited a black couple to the party. When they arrived, he’ll never forget how three couples left the party and how people treated his father after that.
“He always lived that everyone matters,” Edmunds says. “He really instilled that in me, and I’ll never forget how some of the people in town treated him after that — as if he didn’t matter anymore. My whole life — my professional and my personal life — I try to live by this mantra that everyone matters.”
One way to do that is to not discriminate with whom you engage in conversation. For example, Edmunds will talk to the people who park his car in the garage, to the security people at the desk when he comes in and all the way up to the senior managers in the company. But beyond that, it also extends to the various offices he oversees. For example, he has 1,800 people in his San Francisco office. But if he goes down to Fresno, he only has about 30 people there.
“I try to make sure (the people in the Fresno office) understand that they matter as much to me as leader of this region as the partners here in San Francisco that serve the biggest accounts,” Edmunds says.
Edmunds uses a five-minute rule for his meetings to show people that he respects their time.
“Whether there are supposed to be 4,000 people on a call or four, within five minutes of when it’s supposed to start, I start it,” he says. “That doesn’t matter whether my CEO from New York is supposed to be on it and he’s not on it yet, I start it. Within five minutes of starting time, we run. That’s how you show respect to the people who showed up on time.”
All of his employees are well aware of this rule and respect it, just as they do all of the other rules related to this, such as no do-overs.
“So you start the call, and somebody arrives 15 minutes late, you don’t debrief them in front of several hundred people,” he says. “You talk to them later.”
Doing this shows his people that while some people may have higher titles, they’re not more important than anyone.
“I respect their time, and they trust that I’m going to run things on time and run things properly,” he says. “No do-overs. The message that sends is everybody matters. It doesn’t matter if the senior partner shows up late. Everybody is the same.”
Be straight with people
Another lesson Edmunds learned from growing up in a small town is that you can always leave your keys in your car or your front door unlocked. There’s no crime because everybody knows what you’re up to and won’t hesitate to tell you when you’re acting out of line.
“One of the things that’s instilled in you is to talk straight,” he says. “People there didn’t even know what a political agenda was, much less have one. So growing up in something like that, that’s built in to your soul, so when you talk to people and listen to people, you’re straight with them. … Talking straight with people and having no agendas is a really important character and leadership (trait) that all great leaders have.”
You can start with not sugarcoating a situation.
“I have to define reality and say, ‘You know what, it is tough, we’re in a tough market, and that is the reality,’” Edmunds says. “But then you also have to provide hope and a vision as to where it is you’re going to go: Hope that we’re going to be OK as a firm, and a vision to let everyone know that I can actually see around the corner of this recession.”
And while Edmunds strives to be straight with people, he expects the same back from them.
“If I ever ask them to do something that doesn’t help them more effectively mentor and coach and develop their people or more effectively serve their clients, I ask them to push back on me and don’t do it,” Edmunds says.
Nearly every day he’ll get e-mails asking him why the firm wants them to do something. Sometimes he’ll explain why it’s in their best interest to do it, and they’ll understand and buy in, but other times, their questions challenge him to be a better leader.
“There are other times when I will challenge myself or the firm to say, ‘Why are we doing this?’” he says. “When you’re a big organization, sometimes you can become a little too bureaucratic, and sometimes you have to challenge yourself to streamline and do things more effectively.”
The last way to be straight with people is to back their decisions.
“There’s no more powerful a statement you can make to someone around trust than, ‘You have my proxy,’” Edmunds says. “It’s a business term, but it’s really powerful. … Use that word. There’s no more powerful statement from a leader to someone else to say, ‘Wow, he really trusts me and is going to encourage me to make a decision on a really big issue.’”
But this is also not something you just say freely. In order to trust someone to make the right decisions, you have to truly believe in them.
“Building trust takes awhile,” he says. “It’s through several interactions. Trust you’re trying to earn with a client could take months and months and months of doing things that are valuable to that client, and over time, they could trust that you’re not there to sell them something every time you have a conversation. It could be years. It’s the same with your colleagues internally.”
He says you can start with smaller decisions, and once you learn their decision-making capabilities, you can give your proxy on the larger issues.
“There are times when you need to let them fall down a little bit on a decision that might not be as critical, but let them learn from that,” he says. “I guess the bottom line is it just takes a little time to spend with them before you’re comfortable doing it.”
One other way that Edmunds builds trust with his people is by listening to them.
“I think listening skills are the best thing you can have as a leader,” he says. “A lot of times, when you move up in a very senior position, you lose some of that, and there’s a lot of pressure to perform as a leader and to steer the business in a certain direction.”
One way to build your listening skills is to set up venues to hear what people have to say. Edmunds has a series of advisory groups that he’s established to do just that. For example, one is a group of Generation Y employees to give him a fresh perspective from the younger staff. He also has a senior manager group of people that have about eight to 12 years of experience and are one step away from being in the partnership. Then he also has a group made up of young partners in the firms. Each group meets with him quarterly.
“Having different constituency groups giving me input outside the normal chain of leadership is very important,” Edmunds says.
If you want to form your own advisory groups, it’s important to choose wisely who will sit on each.
“You want to look at the top 10 to 20 percent of your folks, because you want them to have the opportunity to have access to me in this informal setting so they can learn more about the firm,” he says. “They’re the future leaders of the firm. Usually, it’s the top performers in each of those categories. You simply look at the evaluations over a period of time, and if they have sustained high performance, I pick from them.”
He said it’s also important to make sure that as you select people, you make each group as diverse as possible, as well.
“I make sure there’s a good balance of men and women and a good balance of diversity, … ” he says. “Whatever we think would create a better team. It’s clear to us that diversity of thought and diversity of background in any kind of meeting or gathering you have helps you reach better answers.”
As you interact with these groups or even in your more regular meetings, it’s important to recognize that you don’t have all the answers.
“People (need to be) willing to check their ego at the door,” Edmunds says. “There are many people that rise in an organization and have a lot of the experiences and believe that they might have the answer before anybody else in the room does. Those are people that need to lean back in the chair and let everyone else talk and listen to them to see if there’s a better answer than what you came in with. … There are times when you want to lean in and times you want to lean out.”
It’s important to recognize when you need to do either of those.
“When you’re with a team and you want the team to get to a good answer for our people and for our client, lean out,” he says. “Let people talk about it, and let the group come to a decision versus leaning in and saying, ‘This is what I think the answer is,’ because then groupthink comes to that (decision) because you’re the most senior person in the room.”
By doing all of these things, you’ll develop a strong trust between you and your team, and that will translate through to all you do.
“There’s a difference between leading and managing,” Edmunds says. “If you’re trying to manage other people, you’re trying to get them to do things because you’re asking them to do it or requiring them to do it.
“But leaders inspire people to go in a different direction. Leadership is about inspirations. You can’t inspire people to do it unless you’re believable, unless you’re trusted, unless you’re straight with them, unless you have good listening skills, unless you convey to them that, in the end, it’s not about me as a leader. It’s about us being successful — successful in our organization, successful serving clients, successful giving back to the community.”
How to reach: Deloitte LLP, (415) 783-4000 or www.deloitte.com
Tim Guertin has three questions he continuously asks his employees to answer to ensure that Varian Medical Systems Inc. continues growing.
“Obviously, growth comes from people wanting to buy your products in ever greater numbers, so the first question you have to ask yourself is, ‘Why would they do that, and how do you make them do that more?’” he says.
Next, he asks how to make the products more efficient and make people happier using them. Lastly, he asks how Varian can get more people who aren’t customers to buy its products, which are medical devices and software used to treat cancer patients.
If you can find the answers to those three questions, then it’s likely that success will follow.
“Do those three things well, I think you’ll grow,” says Guertin, president and CEO of Varian.
He has learned that in order to answer these questions effectively, he and his employees have to focus on their customers, be open to criticism and also be inspirational. As a result of doing these things, the business has grown from $1.6 billion in fiscal 2006 to $2.1 billion in fiscal 2008.
Focus on customers
When Guertin first started in the business, one of his managers made him go to a clinic for two days to watch patients be treated. It helped him better see what the problems were and what the customers liked and disliked.
“You should spend a lot of time talking to customers and having people in your organization talking to customers,” Guertin says. “You need to understand your customers viscerally and spend enough time with them [so] that you do.”
You have to be strategic about it though and make sure you’re spending that valuable time with different demographics.
“You watch new users and see how long it takes them to learn something,” he says. “You talk to the people who have to educate customers and ask them how it’s going and what things are the hardest for the customers to learn. You talk to experienced users and get their opinion.”
The problem with expert users is that they know so much that they often get on tangents, and you don’t learn what you really wanted to learn. Because of this, you have to also hit your intermediate users, who use the product but infrequently. These users may know how to do something but sometimes forget between usages.
“Intermediates represent the bulk of customers, and they’re the most easily frustrated,” Guertin says. “You have to talk to them and figure out how to design your products such that those people stay happy.”
