Most leaders understand that it’s critically important to collaborate regularly on initiatives with their employees, but are they getting all they can out of these interactions?
What leaders may be missing is a new paradigm for employee engagement and competitive advantage.
Many of them are working from an old style of management in which business decisions are made at the top and leaders follow a hierarchy of authority. Senior executives must still set strategy and manage for results, but they can likely achieve better outcomes by letting go.
Authors Craig Schreiber and Kathleen M. Carley explain that adapting a participative-style leadership environment allows people and the business to co-evolve into higher levels, enhancing personal responsibility, accountability, collaboration, innovation and business outcomes.
To do this, leaders need to empower employees to collectively make decisions that drive results and train employees to work in this model.
Employees on the front line are often in the best position to see trends and market opportunities.
Leaders can help drive businesses in new directions and enhance their bottom line by giving lower-level managers and line employees the support and encouragement to assume a much higher level of accountability and responsibility.
Information creation and sharing based on trust are critical components of innovation, according to author R.E. Miles. As they feel more engaged, employees are also more motivated to contribute and add value.
To achieve this, leaders must create an environment where risk within certain boundaries is rewarded so that employees feel comfortable enough to act on their abilities and instincts.
Leaders can support employees by encouraging ideas to grow and flourish among employees rather than through the manager. This will allow employees to identify and pursue opportunities that benefit the company.
The most important — and often most challenging — aspect of leadership is constant follow-through. It is important to discuss leadership techniques with employees and provide training.
Talking through leadership strategies with employees calibrates the group to be more in alignment. It also increases follow-through from employees who feel a part of the process.
Leaders can do this by:
? Discussing best practices among participants
? Identifying leadership needs
? Generating solutions that fit with the needs of the group
? Sharing best practices of employee collaboration throughout the company
? Recognizing work among employees and outcomes
For example, a bank executive wanted leadership training for her front-line managers. Her goal was for them to be able to work out problems and challenges independently or as a leadership group without constantly seeking guidance.
For 10 weeks, we challenged the managers to take more risk and encouraged them to make more decisions at their level. Through group coaching meetings, the employees helped each other consider best alternatives and the executive learned how to manage by letting go. The managers reported feeling more encouraged and engaged, which considerably enhanced results.
Jay Colker, DM, MBA, MA is core faculty for the master’s in counseling and organizational psychology program at the Adler School of Professional Psychology. Colker also maintains a human capital consulting practice and may be reached at email@example.com or at (312) 213-3421.
It would have been easy to hold off on salary raises just a little longer and wait for a clearer sign that the economy had turned a corner.
But Joe McKee and Keith Wolkoff were unwilling to wait. They believed that their employees had worked hard to help Paric Corp. through the recession, and they deserved to be recognized for it.
“The questions do get asked,” says Wolkoff, president at the 234-employee design-build firm. “Is it prudent? Or should we continue to invest in the business? We asked a lot of our people during the very difficult times. It’s just as important to reward those people when you’re starting to see a little more fluidity in the marketplace. It’s the right thing to do.”
The decision was based on the leadership team’s commitment over the past two years to a long-term view and a belief that you can’t let fear guide your decisions, says McKee, Paric’s CEO.
“When you have a crisis, you can circle the wagons or you can choose to move forward,” McKee says. “Most of the times I know when people have circled the wagons; it hasn’t really worked out well for them. Our attitude was to keep moving and be nimble and quick.”
Both leaders wanted to focus on the core things that Paric did well, believing that those skills would be desired by customers even in a tough economy. As they developed a strategy to maximize those qualities and began to see the potential become reality, it became an easy decision to reward the team.
“It was a very painful period in the industry,” Wolkoff says. “But as odd as it is to say, we’re a lot stronger for having gone through it.”
The numbers reflect that assessment. Paric’s revenue grew from $200 million in 2010 to $240 million in 2012. Here’s a look at how the company bounced back so strongly from the recession.
Recalibrate your position
The path to Paric’s better future began with a blunt assessment of what the recession had done to the economy.
“What many people try to do in that environment is to get up and ignore the reality of what’s happening around them, and they don’t speak frankly,” McKee says. “It’s a little bit like what happens when a dog senses your fear. You lose all credibility and bad things happen. So it starts by being brutally honest and by making tough decisions.”
McKee and Wolkoff didn’t hold back in talking about the difficulties the company was facing. They also talked about those opportunities that they believed they could take advantage of. The key is they talked and kept talking to their teams whether the news was good or bad.