When you talk to customers, open up the meeting by letting them talk. Guertin says that if he’s having a daylong meeting with a customer, he lets them talk for an hour before his first PowerPoint slide even comes up.
“You have to know where they’re coming from,” Guertin says. “Most people go into a conversation knowing where they’re coming from and not knowing where the other person is coming from.”
While listening entails using your ears, it also involves observations. For example, if Guertin sees a glimmer of distaste come across somebody’s face, he’ll ask what bothered him or her.
“There’s a little bit of detective work involved,” he says. “If you’re a detective and if you’re questioning a suspect, you can’t just have a planned interview. You have to follow things up.”
You also should reach out to people who aren’t your customers.
“You have to go talk to the people who aren’t interested in your product, and you try to figure out why and what’s going on in their head,” he says.
It may be your product or it may simply be the way you advertise your product, but you’re not going to know unless you ask them.
“You have to teach your sales force to do this,” Guertin says. “The sales force’s job isn’t just to talk. It’s to talk to people who don’t want to buy the product. It’s actually to talk to cold prospects and learn from that.”
Throughout all of these tactics, remember that you have to be somebody your team can emulate.
“You have to demonstrate the behavior yourself because people will watch the boss,” he says. “If I go into a room and spend all my time telling customers instead of listening to them, I’m not modeling that behavior.”
Be open to criticism
The second way you’re going to answer those three questions is to talk to the critics within your organization and customer base.
“Sometimes the best people to talk to you are your critics, which is no fun to do,” Guertin says. “You go talk to them and listen to what they have to say, and then you walk away feeling like you should kill yourself, but the next day you may have a better idea of how to make things better.”
For example, one of Varian’s customers decided to buy a different product offering, so Guertin called the customer and asked an honest question.
“I said, ‘I know we lost, but will you have dinner with me, and let’s talk about it?’” he says. “’I’m not here to change your mind. I just want to talk about where we went wrong. It’s my job to build a better Varian — can you tell me how to do it?’”
The customer said OK, so the two went to dinner, and Guertin was shocked when it lasted four hours.
“I spent dinner going, ‘OK, so we did this wrong. Good. What else?’” he says. “My job was to say, ‘What else?’ and extract a whole list from him.”
Guertin then wrote a letter to his team about what he had learned so they could fix themselves instead of being mad. It’s important that when you get feedback, you recognize what to listen to, so Guertin goes back to his three questions.
“If those are the goals, then when you get feedback, you sort of match them up against those goals,” he says. “If someone says your service organization screwed up, then you get details about how they screwed up, and then you ask yourself, ‘OK, how is this thing working against us in answering one of those three questions?’”
In addition to taking criticism from your customers, you also need to seek out the internal critics.
“In a lot of companies, the people who tell you all the ways in which something will fail are not welcome,” he says. “But you need to have those people.”
Guertin likes to seek out one particular person to run his ideas by.
“He’s one of those people who can see every possible and conceivable way it can fail,” he says. “If I can walk into his office and discuss an idea and survive the failure discussion, and at the end of it, he’s starting to smile and look interested, I know we’ve got something.”
It’s not easy to welcome criticism, but it’s something you have to train yourself to do. Guertin suggests an exercise that an organizational development person showed him years ago to help set aside your defensiveness. That person told him to take a group of employees into a room and ask them to finish the statement, “My job would be better if _____.” Then write down all the things they say, but you can’t change or argue with anything they say. When you’re all done, you may have 60 or 70 things. Ask people to vote by secret ballot for the top five, and then you’ll see where the consensus is for problems.
“Since you’re the boss, if you don’t react defensively, and if you just write it down, the longer the meeting goes on, the more you’ll get things that are crucially important to them and really are bugging them,” he says.
Guertin recently heard a quote from Bob Noyce, one of the co-founders of Intel Corp., who said, “Don’t be encumbered by history. Go off and do something wonderful.”
You have to keep looking beyond what your reality is to pull in people who don’t use your products yet.
“If you just pay attention to history, you’ve been misled about what the future should be,” he says. “Don’t automate the cow paths. Don’t look at the cow paths and decide where the roads ought to be. If you think originally about what customers want, you can sometimes see that an evolutionary step is the wrong step. You need to rethink what people do in order to imagine a new solution.”
Guertin points out the creation of the iPod as an example.
“Sony should have thought of the iPod,” he says. “They made disk drives, they made everything necessary to do it, but they missed it because they were encumbered by their own history. That’s one thing you don’t want to do.”
When you’re thinking revolutionary, your products will inspire people and get them excited. For example, the typical house has a kitchen, living room, dining room, bathrooms, bedrooms and a garage.
“A person who is not a designer can pretty much draw a house, but a great architect can draw a house that’s an inspiration to the person who lives in it every day,” Guertin says.
He points out Frank Lloyd Wright’s Fallingwater as an example.
“The houses of that day compared to Frank Lloyd Wright, you can see that he went to a place nobody had ever gone before,” he says. “That’s what great designers do.”
But often when you look at your own abilities, you realize that your skills are more preschool-like rather than Picasso-like.
“You have to hire people, who by their life experience, have learned how to do that,” Guertin says. “... You have to have those people in your organization.”
To get those people into your organization, you have to spark their passion in the interview process by asking what they’ve most enjoyed in their career. Their response doesn’t matter. What does matter is that you drill down by asking them to tell you more and to explain it in great details. You’re looking at what that answer stirs up inside of them.
“If it was, in truth, something that they really enjoyed and something that they learned a lot from, they’ll be able to tell me a tremendous amount about it, and the more they talk, the [more] enthusiastic they would be,” he says. “By the depth of knowledge they display and the enthusiasm that they show, I can tell what kind of person they are.”
If you can find that passion in someone, you know they’ll also find a passion for your business and products and work to make both more inspirational.
“People put on an interview face, but frankly, most people’s interview faces aren’t that good,” he says. “Passionate people don’t put on that face. … They show love and affection for doing a good job. If someone doesn’t show me love and affection and a good job in an interview, they probably won’t show it to me in the job.”
How to reach: Varian Medical Systems Inc., www.varian.com
Greg Muzzillo is a simple guy and believes business is the same way. He doesn’t want to waste your time and expects the same from you. So if you’re not going to buy from him, don’t give him the runaround.
“Just tell me, ‘I’m buying from the president’s brother, and he owns a print shop, so you don’t have a ghost’s chance in a ding dong of getting business here,’” says Muzzillo, president and co-CEO of Proforma. “Tell me that, and let’s get it over with.”
The same simple philosophy also applies to things like mission statements: Don’t make it long and drawn out with big fancy words that are impossible to remember.
“If they actually thought about the core element of what drives their business and the two or three or four things that they absolutely have to do well and that all of the other paragraphs and pages of their strategic plan hang off of and just focus on those two or three or four elements, then that would be simple,” he says. “Sometimes people don’t think in an outline fashion. They think in a paragraph and book fashion, and all those key elements are on page 45 and 83 as opposed to being a heading of two simple outlines.”
Case in point: Muzzillo’s mission is to make his franchise owners’ dreams come true. That’s it. Short, sweet and to the point.
“I think business is very easy, and I think business is very simple, … ” Muzzillo says. “If you make it simple and don’t make it complicated, then you can communicate that easily. They get it, and they get on board with it because it’s simple and easy to understand.”
This methodology has served him well. He started the print and promotional products supply company 31 years ago with just $200, and then expanded it with a franchising model in the mid-1980s to create a network of independent distributors who could work together to build stronger supplier relationships. His approach worked so well that Proforma has twice been named to the Inc. 500 list and today has more than 650 owners and sales of $350 million.
“We recruit great franchise owners and help our franchise owners’ dreams come true,” Muzzillo says. “That’s not complicated. It’s very simple, and there’s a lot of power in simple.”
Here’s how Muzzillo has grown his business through the years by sticking to the basics.
Get the right people
Muzzillo has given up trying to find every single right characteristic in a potential leader.
“You know, I quit playing God a long time ago,” he says. “I used to think I knew. Now I can tell you what we’re not looking for.”
Instead, when it comes to finding a new leader of one of his franchises, he focuses on what he’s not looking for — someone with a criminal background or someone with bad credit. That’s it.
Like most things with Muzzillo, it’s pretty simple. Taking the approach of knowing what you don’t want in an employee can often be more worthwhile than trying to make sure someone has every characteristic that you could possibly conceive.
For example, Muzzillo has been absolutely amazed by some people who have joined Proforma as franchisors, but he probably wouldn’t have given them the time of day had he been looking for specific characteristics instead of what he doesn’t want. One man in particular put millions of dollars of profit into Proforma’s pockets before he retired, but Muzzillo questions whether he would have made the cut with a different approach.
“If you would have said come up five key ingredients and if people don’t have these five key ingredients, they can’t come in — he never would have made it,” he says. “Give them a shot. I’m not smart enough to be God.”