“In the absence of us communicating what actions we were taking and how we were addressing the economy, people were going to come to their own conclusions,” Wolkoff says. “We just refused to allow that. We were meeting if not every six weeks, then every eight weeks to give everybody a debrief on, ‘Here’s where we’re headed, here’s what we see and here’s what we’re doing about it.’
“Maybe all the information wasn’t pleasant. But at least everybody knew what was going on. There wasn’t all that chatter that can just be counterproductive.”
The crux of the new plan was to focus on the strengths and stop doing the things that weren’t making the company any money.
“When you have limited resources, there are some things you’ve always done because that’s the way you did it,” McKee says. “You need to figure out what those things are and quit doing them. What do we need to work on to move the organization forward?”
Preconstruction services were going to be a big part of Paric’s offerings to customers. Another was going to be the core markets that the company worked in, such as historic renovation, urban development, senior living and interior construction.
“We don’t service everybody,” Wolkoff says. “We go where we can bring value to our customers. Even in bad times, that’s going to prevail.
“It took a little bit of reinforcing from leadership to say, ‘Let’s hunker down, let’s pick our spots, let’s be smart, and let’s continue to invest, and we’ll be fine when we come out the other end.’ Are you going to cover 10 opportunities with your limited resources or are you going to cover three opportunities and increase your hit rate?”
McKee says you go with the three.
“You get two out of those three versus focusing on 10 and you only get two,” McKee says.
Know who you are
In working through the plan and defining what set Paric apart from the competition, Wolkoff says the company’s leadership unearthed a problem that they felt needed to be addressed.
“We started to ask ourselves, how do we define our business as it looked at that point in time,” Wolkoff says. “While we all had great things to say about ourselves, none of us were telling the story exactly the same way. And it really caused us to question, ‘Well, if we’re having that much trouble defining who we are, what are our customers saying?’”
It was with that thought in mind that Paric’s leadership team set out to interview customers, vendors and employees. The goal was to hit on a theme that would accurately and clearly define what the company is all about.
“In everything we do, every opportunity we have to touch each other, at a meeting, even if it’s an outside social event, there needs to be a consistent theme in how we talk to each other,” Wolkoff says. “Every company meeting we have, it has to be the central talking point over and over again.”
After talking to people at all these levels, the theme they arrived at was “Experience Excellence.”
“It doesn’t mean we’re perfect, but we strive for perfection, and that’s the piece we hit on,” Wolkoff says. “At every station we touch, whether it’s a client, vendor or internal employee, we have to strive for that perfection and that excellence.”
When money is tight with customers, the key to making a sale can be the perceived extra value that the customers believe they are getting with your business.
“You could say on the one hand that a building project is a very daunting task,” Wolkoff says. “But it shouldn’t be. If you have the right partner, it should be something that is exciting. It’s changing your organization. So we have to make sure that everybody who touches it from our end makes it the most satisfying experience it can be.”
The goal was to take these words that could easily become a cliché or something that is forgotten soon after it is brought up and embed it into the company’s culture.
McKee compares it to a quote he remembers from retired Denver Broncos quarterback and NFL Hall of Famer John Elway.
“He said on a Super Bowl winning team, they hold each other accountable,” McKee says. “If the guy next to you wasn’t doing his job, the guy to the right of him would say, ‘You better get with it and do your job.’ The coaches weren’t telling him. The players were doing that. We work really hard to try to create that kind of culture with people to where it’s a real team environment.”
When you’re just trying to get a motto or slogan like that to sink in, you can just ask the question.
“With a younger person, you might say, ‘What have you done today to create experience excellence?’” McKee says. “They’ll look at you the first couple of times like you have two heads. But after a while, they’ll begin to understand what you’re getting at. It’s about that discipline to do it right every day.”
One of the things that Paric began during its battle through the recession and has continued to this day is a weekly senior leadership team meeting. It consists of five people: Wolkoff, McKee, the company’s CFO and the senior vice presidents of sales and operations.
“That’s the one meeting that doesn’t get moved off people’s calendars,” Wolkoff says. “It’s the most important meeting we have in a given week.”
The challenging of opinions and belief is not only accepted, it’s encouraged, says Wolkoff.
“There are five people sitting in that room and if one of the five is not voicing an opinion and challenging something, you need to consider, ‘Do they need to be in the room?’” he says. “We’ve been fortunate that there are five very strong leaders in the room.”
The idea isn’t to create tension but to make sure every angle is being explored so the company can make an informed decision. Once the meeting is over, the conflict, if there is any left, must stay in the room.
“Once we leave the room, we’re unified,” Wolkoff says.
McKee says the elimination of secrets and unspoken concerns is one of the keys to success in any business.
“If you’re going to lose, lose doing the things you think you need to do rather than getting to the end and thinking, ‘I wish I would have done that,’” McKee says. ?
How to reach: Paric Corp., (800) 500-4320 or www.paric.com
The McKee and Wolkoff Files
Joe McKee, CEO, Paric Corp.
Born: St. Louis
Education: Bachelor of science degree, civil and environmental engineering from Vanderbilt University; MBA, Washington University, St. Louis.
Did you think about becoming a CEO some day?
I always knew I wanted to build, so that much I knew. But I’ve succeeded well beyond my wildest dreams. I was the kid who designed the clubhouse and treehouse and built go-carts. That’s what I love doing, besides hunting.
Who has been your biggest influence?
It starts with good parents. My parents were absolutely amazing. After that, Rick Jordan helped me a great deal and the current chair of our board, Larry Young. They are both on our board and have been good mentors to me through the years.
Keith Wolkoff, president, Paric Corp.
Born: St. Charles, Mo.
Education: Bachelor’s degree in architecture, Washington University, St. Louis.
Did you think about becoming a company president some day?
No way; it was the furthest thing from my thoughts. I thought more in the now and whatever I was doing, I wanted to do it to the best of my ability. When I saw an opportunity, I had the mindset that I’d rather try and fail than not try at all. By some good luck and some hard work, I find myself where I am today.
Who has been your biggest influence?
Very early on I had an English teacher. Maybe my spelling wasn’t always the best, maybe my attention wasn’t always the best, but I was always a good writer, and I enjoyed it. That particular teacher focused on what I was good at and that empowered me to excel in other areas.
Don’t sugarcoat your problems.
Know what you stand for.
Keep looking to do it better.
Twenty-five years ago, Fred Potthoff and his partner took out a $300,000 line of credit to start their own company. Potthoff backed his half by putting up his house and his retirement savings, and from that moment, it was a race against time to see if he and his partner could sell enough before running out of money.
Fast forward to today, and the company they started, Kroff Inc., a leading water and wastewater treatment and recycling services company, has more than 80 employees, eight different businesses under the Kroff name and annual revenue of more than $50 million. Potthoff’s entrepreneurial gamble paid off, and today, he isn’t stressed about making enough money to survive but rather about finding the right talent to keep the company at the top of its game.
“We are a bottom-up run organization, and we go by the philosophy of hiring bright, creative, entrepreneurial people and giving them the right tools. Then we get out of their way to let them flourish,” Potthoff says.
Even with the company’s eight different businesses, Potthoff has remained an integral part of its hiring process and ensuring that great talent enters the company.
“Some people are surprised when they talk to me first, second or third in the organization as one of the original owners,” Potthoff says. “I tell them, ‘This is the single most important thing that I do in the course of my workweek or month.’”
Since Kroff’s inception in 1988, the company has experienced an average of 24 percent growth every year. The attention to his company’s hiring process, which he calls motivational fit, is what Potthoff focuses on to make sure Kroff Inc. will continue to grow.
Here is how Potthoff hires the best available talent.
Find the best fit
Kroff Inc. has seen some incredible growth over the years and that success is a direct result of the people Potthoff has been able to hire. In fact, each of the organization’s eight businesses started with ideas from sales associates.
“Aside from the original company, my partner and I didn’t come up with any of the other ideas,” Potthoff says. “It was people in our organization coming to us and us listening to them and running with that idea.”
When Potthoff interviews candidates, he is interested in trying to spark that kind of enthusiasm and interest in the company.
“It doesn’t mean that everybody who comes here is going to run their own company, but it’s part of our culture,” he says. “People who fit in well here think that way and look for opportunities. When we interview, the key is looking for that kind of person, so we’ve all been trained in behavioral interviewing and that’s an important component of trying to identify the right person.”
Behavioral interviewing is a key component at Kroff because when the company was first started, Potthoff put a lot of stock into resumes and conventional interviewing. While resumes can provide wonderful statistics about how much somebody sold or how many new accounts they created and a lot of facts and figures, they aren’t as effective at finding the best fit as behavioral interviewing.
“In behavioral interviewing, you get into specific examples and you try to drill down and mine for a number of examples where they’ve shown an attribute in the past,” Potthoff says. “If they say they have an entrepreneurial bent, you say, ‘Give me an example of when you demonstrated this in your past job.’
“Whatever the attribute is, we want specific examples where they’ve done it before and they can tell us a clear story about why they have that talent and where they manifested it.
“It’s a more difficult interview process because often they have to think and dig down to find an example, but that’s what you want. Then you know you’re getting the right person if they can give you a lot of examples where they have demonstrated this capability before.”
While this technique of interviewing has resulted in strong employees for Kroff, it isn’t without its drawbacks.