When hiring employees, Muzzillo relies partially on personality testing.
“You want to make sure they have a good fit for the position, … ” he says. “It’s a little bit of intelligence testing and a little bit of personality testing to make sure we’re putting the right people in the right spots.”
The intelligence testing addresses different questions centered on math and reading. The personality profile asks questions to candidates to understand them more. Questions include: Do you prefer to work in a group? Does it bother you to work in a group? And did you steal from a previous employer?
Prospective employees also go through a couple of interviews, often with the entire team that they’ll be joining because that team doesn’t let just anyone join its family.
In addition to the testing process and interviewing, Muzzillo also says there’s one other way to get to the heart of a person.
“There’s nothing like a woman’s intuition,” he says. “You know you have it or you don’t, and I don’t have it, and I’m not trying to be sexist, but I think women have an intuition that men don’t.”
While he doesn’t do much of the hiring these days, when he did, he would ask the receptionist what she thought of a particular candidate and actually relied half on testing and half on his receptionist’s intuition to make a decision.
“She would know,” he says. “‘You should see how he acted in the lobby waiting,’ or, ‘You should have seen how arrogant he was,’ or, ‘He wouldn’t even wear the name badge,’ or, ‘Man, what a great guy’ — they knew.”
Above all, take your time in hiring and focus on one position and one person at a time.
“We can grow one good person at a time,” he says. “One good staff person at a time and one good franchise owner at a time can create a really big thing. Really, our focus is just one good person at a time.”
Trust your people
Back when the business was first starting, Muzzillo asked his franchise owners if they thought it would be a good idea to have some sort of franchise advisory counsel. They all liked the idea, and the first official thing that they did was kick Muzzillo out.
“They say, ‘Now, Greg, this is going to be our advisory council; we’re going to do it our way,’ and they kicked me out,” he says.
This was frightening and very hard for Muzzillo, who says that he was scared to even let them vote on what color the business cards would be.
While it may seem scary to let your people take over, it can also make life simpler for you, because they can handle things and make decisions that you otherwise would have spent time doing.
The key is getting the right people on the advisory council. He notes that sometimes you may have good intentions of setting a group for your employees, customers, vendors or, in this case, franchisors, but sometimes those good intentions are sidestepped by people who talk too much but don’t have anything to really say.
“Set up a formal network to listen to as opposed to random people,” he says. “Sometimes if you just want to listen to random people, the wrong people make the most noise, and it’s not necessarily the noise you want to hear. But if you set up a network of peers that elect and govern themselves, my experience has been that the cream always rises to the top.”
For Proforma’s council, it consists of eight elected regional representatives and then four elected officers, for a total of 12 people.
“When we hear from people that have been elected by their own peers and respected by their own peers, we’re not hearing the noise of people who would rather hear themselves talk as opposed to accomplish things,” Muzzillo says. “We’re hearing significant, meaningful talk from our top producers, who themselves know how to filter the good from the useless from the people that they represent.”
Council members are elected for two-year terms, but the elections are held each year, so that half of the council changes out annually. This helps ensure that it keeps running smoothly while still getting fresh blood involved.
Having a council of people that doesn’t include you also helps people buy in to your mission, vision, values and goals.
“The franchise owners proved to be loyal to the vision,” he says. “Not necessarily to my ideas but loyal to the vision, and at the end of the day, they’ve helped people become like-minded. They helped people who were rowing in the wrong direction start rowing in the right direction in a way that not even I, as CEO of the company, could get them to row. … Sometimes your peers can get you to see something in a different way that other leadership can’t get you to.”
For example, a while back, Proforma needed to find a new bank. While negotiating with one, the bank told Muzzillo that it thought it could make it work, but there was a certain wording in the franchise agreements that it wasn’t comfortable with, so the bank needed nearly all of the 120 franchise owners to change it.
“I remember thinking, ‘If we don’t get this done, I don’t know how we’re going to survive as a company,’” Muzzillo says.
Instead of trying to convince 120 people that they should do this, he instead went to the president of the advisory counsel and explained the situation. That person understood and convinced 118 of those people to change their agreements, which was more than enough to make the bank feel comfortable giving them money.
“To this day, that’s the franchise agreement that we have,” he says. “Those were the terms that helped us grow like a weed, and I know I never would have gotten it done without their peers telling them to.”
Focus on the best work
When you have so many different things on your plate, sometimes it can be hard to simplify and just focus on what you really have to in order to move the business forward.
“It comes down to what’s the value of your time,” he says. “All work’s not created equal.”
Muzzillo teaches a class about how to grow a business in his industry, and in it, he poses a question.
“If there are three desks in your office that you could go to, and one pays $400 an hour, one pays $40 an hour, and the other pays $20 an hour, what desk are you going to go to?” he says. “They all say, ‘Oh, I’m going to go to the $400-an-hour desk.’ You’re all liars. I tell them right to their face — you’re liars because the $400-an-hour desk is the hard stuff.”
He says that the $400-an-hour work can be filled with failure, such as making a big proposal for a big company and losing, being rejected for sales, and other painful things.
And this is true, no matter what industry you are a part of.
“There are some things that are $400-an-hour work, and there are some things that are $40-an-hour work,” he says. “A lot of people don’t think that way. A lot of people just think there’s work, and a lot of people just think there’s their to-do list. It all mushes together in their head. … Some of it is really going to get you a return on your invested time, and some of it’s just really going to be a waste of time, and yet, it’s hard to discern which those are.”
Sometimes you may think that the $20-an-hour or the $40-an-hour work is what’s most important.
“Sitting behind your desk and being CEO of Me Incorporated, with your name out there, oh man, that feels really important, and sometimes it’s easy to fall into doing the $20-an-hour work, the $40-an-hour work, avoiding the $400-an-hour work all day, and going home exhausted but never doing anything that is the right stuff all day,” he says. “The key really is for every businessperson to figure out what’s the $400-an-hour work, and what’s the $40-an-hour work, and figure out how to get rid of the $40-an-hour work and to do more of the $400-an-hour work.”
One of the biggest $400-an-hour tasks is getting business that you don’t have yet. He says you can do this by getting business that your current customers aren’t already giving you, getting new customers altogether, hiring salespeople to get it or acquiring your competition.
“It’s not going and calling on your favorite customers and bringing them another box of doughnuts,” he says.
Muzzillo has a rule he lives by that is also pretty simple.
“You will eventually get paid for the work you do,” he says. “If you love doing accounting … then you’re eventually going to make $20 an hour. Good for you, right? Because you’ve chosen the wrong thing. You can. You own the business. Nobody can fire you. It’s a choice. Doing the right thing is a choice. Nobody can fire you over the wrong choice, but if you make the right choice, it will show up.”
While it may be harder to focus on the right work because it’s scarier and often attacks your pride, Muzzillo says you can’t let your pride get in the way when you have those feelings.
“If you let your pride run you when you’re running your business, you’ll never be proud in line at the bank,” he says. “But if you throw pride out the window, you’ll be very proud in line at the bank.”
For example, when Muzzillo quit his job as an auditor at what eventually became Deloitte LLP to start Proforma, he had a lot of rough days.
“It was kind of embarrassing,” he says. “Here’s Greg. He used to be this big important auditor, and now he’s running around, schlepping around a briefcase, begging people to buy printing from him. It wasn’t prideful, but I said to myself, ‘Greg, you’re going to be proud someday in line at the bank, and the only way to get there is to not worry about being proud from 9 to 5.’”
Today, Muzzillo accredits his success to that rule.
“If I didn’t have this rule, I’d be nowhere today or my head would be falling off my shoulders because I have pride,” he says.
He says that instead of focusing on the today, you should focus on what your dream is. For example, he tells his franchisors to make their goal visible to them by writing down on a business card how much they want to make and in what year they’re going to do it. Then put that card in an easy to see place in their wallet, so every time they open the wallet, they see that card and are reminded of what the big goal is. He had one franchisor do this for 12 years and that franchisor reached $100,000, then $250,000, then $500,000, and that franchisor is now working on $1 million.
“Focus on whatever the big dream is, that big goal, and then try to think of all those things that are going to get you there, and try not to do all those things that are going to get in the way, and it’ll happen,” he says.
Lastly, sometimes when no other motivation is forcing you to focus on the right stuff, it just comes down to a good old, suck-it-up mentality.
“When I was building my business, it was sort of like going to the gym, which I hate to do,” Muzzillo says. “But once you get started, it’s like, ‘Oh yeah, now we’re going.’ Once you get into the groove of selling, you’re in the groove. Once you go to the gym, it’s kind of like half the battle — the rest is easy.”
How to reach: Proforma, (800) 825-1525 or www.proforma.com
When Dave Hitz co-founded NetApp Inc. in 1992, he went through the typical growing pains of a start-up. But when he grew to about 50 employees in size, things started getting really crazy. Revenue and head count were doubling each year, and he found himself buying a Polaroid camera and running around taking photos of every employee, writing their names on them and hanging them on the board because nobody knew each other.