“Behavioral interviewing is a challenge; you have to sit and wait sometimes for the person to think of examples because you want them to give you very specific, very concrete examples,” he says. “So the interviewing process takes a little patience whenever the candidate is in front of you.”
In Kroff’s case, the company hires a lot of sales engineers, and one of the first challenges is finding an outstanding chemical engineer who wants to have a career in sales.
“Sometimes it’s mixing oil and water, and we’re often looking for personality attributes that aren’t in one person,” he says.
Another challenge is where to find the best talent. The best candidates may be the passive candidates, not the ones shopping their resume around.
“They are the ones who are successful who are doing a great job wherever they are,” Potthoff says. “To try to get their attention sometimes is difficult.”
The third thing Kroff does to find good talent is to check references or see if someone has worked with that person before.
“If you depend on the interview process and the resume, it’s more of a crapshoot,” he says. “If you can find somebody in your organization or get references from reliable people who have worked with the person, then your chance of having success with that person is greater.”
To overcome these challenges and have help in the search process for talented employees, Kroff often utilizes the services of recruiters.
“We’ve picked two or three that we work with and we bring them in to our office and try to educate them to make sure they understand exactly what we’re looking for, because when you’re dealing with recruiters, they’ll often throw resumes at you in hopes you’re going to hire somebody,” he says.
“It is important to invest some time with the recruiter and say, ‘This is exactly what we’re looking for, and don’t send us anybody else.’”
Translate talent into success
While a company’s success can benefit greatly from its products or services, Potthoff believes his hiring techniques and the talent he has been able to bring in are the true difference makers.
“You can have the best products in the world and you can have the best computer software and order entry, but it really comes down to quality people,” Potthoff says. “The key component of our success is that we’ve been very fortunate for the most part in hiring great people.”
Another key component of Kroff’s success has been that Potthoff has done a good job of listening to ideas.
“It’s one thing to give lip service to somebody, but if somebody comes to you with a good, creative idea, you can’t summarily dismiss it because maybe you tried it before or it seems a little harebrained,” he says. “You have to be willing to listen and trust the people, and if you think it’s a great idea, be willing to move and invest in it. When you do that, the culture responds to it.”
A lack of listening is one of the biggest mistakes many companies make.
“I don’t think many companies listen well enough to the people in the field who have their fingers on the pulse,” Potthoff says. “If you’ve hired the right people, they’re closer to the action and the opportunities than somebody sitting up in a corporate office somewhere.
“I’ve seen it in the past where some vice president comes up with an idea about what market the company should go after. It may be a brilliant idea, but oftentimes, it’s not. I think you are better served by getting intelligent, creative people and listening to them when they come to you with a market opportunity, because they’re in a better position in a lot of ways to see opportunities.”
To incorporate this kind of thinking into your organization you have to make the behavior part of your company’s culture.
“View company meetings and company culture as a meritocracy, which is the way we look at it,” he says. “In other words, if we are in a manager’s meeting, I set the tone for the meeting. It’s not myself and my business partner pontificating about where the company is headed and what we’re going to do.
“When you present ideas, everybody has to chime in with what they think the best idea is, and we will hash it out here and the best idea will rise to the top.”
This mentality is an easy thing to say, but it’s a hard thing to accept because you have to set your ego aside and listen to comments and criticism.
“That’s where some entrepreneurs and business owners go array because they are so vested in the company,” Potthoff says. “The way they got the company off the ground is the right way to do it, and it’s hard for them sometimes to hear somebody criticize it. It is vital to stay vibrant and alive, so you have to listen to the new people that you bring in.” ?
How to reach: Kroff Inc., (412) 321-9800 or www.kroff.com
Be involved in the hiring process.
Utilize resources to help you find the best talent.
Once you have the talent use it to grow your business.
The Potthoff File
Co-founder and co-owner
Born: Latrobe, Pa.
Education: He attended Shippensburg University and got a bachelor of science degree in business.
What was your very first job?
I was a lifeguard in the town of Latrobe. It was a great summer job.
What is some business advice you would give to others?
The bulk of my time in business has been in specialty chemical sales … and if you graphed how much time I spend listening and how much time I spend talking, I probably listen 75 percent of the time and talk 25 percent of the time. For anybody in business, that is a good ratio. You can learn a lot more and get a lot more accomplished if you use that ratio to build your business and career.
Who do you admire in business?
If you could have a conversation with someone from the past or present, who would you want to speak with?
I’m a history buff, so there are a lot of people that I’ve read about over the years that I’m intrigued with. Out of the Founding Fathers, I think the most fascinating person to speak with would be Thomas Jefferson. I think he is one of the most brilliant people that I have ever read about, and how fortunate we were to have him as one of the founding fathers.