These new challenges clued him in that a new era was emerging at his storage and data management solutions company.
“You start to see you’re doing things like that, and it should raise alarm bells in your head of, ‘Is this the early sign of a new era, and if it is, what might that mean?’” Hitz says.
Just like with a country’s history, companies have eras, as well.
“I would define an era as when the strategic issues are completely different from the things you focus on during the period before or after,” Hitz says.
Sometimes those eras are very clearly defined, and sometimes they tend to blur together, but Hitz says you have to recognize when eras are changing.
“If you can predict a future era, that would be awesome,” he says. “I’m not even sure it’s possible in general to predict future eras, but the next best thing to predicting one is to get an early hint that your era might be changing.”
Hitz has been through a few eras at NetApp start-up, crazy growth, tech crash, building back up to pre-tech-crash numbers and, most recently, the recession. Similarly, your company may be facing a new era right now. Hitz has survived it all, and last fiscal year, NetApp did $3.3 billion, but it’s taken tenacity and adaptability to weather the ups and downs of all the eras he has encountered. No matter the era, you have to always be looking for new opportunities and creating a new vision to ensure that your business will be around 10 years from now.
Look for new opportunities
When NetApp hit the tech crash, obviously people freaked out across the industry and went into safe mode.
“A lot of people look at a downturn and they say, ‘That’s the time to dig in. Whatever you’re doing, hunker down, and do it a little more efficiently,’” Hitz says. “I think that can be a big mistake. A downturn of the magnitude that we’re seeing now and certainly for tech companies, the dot-com crash, it’s almost certainly a new era. Whatever the key strategic stuff you were doing before, that has to be different.”
NetApp’s vice chairman, Tom Mendoza, always told Hitz that customers only open their wallets when they’re in pain, so while you may look out at the market and say people aren’t going to spend money right now, also remember that they’re in pain, so you have to find their pain and then show them how you can ease it.
“Downturns create a lot of new pain,” Hitz says. “A whole bunch of customers who whatever they were doing before, it’s not working anymore, and all of that pain they have is now opportunity.”
You need to talk to both your current customers and people you’d like to see as customers in the future.
“Hang out with them,” he says. “They’ll tell you. The interesting thing about customers is customers often will tell you what they wish you would do, and when they do that, I think they’re often wrong.”
He acknowledges that you’re supposed to say that the customer is never wrong, but sometimes customers aren’t quite sure what they need.
“They’re not necessarily the expert on how your product works or how your service should work, but dig behind the thing they tell you to do, and say, ‘I’d like to understand more. What’s the problem you’re trying to solve when you ask me to do X, Y, Z?’”
For example, when meeting with one customer who wanted NetApp to create a new feature for them, Hitz’s team dug deeper and discovered that the solution to the customer’s problem could be found in another product they already made. Had they not pushed, they would have wasted time and development efforts creating a whole new product.
On top of actively listening and probing deeper, you also have to learn to be persistent.
During the dot-com boom, about 70 percent of NetApp’s customers were Internet and technology companies, which made NetApp’s senior leadership very nervous. They wanted to find customers in other industries, so they kept calling up companies on Wall Street and explaining the cool features they offered and how they could do things less expensively than their current providers. They got laughed at. Things were good, and they had money, so they didn’t care about cool features or cheap costs. Enter the tech crash, and then things changed.
“After the crash, everybody we talked to said, ‘Oh my God! You can solve the problem for cheaper? Oh my God! You have features that let me do it a different way!’” Hitz says. “Suddenly a zone of customers that we had locked out of ended up being our key target.”
Now clients may not be willing to spend as much money as they were before, but they still have to run their businesses, so look for ways you can help them do that more efficiently and cost effectively.
“If you can help them do that in a different way, that can be a great opportunity,” he says.
As NetApp started to grow by capitalizing on new industries, the face of the company changed. When it reached the $1 billion mark the second time, only 30 percent of its business was in the technology and Internet fields, and it had expanded into all of those areas it previously wanted to be in. Instead of being a tech-heavy company, now it sells primarily to Fortune 1,000 companies.
“It’s tough in the downturn, because you don’t necessarily have the opportunity to do as much new investment as you want,” Hitz says. “You’re probably cutting it back, but what do you have in your portfolio of business that allows you to solve all the new problems that have just emerged out there?”
He says to spend time brainstorming and focusing efforts around that question in order to move forward during this hard time.
“It doesn’t feel like that’s the right thing to be doing, but at least spend some time saying, ‘Is there a group of people that suddenly have some pain that’s just what we know how to solve that never would have considered us before?’” he says. “It could be an opportunity for transformation.”
Create a new vision
After Hitz grew NetApp back up to $1 billion in revenue after it dropped during the tech crash, he was suddenly faced with a new challenge. When the company was doubling, he obviously just doubled the previous year’s numbers to create the new goal. When he was coming out of the tech crash, his goal was simply to get back to where he was before. This was uncharted water since he had never been above this mark.
“For the first time, I was very confused because for the first time, I didn’t have a good idea what our mission was,” he says.
He was so confused that he drew inspiration from literature to create a vision for NetApp. At the time, Hitz was reading Robert Heinlein’s “Future History” series, a story about what 500 years from now looks like and what happened in between to get there.
While Hitz didn’t go that far forward, he looked out a few years and saw NetApp at $3 billion in revenue, so he took a past-tense approach to determine how he would have gotten there in order to develop a new vision.
“Vision is describing as well as you can what the future should look like, but doing it in the, ‘How did we get there? What steps happened?’” Hitz says. “Talk to people from all different departments about what would have needed to work.”
Hitz did internal interviews and talked to every person in the CEO’s suite because a chief financial officer will have a different view than the chief operating officer. He walked people through his era concept and asked them to think about past eras. In defining an era, don’t be shortsighted.
“Think back as far as your company goes and just ask, ‘What are these big eras?’ not six-month things, but typically two, three, five years kind of things,” Hitz says. “That gets your head a little bit in a better space, and you get more of the right time scale. Thinking of long periods in the past can help your head explore longer periods in the future.”
He also asked them to think about key drivers in past eras and key drivers for future eras.
“Our CEO once gave me advice on strategic planning,” Hitz says. “He says the goal of every strategy should be to gain market share, and therefore, every strategy should begin with a market analysis. Who else are you competing with? What other products are there? That’s the starting point.”
He also asked them to picture who their customers were and what they needed. What products and services do we know how to develop or what do we need to do different? How will they reach those customers, and how do they like to buy? Do we need offices in India or do we need better HR systems here to support who we hire?
He used all of this input to help develop steps to reach that $3 billion mark, but there was another element to creating a vision that is important to him, and that’s to take a positive approach, despite any problems you face. Although he founded the company, Hitz stayed a programmer evangelist until it hit about 1,000 people and was asked to run all of engineering, which was about 250 people. Upon doing so, he realized that when he complained, people ran around trying to fix the things he complained about.
“My first lesson from that is if I’m going to whine, I should whine as accurately as possible because if I don’t whine accurately, they’re likely to fix the wrong thing,” he says. “So I’m trying to do management by whining accurately, which perhaps isn’t the most inspiring way a boss could be.”
Through this management strategy he had an epiphany though.
“Whining is the evil twin of vision,” Hitz says. “When you’re trying to whine accurately, you’re describing as carefully as you can how you wish the world was not. The whole point of vision is to describe as accurately as you can how you wish the world would become. If only you can flip it around from a whine of all the things that you don’t like into a vision of the way things would be different. It’s almost the same stuff, but I can tell you that the vision version is a lot more inspiring than the whining version.”
For example, take the proverbial glass half-full versus half-empty concept. Most would say you’re either positive or negative when looking at that glass, but Hitz takes a different approach. He sees the glass and says it’s twice as large as it needs to be to hold the contents, so how can he better make the glass.
“You flip it from, ‘Jeez, that glass is too big who designed it too big’ to, ‘Wow, we could save some glass if we made it smaller,’” he says. “It’s just expressing yourself a different way.”
How to reach: NetApp Inc., (408) 822-6000 or www.netapp.com
Every customer, every employee, every day.
That simple six-word phrase has proven quite successful for Pete Sinisgalli over the years.
“I’ve generally always believed that wherever I’ve worked,” Sinisgalli says. “It’s a rather straightforward formula. … You have to emphasize different parts of that depending on the specific business, but focusing on customers ruthlessly and focusing on employees passionately will always lead to a good outcome.”
This mantra helped him succeed at Dun & Bradstreet Corp., CheckFree Corp. and also NewRoads Inc. before arriving in the executive suite at Manhattan Associates Inc. in 2004. When he arrived, Manhattan had done $196.8 million in revenue the previous year and things were going well for the supply chain optimization provider.
So what do you do when you’ve already got a good thing going on? Sinisgalli wanted to keep growing and make it even better.
“The key challenge has been how do we continue to grow the company and drive improvements in customer satisfaction,” the president and CEO says.
He looked out at the good organization he already had and knew that his every customer, every employee, every day approach to business would also lead to success at Manhattan, so he decided to focus his efforts on taking care of customers and creating a great place for employees to work.
“It’s overly childish my ‘every customer, every employee, every day’ phrase, but I think if you do that and make incremental progress every day, if you look back a year later, it will look a lot more impressive,” Sinisgalli says.
Focus on customers
When it comes to focusing on every customer, Sinisgalli says it all comes down to one thing: frequent contact.
“We have a number of different prospective opportunities to touch our customers,” Sinisgalli says. “It’s important you take advantage of those opportunities. Too often, companies will suggest that the only time they hear from a company is when they’re sending them a bill. You certainly want to avoid that. … The more frequent and the more open the environment for customer feedback, the better.”
You need to have multiple ways to get feedback, and you can start with customer calls. Whenever customers call for help, make sure they not only have their question answered, but that they also rank their experience. Manhattan sends customers who interacted with the company in some way a link to an online survey where they rate the experience on a scale of 1 to 5 in a few keys areas, such as timeliness, quality and professionalism.
“That instant feedback is very valuable,” he says. “It gives you a firsthand feel for what customers think, and if there is an issue, before it becomes a big issue, you have an opportunity to respond to it.”
If the ranking is less than a 4, then a manager follows up with that customer by calling so he or she can better understand the situation and what needed to happen to improve the customer’s experience.
“The management will penetrate to better understand what didn’t go as well as the customer would have liked under ideal circumstances and then work with the people who provided the support to improve that going forward,” Sinisgalli says.
Last year, Manhattan averaged a 4.6 on these calls, so Sinisgalli is satisfied in his team’s ability to solve customer problems.
Besides taking customer calls, he also has found product councils as a way to get feedback from customers to help dictate the direction Manhattan should go.
“Developing a product council that has real power is a good way to encourage your customers to come forward with their thoughts,” he says.
Manhattan has a small council of about 12 customers for each of its products.
“Any more than that, it’s too hard, and any less than that, you don’t have enough input, but with a dozen on each council, it works out well,” Sinisgalli says.
Each smaller council has a president, and those council presidents — about 20 in all — participate in larger, overall product council meetings three to four times a year.
Lastly, provide a large-scale event for your customers to meet with you each year. Manhattan has an annual meeting with its customers. The last one brought 1,000 people to Orlando to gain more insight into the marketplace and get detailed information about Manhattan’s solutions and products. They have a couple of larger sessions for everyone and then smaller breakout sessions organized by products so people can ask questions and provide thoughts about how the products can better meet their needs. These sessions also help them gauge how prevalent issues are.
“Is this one customer request or were the majority of people in the audience making a similar request?” Sinisgalli says. “It’s a pretty easy way to assess the majority needs of the customer base in these meetings.”
The user conference is also helpful because when customers get around other people that they’re not necessarily doing business with, they’re more willing to speak up and bounce feedback off of each other.
“The most important thing to do is provide an environment that customers are comfortable sharing direct feedback,” Sinisgalli says. “A customer conference is a great mechanism when you have a dozen or more customers using the same product sitting around the table, they’ll tend to get more and more comfortable and feed off each other with suggestions of where to help move our products, so create that environment.”
Focus on employees
If you want to be successful on the people side of the business, you have to start by looking at your hiring process.
“You’ve got to hire correctly,” Sinisgalli says. “When you’re out going on campus or hiring people for midlevel roles, you have to do it with a profile in mind that’s consistent with your culture.”
Sinisgalli looks for someone who’s not only talented but also customer-focused, and he asks a lot of questions to see if candidates have both traits.
“If it’s a college student, it’s a little harder,” he says. “It’s somebody who’s not had work experience before, but then you can ask them questions about what they do in their spare time, how they spend their summer breaks, how engaged they are in outside educational activities, to get a sense for how they prioritize, how they spend their energy.”
If someone has work experience already, it’s a little easier to drive down into his or her core.
“Ask them about what things they were successful at, what wasn’t successful, and then penetrate those areas, and it will come across pretty quickly if they’re focused on customer success or focused on something else,” he says.
Sinisgalli says it’s also crucial to discover whether someone is more focused on personal success or company success.
“Most people are pretty polished and sophisticated,” Sinisgalli says. “It would not come across blatantly. You’d have to ferret that out. … It’s hard to fake more than five or six questions. You penetrate any one line of questioning, and you ultimately get to the core of any person you’re speaking with.”
Lastly, he typically does at least three to five interviews each time he’s hiring someone and also mixes up the location.
“Find more opportunities for the person to behave as they would normally behave,” he says. “Do an office interview, perhaps a lunch interview, a dinner interview, a sporting event. Go to a baseball game or play a round of golf. It’s a good opportunity to better penetrate someone’s true culture.”
Once you have the right people on board, then you have to focus on them.
“Having the right development programs in place is critically important,” he says.
Manhattan has technical training and general manager training, but it also has more elite programs to really hone the cream of the crop. Through the Manhattan Academy, the best of the best spend a week with Sinisgalli and other senior executives in a mini MBA program.
With about 2,200 employees though, it can be hard to figure out whom to invest time and money into, so Sinisgalli relies on his direct reports to help him. Through the semiannual review process, leaders identify team members that have exceptional potential.
“We define that as the ability to do their current job extremely well and the ability to move at least two levels further than where they are today,” he says. “Identify those folks that have exceptional capacity.”
To objectively identify people, he has a matrix with four quadrants on it. One axis is the ability to execute in the current role and the other axis is potential. Ideally, employees want to be in the upper right quadrant. If someone falls into that golden quadrant, then Sinisgalli puts more efforts toward training and developing him or her and ensures his or her compensation plan is strong to keep that person interested in growing with Manhattan.
Lastly, you have to make sure you stay attuned to your employees’ needs and desires.
“Keep an eye out to what’s important to the employees,” Sinisgalli says. “If you’re doing the things that make the employees feel good about working in your company, they’ll do great work.”
For example, if employees are interested in working in China, India, France or another Manhattan location abroad, Sinisgalli makes it happen. If people are interested in working in another department, he gives them the opportunity to try it, and if it doesn’t work out, they can go back to their former role.
“We prioritize that by the top, top folks get the first crack at those transfers, but we try to make that available to anyone who’s in our business,” he says. “It’s one way to expand their knowledge but also keep them excited about working here.”
If you really want to know how your employees feel and what they need though, you have to make them comfortable speaking to you.
For example, about twice a month, Sinisgalli has breakfast with 10 randomly selected associates. He provides doughnuts, juice and coffee and talks for about 15 minutes about the status of the company, and then he opens it up for questions and dialogue. He learns a lot about where he needs to focus his efforts just by listening to their thoughts and ideas.
Another way he connects with employees is by having casual events. During football season, they had a barbecue in the parking deck and encouraged employees to wear their favorite college gear. Sinisgalli sported his Cornell University apparel while grilling burgers and hot dogs and enjoying conversations with employees.
“Create that open environment, and talk to the folks in a relaxed way that will make them comfortable raising ideas and concerns,” he says.
The combination of doing all of these things helps create a strong company culture that encourages your employees to grow with you.
By combining his every employee efforts with his every customer efforts, Sinisgalli has succeeded in taking what was already a good company at $196.8 million when he arrived and growing it to $337 million the past two years. But despite the company’s success, he’ll continue his every customer, every employee, every day approach to ensure Manhattan continues to thrive.
“By making incremental progress on driving up customer satisfaction and making this a better place for employees to work, I believe it will continue to allow us to become an even better company than we are today,” he says.
How to reach: Manhattan Associates Inc., (770) 955-7070 or www.manh.com
About three years ago, Bonnie Curtis faced the challenge of merging Gillette with Procter & Gamble — no easy task considering that both companies had very different ways of doing things and both were very proud of how they did them.
“We usually integrate everything and say, ‘Do it the Procter way,’” says the vice president for Procter & Gamble Product Supply. “In this case, they had some stuff that was pretty good. The question was, how do we take the Gillette stuff that was really good and bring in to the Procter?”
To start, she created an integration team of 20 people — 10 from each side. This team was in charge of finding the middle ground. For example, in one situation, the team was tasked to cut millions from one area’s budget. She knew that neither side could do it alone, so it forced them to work together to create one way of doing things. It was heated at times, with one team member even petitioning Curtis to fire a woman on the other side. In the end, the team found common ground, the woman was actually promoted and the petitioner wrote a glowing note complimenting her on her work.
“That was telling for me,” she says. “We started in this extremely combative position and look at where we got by giving them a common goal that was stretching but deliverable.”
Even after the merger though, people were working 12- to 14-hour days, and Curtis knew that wasn’t right. They needed to become better information factories.