What are you looking forward to in the future of your business?
What excites me now and what motivates me is watching people underneath me do well personally and professionally.
With the world of business changing faster and becoming more complex every decade, organizations today have to adapt, reinvent, differentiate or die. Over the past few years, the nature and intensity of these changes in the business landscape has created organizational disruption and a realistic need to redesign organizational strategy and leadership approaches.
The process is not easy, and this is why many executives in organizations decide to stay the course, bury their head in the sand, and copy and paste what others are doing. Today, businesses are realizing that they cannot cut their way to prosperity and that their growth potential has been severely reduced due to the continued recessionary trends.
They are starting to look at their business models and are reinventing their value propositions in order to generate customer excitement, boost value-creation programs and capture value through value-based pricing. These companies get it. Many, though, do not.
The following are tips on how you can embrace the value imperative and design and implement leadership initiatives to place customer value at the center of business.
Organize a series of off-site meetings with key people to have a realistic, candid and mindful conversation about your value proposition: Why are customers buying from us? What makes us truly different? Are we paying enough attention to our business model? Are we working on the right projects to support our value proposition?
This meeting should be led by top executives to demonstrate the importance of the process. I recommend you avoid the use of consultants, keep the agenda semi-structured to create conversational flow and reinforce that this is a confidential and safe environment.
Define your core
Identify what your true “core business” is that brings most of your revenue and profits: Are we bringing enough value to customers? Are we losing steam in our differentiation? Are competitors catching up on us? Does the core business need to be reinvigorated? Defining the true core business might end up being an interesting process as a team.
I recommend you avoid the use of the constraining and sterile strategic analysis tools such as SWOT analysis, market forces analysis and others. Start with a white sheet of paper and see where it takes you.
Find ‘hidden assets’
Identify your “hidden assets” that are creating excitement with customers and generating profit but that you have taken for granted, not paid attention to or underestimated. List these assets, celebrate having them and evaluate their contribution to the overall value proposition.
The definition of what a hidden asset is might get tricky, but it is worth having it. Launch the conversation of what-if scenarios: What if we had more of this or we did more of that? What would be the impact on customers?
Based on the previous steps, start redesigning your core business and value proposition by reinforcing the strengths you clearly have identified and by leveraging your hidden assets. While it is important to fix gaps or work on weaknesses, leveraging strengths and hidden assets might have a greater return.
Eventually, the result of this business model redesign process will need to be integrated in the strategic planning process. This process is critical to re-energize your value proposition and your overall business model. It is also a great opportunity to emphasize with your leadership team that all you need to do is create customer value and increase loyalty.
When times are tough, customers will make quality/performance sacrifices, will try other alternatives to reduce costs and will challenge your value proposition. My view is that the best defense is a calculated offense. ?
Stephan Liozu (www.stephanliozu.com) is the founder of Value Innoruption Advisors. He specializes in disruptive approaches in strategy, innovation and value management. He is also a Ph.D. candidate in management at Case Western Reserve University and can be reached at firstname.lastname@example.org.
“Most of the companies I admire in the world I think have a deeper purpose. I’ve met a lot of successful entrepreneurs. They all started their businesses not to maximize shareholder value but to pursue a dream.” – John Mackey, CEO and founder of Whole Foods Market Inc.
What would the world look like if each of us pursued purpose before profit?
Just a glance at the headlines reveals example after example of leadership gone awry: people failing to do the jobs with which they were entrusted, mired in greed, wastefulness and willful deception. Gross abuses of power and criminality are all too common. It seems time for drastic change.
When will we close the door on cynicism and complacency? When will we say enough is enough to self-serving leadership and instead examine the impact we’re having on those around us? How can we begin to seek the greater good before our own interests?
It begins with each of us intentionally pursuing our full potential, striving for a purpose greater than ourselves. When we achieve that, our businesses, communities and people will thrive. Profitability will follow purpose, not profitability for the purpose of self-aggrandizement.
Inspire a vision for the greater good.
Deep down, most of us crave a cause to aspire to that is greater than ourselves. In order to lead for the greater good, we must create an expansive vision of the future that engages and inspires those around us. The vision must be one we’re passionate about; positivity is contagious. Those we lead will see that the objective isn’t solely about personal success but rather about a work product everyone can be proud of.
There are two ways we can begin to do this. One is by bringing together diverse teams to share their dreams for the company and their part in making it happen. For this to be a success, we must create inclusive environments where each person feels safe to fully participate.