“We need to take information in, process it, and get it out,” Curtis says. “Just like you would in a factory with products, and getting that thing humming so we’re not reinventing the wheel, so we’re not fighting fires … so we can spend our time on improvements.”
She charged everyone to get back 60 minutes in his or her day so the employee could focus on the new work and also be home for dinner with his or her family.
“I don’t want to hear about HR or how someone’s screwing up your time,” Curtis says. “I want you to think about how are you screwing up your time?”
She had one-on-one meetings with her direct reports and asked them how they were doing on this. They sent out quarterly surveys asking people how many minutes they had gotten back. She also spearheaded the campaign by doing deliberate things to help them create more efficient meetings. She took the tables out of the conference rooms and banned computers, BlackBerrys and PowerPoint presentations in meetings.
“The meetings are shorter,” she says. “People are engaged.”
Because people didn’t need two weeks to create an elaborate presentation anymore, meetings could be set much earlier, and people weren’t sleep-deprived from making slides all night.
Now, if she walks by a meeting and sees glazed eyes, she knows someone isn’t doing something right.
“Either you have the wrong people in the meeting or you’re running a really boring meeting — fix it,” she says. “We don’t have time to sit in meetings zoned out.”
She also worked to create a safe environment so that people on the Gillette side or people lower in the organization felt they could speak up in meetings. To do that, you have to show that you’re willing to listen to people. For example, someone four levels below Curtis came to her and explained that when she moved a meeting, it didn’t just affect her and the people who had to be there. Instead it cascaded down, forcing others in the organization to change meetings and commitments, and it actually affected about 100 people. Curtis was floored.
“I said, ‘Holy cow!’” Curtis says. “I went over to my assistant and said, ‘We’re done.’ We’re going to fix things, and if something changes, I’m just not going to the other meeting. That guy had the guts to tell me that. It didn’t even occur to me how much disruption that was causing.”
The key is to do some introspection.
“If I’m classist, it’s going to show up in all of my behaviors,” Curtis says. “I need to think about who I am, what’s my positional power. What’s it look like? What does it mean to me? When I ask for feedback, do I really mean it or am I doing it because somebody told me to do it? The first part is introspection on my part about what culture do I want and what am I doing to help drive it.”
How to reach: Proctor & Gamble Product Supply, www.pg.com
Charles Lipman admits that he has limited skill sets when it comes to technical products. And that’s not an easy admission to make, given that his company, DiversiTech Inc., manufactures air conditioning condenser pads and supplies other technical components for the heating, ventilating, air conditioning and refrigeration industry.
But Lipman has found ways to overcome this weakness and has grown DiversiTech to annual revenue of about $150 million by trusting his 350 employees and knowing when they can help him with something he’s not as knowledgeable about.
“It’s, one, confidence in your capabilities and that of your people,” the president says. “Second is being unafraid of risk, and third, it’s understanding that every decision you make can be wrong and [having] a commitment to review and adjust.”
Smart Business spoke with Lipman about how to grow your company by trusting in people and being unafraid to take risks.
Don’t fear risk. It’s confidence in your people. Of course, you have to have the people to be confident in. That’s important. You can’t have confidence and have it be misplaced.
[You know that] by the results. They have to be placed in situations where they have options, and they have to illustrate the right choices.
You can gauge that even in the simplest of actions — someone who spends enormous amounts of time in critical situations and burns the midnight oil, as they say, is a person with energy and passion, and that matters. A person that will come to you and tell you that the situation is bad. That’s the person you want on board because you don’t have to wonder about it.
If you have people who have demonstrated their abilities to get stuff done and deal with difficult areas, then you shouldn’t be afraid of going into another one.
I have confidence in people because they’re here, first. Second, the review process is proportionate to the amount of trust and the amount of risk. If the risk is great and the trust is modest, then one would have to review fairly frequently. On the other hand, if the risk is low, then the review would be a very long period in between.
It’s very important to have metrics on anything you do. Even if it’s wild speculation, it’s important to put that speculation in writing and have a measurement of where you expect to be and when you expect to be there and milestones to that objective.
Involve people in decisions. You ask them the questions leading up to the ultimate question — what are we doing well, what are we not doing so well, do we have the resources we need to achieve the objective, what will we do if the results are no better in a period of time, what are the options, what option would you choose, what’s the reason?
I prefer not asking one question, and that’s, ‘What should we do?’ Then they don’t tell me what else they’re thinking about.
Many times, one of their other options is one that they really prefer but think you will not and therefore don’t present it.
Let people make mistakes; let them lose money from time to time. You can be wrong, and they can have a success with respect to an idea that you consider worthless, and second is the fact that they know they have your confidence that could cause them to come out with other ideas, some of which might be the game-changers, and they won’t do that if you’re going to be hypercritical of their ideas and not give them the freedom to implement them.
But there are exceptions. The two exceptions are it’s ethically inappropriate, and the risk is too great. That’s not a metric decision. It’s more of taking a look at what could go wrong and how much damage that event would cause. If that event would cause a catastrophic problem for the company, it’s unlikely that we should go forward in any circumstances.
Live your values. A leader has to articulate the values, and he has to do it on a consistent basis. Those values rarely should change. They should be constants. Refer to them at a time of decision-making, and make sure you live up to them, as well. If you don’t live up to them, anything else you do won’t matter.
It’s internal — how do you make decisions, how do you do the right things, how do you want people to deal with people and deal with situations. People use words all the time, but unless you think them through, they don’t have the full meaning that they could. Words like integrity. What does that really mean? If you give it some thought, that’s helpful. It can be as simple as working out what’s the right thing to do and then go from there to decide what we should do. Always keep in mind what the high road is — always know that.
Look forward. You have to have the attitude that you’re not too interested in history — you’re more interested in going forward.
No one likes to change. The only people who like to change are people who like to change others. It’s something that we all have a problem with, and very few of us acknowledge it.
Be persistent in terms of demanding it and rewarding those who do. Rewards are almost always monetary. People are paid based upon their results and the results of the company, and we tell them that.
HOW TO REACH: DiversiTech Inc., (678) 542-3600 or www.diversitech.com
Five years ago, Ken Baggett stood before Reznick Group PC’s partners and unveiled a goal to become the 10th-largest accounting firm with 10 offices over the next 10 years a huge stretch for a company that was, at the time, a $70 million regional player.
“I’ll never forget, one of my partners said, ‘You’ve lost your mind,’” Baggett says. “I knew buy-in was not there yet.”
Over the next year, this CEO and managing principal worked to get that buy-in. And when Baggett presented the following year, the firm had progressed so much that he recast his 10-year projections. This time, that doubting partner asked if Baggett was being a bit conservative. Today, the firm has reached that initial goal of 10 offices, and in 2007, it posted revenue of $230 million.
“It takes a little time when you have a stretch goal to get people to believe you, and you have to continue to preach it until they do,” he says.
Smart Business spoke with Baggett about how to get buy-in for massive goals.
Use your leaders. I don’t always formulate the plan myself. Sometimes it comes from others who say, ‘What do you think about this?’ and we’ll sit down and bat it around.
First, you have to get a small group. You will not get buy-in to something by doing it large scale. Get that smaller group, and let them go out. Be strategic in who you pick.
You have to pick people who will be recognized as leaders already. They’re already go-to people. You say, ‘Gosh, they’re the busiest people,’ but they will still rise to the occasion.
Share history and trends. This was a mistake that I made. I had done the analysis of the history, but I didn’t share that with the partners because you assume everyone knows your history.
When that guy stands up and says, ‘You’ve lost your mind,’ I said, ‘There’s something missing here.’ I re-presented the strategic plan and said, ‘Guys, if we grow at the same 15 percent pace that we have the last 12 years, we will exceed this goal.’ Then people went, ‘Oh, OK. You’re not out to lunch.’
Study your history. There’s a reason we all study history, and it isn’t to tell nice stories it’s so we can either predict that future or try to not replicate the mistakes.
Now, if history isn’t in your favor, think another methodology. Maybe it’s the rest of the industry. The industry has grown, let’s assume, from an average of 10 percent over the last 10 years. We’ve grown at 6 we can certainly be better than average.
If everyone’s averaged 10, don’t play to be average. Therefore, you look around the room and you say, ‘Everyone else has been able to do this. What has hindered us from that?’
Use the industry, No. 1, and then benchmark against other peer group people. Don’t benchmark the guy who’s doing 7 benchmark against the guy who’s doing 15.
Recognize where people stand. In any organization, there’s going to be 20 percent that’s going to jump on the bandwagon and be a cheerleader with you. There’s going to be 60 percent going, ‘Let me wait and see what he does or what happens.’
Then there’s 20 percent that are naysayers. Neutralize the naysayers. Absolutely spend time with your cheerleaders make sure they truly understand what it’s going to take. Let them, along with you, infiltrate that other 60 percent that’s waiting and seeing. It’s like any execution you have to break it down into smaller parts.