The second way is to create opportunities for leaders to thoughtfully engage around what it means to lead for the greater good. How does each person define it? What does it mean for the organization as a whole?
Recognize the power of relationships.
When we lead for the greater good, we focus on what’s best for our organizations and our employees. Leading for the greater good means you don’t browbeat people into doing what you want. Instead it’s about determining if they want what you want and vice versa. It’s about shared goals and full engagement in working toward those goals. This can’t be achieved through coercion or with a megaphone. Instead it requires relationships developed through conversation.
In a June 2012 article in Harvard Business Review titled “Leadership is Conversation,” Boris Groysberg and Michael Slind affirm the role of conversation for today’s leaders. They rightly point out that a top-down leadership approach is on the way out and that leadership that emphasizes conversation is the way of the future. They have coined a model called “organizational conversation,” which simply emphasizes intimacy, interactivity, inclusion and intentionality.
As leaders, we need to ask ourselves, which of my actions and habits limit or prevent relationship-building? Am I contributing to an atmosphere of intimacy and trust,or of fear and exclusion? Which of my behaviors are selfish and which are leading for the greater good? Am I investing the time to meaningfully engage with people and learn from them? Are they open to learn from me?
Damaging behaviors include being distant or inaccessible, overly judgmental and critical, and dismissing the contributions of others. Selfishness and bad behavior have been shown to be contagious, as have positive behaviors. As leaders, we must recognize that relationships can’t take root in a climate where negative behaviors are flourishing. Shifting the climate to one of positivity and interactivity is incumbent on us.
Give credit to others.
Leaders who lead for the greater good aren’t trying to amass credit for themselves. They understand that their employees want and deserve credit too, and they know that by giving them recognition, everyone benefits. It should be obvious that people will be more likely to support your goals when they see your primary interest isn’t self-promotion but rather teamwork. Create opportunities to recognize the contributions of others.
Emotion and behavior are contagious. As leaders, we must consider the ripple effect of our actions. Are we going to radiate selfishness, complacency and negativity? Or will we reach for a worthwhile purpose greater than ourselves and choose to inspire positivity, connectivity and hope in those around us? ?
Donna Rae Smith is a guest blogger for Smart Business. She is the founder and CEO of Bright Side Inc., a transformational change catalyst company that has partnered with more than 250 of the world’s most influential companies. For more information, visit www.bright-side.com or contact Donna Rae Smith at email@example.com
It could be a deal. It could be a business strategy. It could even be a house. Whatever the project, Joe Nettemeyer is all about making it bigger, better and more successful.
“I had a boss tell me once that I was not a person that he would put into a business to sustain it,” says Nettemeyer, CEO of Valin Corp. “He’d always put me into something that he wanted to build because I couldn’t help but start trying to re-engineer anything I wanted to get my hands on. Building something is an ongoing challenge, but the results give you a huge amount of satisfaction.”
A builder was exactly what Valin Corp. needed when Nettemeyer joined the industrial solutions business in 2001. Despite years of great success in the semiconductor capital equipment business, Valin has been a fast casualty of the computer-chip industry downturn. With a whopping 90 percent of its revenue coming from chip manufacturing, the company’s revenue plummeted by two-thirds in six months.
“Everything crashed, equipment owners crashed, and we went from being a $75 million business to a $25 million business in about 120 days,” Nettemeyer says. “We didn’t lose market share; it’s just that the slides of the market opportunity dramatically contracted.”
As Valin’s new CEO, Nettemeyer realized the 38-year-old chip manufacturer had two options: Continue in the same direction and fall apart or rebuild as a much more diverse business. Here’s how he transformed the floundering company into one of the nation’s fastest-growing businesses.
Shake off complacency
With such a large percentage of Valin’s income tied to shrinking revenue streams, Nettemeyer looked for ways to create new sources of income — and quickly. Acquisitions would allow the company to efficiently diversify its portfolio and grow new business lines.
“When I came in, I realized that we had such a great dependency on too few accounts,” Nettemeyer says. “It was such a huge risk. We had to move into acquisitions. So right in the midst of that turmoil I went out and started borrowing money and buying businesses.”
Not everyone was as excited as Nettemeyer about diversification.
“Experimentation brings rewards and risks that make people uncomfortable,” Nettemeyer says.
“It was challenging for people because they were in a comfort zone. They’d done extraordinarily well for 20 years doing what they were doing, and we were pushing them outside of it.”
In the past, Valin focused on small diameter process management, working with quarter-inch or half-inch tubing. Suddenly, the company was working with up to 60-inch pipe.
Recognizing that he was asking people to make some big changes, Nettemeyer made sure that he and the leadership team were transparent and thorough when they laid out the acquisition strategy to employees.