Neutralize naysayers. It’s one-on-one. I had to sit down with them and say, ‘Why do you believe that?’ ‘Well, it’s talent.’ ‘Well, part of our plan is to bring in high-level talent in these areas of growth.’ You had to go down a one on one. That was one part of it.
One part was I had to go to a couple people and say, ‘I understand that you’re not buying it, and I appreciate that you’re not buying in to it and that you have a kind of negative personality. All I ask you to do is to not speak in an open meeting negatively against it. If I am proven wrong, I promise you I will give you the floor to talk about how badly I predicted what we could do.’
I have a wonderful group of partners, and those who were uncertain stayed quiet.
I knew I needed their involvement in certain things. I’d say, ‘I understand that you don’t really buy in to it, but this is an area you’re in, and I really need you to do this,’ so I gave them a major task.
If you’re the guard on the football team, and every day you have to go out for blocking assignments, you may not like it, but at the end of the day, if you block well, something good might happen.
Capitalize on cheerleaders. You have to cultivate that 20 percent and say, ‘Here’s what we’re looking for. Let’s think that through,’ and they became part of the solution. They were part of the process. Spend time with them and understand what their desires are.
If you’ve got six parts you’re trying to accomplish, it’s very seldom that one person is going to be involved in all six parts. You have to look at their strengths.
Once you get someone in the right direction, stay out of their way. Let them lead. Just because you’re CEO or managing partner or whatever the title might be, part of that is knowing when to get in there and get involved and knowing when to leave it alone and let smart people run with it. It’s trial and error.
HOW TO REACH: Reznick Group PC, (404) 847-9447 or www.reznickgroup.com
While LeBron James is a superstar in the Cleveland Cavaliers’ organization, everyone can think of a standout employee in their own business. The question is, as a manager, how do you coach and work with this player to make him or her better?
Cleveland Cavaliers General Manager Danny Ferry offered his advice at an event benefiting the Ronald McDonald House about how to coach your best to be better.
“My thought of how we coach the best is, for example with LeBron, being honest with him — whether he had a good game or bad game — being compassionate and trying to do things right, night in and night out,” Ferry says.
Ferry was a standout player at Duke University and went on to play in the NBA for the Cavaliers and the San Antonio Spurs, so he approaches the concept of coaching the best from a player’s view instead of a coach’s.
“At one point, I was the best player on my team, and that was when I was in college and high school,” Ferry says. “I didn’t want to be treated any differently than anyone else.”
It’s important to treat your standout just like the others on the team, and that message should also be communicated to that person.
“This was something that (Duke University Basketball Head Coach Mike Krzyzewski) talked about a lot to me, and this is something that (Cavaliers Head Coach Mike Brown) talked to LeBron [about] — ‘You’re going to have to allow me to be hard on you, and you have to allow me to coach you because everybody else is looking,’” Ferry says. “You have to have that level of trust and communication with your star player and say, ‘I’m going to get on you, and I’m not always going to be right, but it’s important for our culture and important for our team to see that I’m willing to jump your butt more than anybody else.’”
Doing this shows the rest of your employees that you recognize the top performer isn’t perfect. For example, during Cavs film sessions, Ferry says that while the staff uses all of the players’ mistakes, James’ are on there more than anyone else’s.
“In some ways, you have got to put us on your shoulders in the film room, too, and we’re going to learn from your mistakes, as well,” Ferry says.
It’s also crucial that you don’t elevate a bad apple to stardom. “Ultimately, your superstar has to have character for it to really work,” Ferry says. “That person having solid character is hugely important to the potential success for the whole organization.
With solid character, the rest of your organization will try to emulate that behavior.
While it’s important to build up your best person, you also have to be careful of depending on them too much, which is something that, like all managers, Brown has had to work at with his team.
“It’s hard because [James] is such a good player,” Ferry says. “We want to say, ‘Hey, here’s the ball, OK?’ and he can make things happen, but staying with it and putting him more on the back end has been one of Mike’s focuses, and the offense has moved better.”
On top of that, Ferry says the team has done better this past year at playing well when James is out than it has in the past, which wouldn’t have happened if Brown focused only on James.
“It’s a balance, and Mike Brown has to have the credibility to say, ‘Hey, I’m putting us in the best position to win,’” Ferry says.
As the leader, it’s important to utilize your best people to leverage the team, but it’s also important to explain why your star was or wasn’t placed on a project. Doing this fosters trust and builds stronger communication between manager and employee, and
Ferry says Brown does this with his players.
“He’s very honest and open upfront, ‘This is going on, this is going on — I’m going to play you, but this is what I expect, or I’m not going to play you because of these issues,’” Ferry says. “If you communicate afterward, it makes it more challenging because there isn’t as much trust.”
Balancing all of this with everything else you have to worry about as a manager can seem tough, but Ferry boils it down to the fundamentals.
“Whatever it is, you have to win people over with honesty, caring and character, and you have to be consistent — and doing those things consistently.” <
HOW TO REACH: Cleveland Cavaliers, www.nba.com/cavaliers
When TFS Financial Corp., the holding company for Third Federal Savings & Loan Association of Cleveland, had a magician perform as part of its 70th anniversary celebration this year, the performer pulled Marc Stefanski aside and asked this chairman, president and CEO if he could speak with him. While he wasn’t sure what the magician was about to say, Stefanski obliged.
“You and this organization get it,” the man told him. “I’ve done hundreds of these things annually, and nobody gets it. The CEO, a lot of times, doesn’t show up, the people who contract me to come in are in marketing or PR, and they don’t even bother to show up. It’s never the directors or top management there or directly involved. If they do show up, it’s a token appearance, and they go on to something else that’s more important.”
What followed touched Stefanski even more.
“You’re directly involved,” the magician said. “You give things away. You tell people how much you care about them. You can’t imagine what I’ve seen out there. You can’t imagine how far it goes. This is just amazing to see and watch and be a part of.”
What the magician saw was a culture70 years in the making, based on values that Stefanski’s parents believed in when they started the company.
“It comes from the top down,” Stefanski says. “If the leader is focused on one thing but tells all the associates to do something a different way to create this culture out there, it will never happen. The leader has to be visible, has to live the values, has to be the keeper of the values.”
And that’s exactly what Stefanski does. Each year, you’ll see him up on stage with other associates playing in a company rock band in front of employees. This past summer, he paid a visit to a Euclid branch to meet a 103-year-old customer who wanted to meet him because she thought he seemed like a nice guy.
By reinforcing the values in different facets throughout the years, Stefanski has-been able to not only earn the respect of his employees, but that respect has translated into the company having $10.28 billion in total assets and $538 million in interest income last year, up from $8.42 billion and$414 million in 2003 respectively. The key to creating a culture and team that “gets it,” as the magician put it, is first establishing values, communicating those to the organization and having people who embody them. You also need to commit to those same people and involve them along the way.
“My strategy has always been putting people first and strategy second,” he says. “I’ve always believed that if we can do that ... we can be very successful because this is people business. This is not about money. It’s about people and taking care of their money and putting people first.”
Establish your values
You have to make sure that you first identify what is important to your organization. For Third Federal, the four most important values are love, trust, respect and a commitment to excellence.
While some may say that love, trust and respect are soft and don’t belong in a business setting, Stefanski would suggest otherwise.
“The bottom line is, it comes down to relationships,” he says. “How good of father were you? How good of a mother were you? How good of a son or daughter were you? Friend were you? Associate were you working the job?
“That’s the single most important thing. Nobody is going to care how much money you made at the end. Nobody’s going to care what kind of job title you held. Nobody’s going to care how many touch-downs did you make. They’re going to say, ‘What kind of person was he?’”
While the softer values are important in creating a nurturing culture, you then have to balance those to make sure you can still compete.
“Commitment to excellence is actually our balance to all the softer values,” he says. “Without a commitment to excellence, you can’t have No. 1 or No. 2 market share. You can’t be the best you can be or accomplish the goals you want to accomplish.”
Some people may feel that the commitment to excellence is the most important value of the four, but you have to take a look at the bigger picture of your organization.
“I compare making money for a corporation like a human being breathing air,” Stefanski says. “A human being needs to breathe air, but that isn’t your sole existence to breathe air. It’s the same thing for a corporation. A corporation needs to make money, but its purpose isn’t necessarily to make money.”
You also have to realize that while you decide on something, everyone may not fall in line. You just have to be willing to take steps to reaching where you want to go and continuously reinforce it.
“It takes total discipline to those values,” he says. “Values end up being the foundation for the culture.”
Communicate the values
Fifteen years ago, Stefanski was shocked into a new initiative. He was leading senior leadership team associates through a year of meetings focusing on the company. Atone point, he reminded everyone that everything they’re talking about or doing is based on the company’s values. Upon saying that, a man who had been with Third Federal for 30 years raised his hand and asked what the values were.