“I walked the management team through a plan, and we talked about how we could integrate these different technologies and provide solutions versus just selling parts and pieces,” he says.
“There was a lot of communication. I selected all the individuals that I felt were key leaders and we had monthly leadership meetings. We reviewed where we were at, and we had an open book approach to financials. We were measuring the initiatives that we were undertaking. Through that 24-month real crucial period, we were giving monthly feedback.”
Employees appreciated the fact that Nettemeyer didn’t sugarcoat the changes.
“I wasn’t going to pretend that this would all pass,” he says. “There was a core group that really came together and embraced what we had to do.”
At that point, employees who still wanted to take a “wait and see” approach to the market — including two members of Nettemeyer’s leadership team — were asked to go their separate ways.
“I think it’s my responsibility to the company to leave it a better company than it was when I came here,” he says. “That means we’ve got to get out in front. That gives you some heartache and pain. It gives you sleepless nights and scary moments. You have to celebrate the successes, but you also have to say, ‘That was really a dumb idea — let’s stop it.’
“I had to replace some of the management team because they wanted to sit and wait. They thought that the semiconductor industry was going to continue what it always did — it was only in a short-term contraction. Well, that contraction lasted for three years.”
Soon after making Valin’s first acquisition in October 2001, Nettemeyer began buying businesses and product streams that were within the company’s technical bandwidth and that could provide it a competitive advantage. Some acquisitions were a natural expansion of things that the company already did, such as safety devices. Others helped flesh out Valin’s expertise to transform it from a parts provider into a resource for customers.
“We have to find new ways to do things because if you’re going to stand pat, you’re going to get slowly sliced up in the marketplace,” Nettemeyer says. “The biggest struggle we face is the fight against the complacency you get with maintaining the status quo.
“Every year in our planning process, we say, ‘Is this the way that people are going to want to do business with us 10 years from now?’ When you ask that question, everybody says no, and then the next question is, ‘Well, what should we be doing about it?’”
Valin has completed 28 acquisitions since Nettemeyer joined the company 12 years ago, building on technology, and moving more aggressively into light manufacturing, medical devices and service lines. Instead of chip manufacturing, Valin’s biggest markets are now energy, oil and gas. The diversification strategy has allowed the San Jose, Calif.-based company to more than double its size and value over the last five years.
One of the reasons that Valin has been able to integrate so many new businesses so effectively is by having a clearly defined integration process that provides ongoing support.
“The smallest business we’ve bought had $500,000 in revenue,” Nettemeyer says. “The largest we’ve bought had $25 million in revenue. I’d say we spend most of our time buying businesses in the $3 million to $20 million range. We just have to make sure that we take them on at a pace that’s digestible.”
Valin’s integration process goes like this: After purchasing a business, the company converts the business’s IT systems in one weekend. Next, Nettemeyer brings in a team for one week to teach employees how to navigate and enter information into its ERP system. After the tech teams leave, an expert is assigned to stay and work with the business over the following months.
“You teach people, but they forget how to do that and how to make connections,” Nettemeyer says. “We have an embedded expert there for 60 days because we find that’s about how long it takes to get people comfortable with it.
“Then after that we have a call desk that they can call at any time, and they continue to have technical support. It’s getting them integrated into our system quickly that gives us good control over our assets, inventory receivables and cash flow. We’re excellent at doing that.”
Invest in education
While contracting revenue forced Valin to shrink its employee base to 45 employees in 2001, acquisitions enabled it to transition into a variety of new markets. By 2011, chip manufacturing — previously the company’s bread and butter — accounted for just 25 percent of the company’s $150 million revenue. This growth also meant Nettemeyer could begin hiring again, adding employees to expand the company’s businesses across the country.
However, there were some challenges stemming from Valin’s diverse and growing footprint.
On one hand, Nettemeyer and his team — like many manufacturing companies in the U.S. — have had to deal with a dwindling talent pool, specifically, the lack of highly qualified engineering talent in the market. Taking advantage of new business opportunities requires a well-trained work force with the sophisticated skills.
To attract and retain talented people, Nettemeyer has worked to create fellowships with IBM, Texas A&M School of Engineering and The Ohio State University to open opportunities for employees at Valin. Each year, for example, the company sends two promising managers to participate in the Texas A&M School of Engineering master’s program in industrial distribution so that they can learn critical skills to drive the business forward.
“Part of our educational effort is we’re monetizing education and teaching engineers how they can run their facilities more efficiently and prevent downtimes — a huge expense,” Nettemeyer says. “They are more likely to be thought leaders, and you get thought leadership through education.”