“I was shocked,” Stefanski says. “I learned from that incident about 15 years ago that you can’t emphasize and talk about the value system enough.”
Ever since that revelation, Stefanski has been on a mission to make sure that the values are known and practiced throughout his organization in various ways. He immediately changed his leadership approach.
“We bounced around from different books and philosophies and business approaches,” he says. “We did a lot of things and never really equated it back to our values.”
Stefanski felt like he hit a brick wall, and he realized he needed to emphasize the values more in everything he did.
“Anything and everything we present, we have to go back to our value system and show how it links back to that,” he says.
Stefanski has also made values a centerpiece of conversation with his executives to ensure they keep getting the word out. He holds off-site meetings with his top10 management people about once a quarter, and at these meetings, they talk about how they can improve the company and the communication of the values. He says he realized that it wasn’t anything he could do quickly and that he would have to work on it over time.
“The Japanese have a great way of going about it — a little bit at a time, constant improvement and all of a sudden you’re king of the hill,” Stefanski says.
In doing so, you have to be consistent.“ Once you’ve found the words that you want to use and the values of it, it’s important to keep the message consistent,” he says.
Now whenever he talks, he’s mentioning the values, including in videos that are made for the company.
“It ends up being almost a replay, but you’d be shocked and surprised how many people are saying, ‘Oh, that’s new and different. I’ve never heard that before,’” he says. “The message can’t be said enough by the top person, by the CEO or the chairman of the board.”
This repetition is important though. “Talk about those all day long because people forget,” he says. “People forget. If leaders are focused on shareholders, for example, or building the company’s worth in the stock market, that will show up, and everyone in the organization won’t be able to create that culture of togetherness or teamwork on their own. It just won’t happen.”
Hold people accountable
Even if your company has values, they won’t thrive if you don’t have the right people in your organization. Stefanski says there are four types of people out there. First are the A-players.
“Those are people who understand and get the values, and they’re good producers,” he says. “They’re hard workers. They understand their job. They accomplish a lot.”
Then there are those that are the B-players, who have the values but aren’t as good at their job. These are people you can work with.
“Give them more training,” Stefanski says. “Give them more support, give them more love, give them whatever to be more successful.”
At the very bottom are the D-players. “The D-players don’t have the values, and they don’t understand what’s going on,” Stefanski says. “They’re easy to not have work here.”
But in between the B’s and D’s are the C’s, which are a bit trickier because they don’t have the values but are really good at theirjobs.
“The folks that are C-players, they can’t last in the organization because they’re just running over people to get their work done,” Stefanski says. “They’re running over people maybe to feather their own cap.”
When it comes to your C-players who are good at the job, you have to sit them down and talk to them. For example, Stefanski has had to sit down with even some of his top-level people before.
“It’s not unusual for us to sit down with someone and say, ‘Look, you’ve accomplished a lot, but on the other hand, you didn’t do it with a whole lot of respect, or you took all the credit, and you shouldn’t have taken all the credit. That’s not how we operate here,’” he says.
Many times, they’ll try to point out their accomplishments some more, but Stefanski will go on to explain that he’s more concerned with people having genuine concern for their fellow co-workers and treating each other with respect than he is with the results themselves.
“We’re talking about the trust that’s built up,” he says. “You can’t build up trust if you’re taking all the credit. You can’t build up respect if you’re taking all the credit. It just doesn’t happen. Those people either they try and they can change, or they can’t, and most of them can’t.”
When you have a situation like that with a C-player, give them a chance to change.
“If their behavior doesn’t change and their attitude toward an associate doesn’t change and they’re still trying to hog all the credit and they say, ‘OK, I can do that,’ and they go back and do the same thing they were always doing, it becomes obvious,” Stefanski says.
He says, again, this is why it’s so important for leaders to live the values so they’re not being hypocritical when reviewing an employee against the values. He’s learned this firsthand with his five kids.
“Boy, I can tell them things till I’m blue in the face, but if I do something a certain way, then they’re doing it,” he says. “People will do what you do, not what you say.”
Commit to your employees
Stefanski once saw a bumper sticker that read, “Love is commitment.” With love as one of Third Federal’s values, Stefanski points out that love isn’t what most people think it is.
“Love can be a lot of things, but without commitment, you don’t have anything,” he says. “Ask anyone who’s been married along time.”
Stefanski’s commitment runs so deep that he doesn’t partake in extracurricular activities like sitting on boards, spending time on the golf course or belonging to a country club. Instead, he spends time with his family and encourages his employees to leave at5 o’clock so they can do the same.
“It’s total commitment to my family and this organization, in that order,” he says.
Even within his commitment to Third Federal, there’s also the rank and file to think about.
“You need to put people first, strategy second,” he says. “In this case, I’m even suggesting that you put your associate first, you put your customers first, and the shareholders follow after.”
While a lot of companies tend to focus on bringing results to their shareholders — whomever that may be, depending if it’s a public or private company — Stefanski recognizes the importance of focusing on his employees.
“I think we’ve seen many examples along the way where the companies and industries have put shareholders first and investment back into the company second,” he says. “Most of those companies are either out of business or currently have financial trouble or you name it — there are major, major issues.”
For example, he says to look at the American automakers. In the 1960s and’70s, they gave a lot of their money back to their shareholders and didn’t reinvest back in their plants.
“They didn’t reinvest back in their people,” Stefanski says. “The result today is that the Japanese are winning the war because they’re going to outsell GM.”
Instead of taking a short-term approach and padding his shareholders’ wallets, Stefanski looks toward the future.
“There’s not a shareholder that would agree with that, but again, if you don’t have a business, how can you give back to the shareholder?” he says. “If the shareholder is in it for the short term, this isn’t a good place to invest money because we’re in it for the long term.”
When it comes to how much stock and other bonuses employees receive, Stefanski rewards the most-tenured employees as opposed to the highest-ranking ones.
“All the consultants said, ‘You can’t do this,’ but we said, ‘Who has built this company?’” he says. “Who deserves those perks and deserves the recognition? These folks have a much more difficult job than I do.”
Rewarding tenure has kept Third Federal’s turnover around 7 percent in an industry where 20 percent or more is common and helps ensure employees will stick around for the long haul.
“We’re building a company to last,” Stefanski says. “In order to last, you have to develop this culture that’s almost cult-like in that it’s radically different than most organizations. It’s easy for Wall Street to
slice and dice up many organizations because they all look the same. A company like ours is a foreign object to them — the reason being we’re in it for the long term, not the quarter-to-quarter thing. We’re in it for 50 quarters down the road.”
Trust your people
One day Stefanski had an idea to weed out smoking on the Third Federal campus. Unlike some companies, he wasn’t trying to fire people who smoked, but he wanted to work to discourage it. Instead of creating a plan himself, he had others figure it out.
“I said, ‘We should be able to do this,’” he says. “That was my input, and what they came up with, I thought it was brilliant.”
His employees came up with an incentive program where if one succeeded in quitting, he or she would receive $1,000. Additionally, employees have also helped develop wellness and green initiatives across the organization.
“The bottom line is we accomplish a lot because we get people involved, and we get people involved in the early stages, not just in execution,” Stefanski says. “We want people to be part of the creative part and come up with a meaningful program.”
He says it’s important that as a leader, you keep your opinions to yourself when employees are developing ideas.
“It’s certainly a team effort, and my input is minimal,” he says. “My job is to basically create the vision and be the keeper of the values and grease the skids along the way if someone runs into a stone wall and make sure they can be successful on the job and the program can be successful but not that I should get credit or I should be the leader and get in every picture. I love to have the associates a part of it.”
He says that if accomplishing huge results is important to you, then you need to have a team working on things instead of yourself.
“If you run a race and if you race one person four times around the track or you race four people as a team, the team will win 100percent of the time,” Stefanski says. “More synergy can be created if you put a team together to brainstorm the how to implement these kinds of things around the organization.”
While some may not see the benefit of a values-based leadership style and culture, there are clear reasons for Third Federal.
“If you keep doing this stuff, it can be very beneficial, and it can work,” Stefanski says. “We treat our associates well, and we have fun at work, but the expectations are that they’re going to treat the customer well. I think that if people feel good about themselves, and they have a career, and they feel good about their family ... that pays dividends 10 times over. People are much nicer to customers, and they’re more engaged with the customer, and people appreciate that. There is method to the madness. We’re not just giving the bank away. We want people to be happy on the job so they’re happy treating customer the way they want to be treated.”
And so far, Stefanski feels like he and his people are doing a good job it.
“We’re creating a foundation for the next generation of Stefanskis with the hope that they’re smart enough to realize this isn’t too bad and to look back and realize that what was created was a good thing,” Stefanski says. “I hope, and I think, my parents and all the founding people are looking down on us now and saying, ‘I think you did a good job.’”
HOW TO REACH: TFS Financial Corp., (800) 844-7333 or www.thirdfederal.com