Investing in education, both formal and informal, also helps you provide a framework that enables employees to come together and be successful. Having employees aligned behind common goals and a common vision has been critical in a culture that gives Valin a competitive advantage.
“If I have five presenters going around trying to teach something, they are all going to teach it differently,” Nettemeyer says. “We wanted to get uniformity in the message. We wanted to make sure that we’re highlighting the things that we think are important.
“If you don’t do that, people on their own will spend their time managing their own basket and not managing to the goals and objectives that we have to achieve.”
Today, Nettemeyer and his leadership team spend much more time visiting with managers to talk about their priorities and responsibilities as owners. Being a 100 percent ESOP business, it’s important for Valin to have a consistent message about what ownership is and the responsibilities owner have to suppliers, shareholders and customers. Three years ago, the company also hired a doctorate in education employee to develop online training modules that give Valin’s 240 employees in nine states and 15 locations a common process and common approach to management and establishing priorities.
“The education component is critically important for us,” Nettemeyer says. “You buy different companies, and they all have their different approach. Everybody thinks that their way is better. What we have to strive for is being consistent. Being consistent means that people have to have a repeatable positive experience when they interact with our company, and we see training as a huge part of that.” ?
How to reach: Valin Corp., (800) 774-5630 or
The Nettemeyer File
Born: St. Louis
Education: St. Louis University
What is one part of your daily routine that you wouldn’t change?
I get up at 6 a.m. every morning and read for about an hour and a half, usually something that pertains to work. I have a responsibility to the organization as CEO to stay current with contemporary business. Most of the material I read is focused on economics, insights on how to make better decisions and improve the business or how to sustain our business for the long term.
What do you do to regroup on a tough day?
After a tough day, I like to go home and have dinner with wife of 36 years, talk about our family — four children and three grandchildren — because they are the cornerstone of my life.
What is the toughest business decision you made recently?
I’m making tough business decisions every day, whether it’s the decision to make an acquisition or walk away from an opportunity. These decisions are the challenge of a healthy struggle. If you think it’s easy, you are missing something.
What do you like most about your job?
We’re pushing the envelope. Organizationally, we’ve committed ourselves to being students of our industry … I find that intellectual stimulation to be really gratifying.
How do you find good people?
I remember Ross Perot when he wrote his book, he said, ‘Eagles don’t flock together. You have to go find them one at a time.’ You have to find the people, and you’ve got to have people that have passion and commitment and want to accomplish bigger things. They want to be part of something that they have major accomplishments … you have to be looking all the time for people with that profile.
A number of years ago, a friend of mine owned a small and successful neighborhood gym, long before the big chains got into the business. In the beginning, he was extremely excited. He poured his heart and soul into the operation. We used to talk about how much potential the business had, the cool clients, the trainers, the community activities — all of it.
Six years later, his tone changed. Words and phrases like “boring” and “same old, same old” were now part of his everyday lexicon. He lost some clients, whom he labeled as “complainers,” and decided he was better off without them. I’m sure you can predict the outcome: He sold the business for a fraction of what it had been worth during its heyday.
Soon after the sale, the new owners ramped up the business, grew their client base, expanded to other locations and took the business to the next level. My friend watched from the sidelines. “I could have done that,” he said. And he could have.
Just after selling the gym, during one of our late-night brainstorming sessions, my friend asked me what I thought the new owners would do to give the business a facelift. I asked him, “What do you think they will do?” He was the fitness expert, after all. What would he do if he were starting again? Shockingly, my friend immediately reeled off a list of exciting and brilliant ideas that he would execute.
The lesson I learned that night was what I now call the innovator’s plateau. Each of us begins an endeavor buzzing with energy and full of ideas. We get up and go to work each day excited about seeing our vision materialize. Yet after a certain number of years, things settle. We grow accustomed to the people we see every day and notice their idiosyncrasies. We develop routines that aren’t stimulating. We tread water. We’re bored. We’re beaten.
Avoiding the plateau
So how does one avoid the innovator’s plateau? Simple. Pay attention. Take your emotional temperature every year. Ask yourself hard questions. Have you peaked emotionally? Why are you bored? Is this really as good as it gets, or are you unwilling to take new risks, financially, energetically, emotionally?
Is someone out there doing a better job? If your board fired the current executives and brought in a new management team, what would they do to fix and build the business? What would your customers ask for if you dared to ask them?
One of the best books I’ve read is written by Andy Grove, the retired CEO of Intel. In 1996, Grove wrote, “Only the Paranoid Survive.” This axiom had a profound impact on me as I was growing my business, and it still does today. So if you find yourself getting bored, consider it an alarm bell. Wake up and innovate. See your business in a new way. And remember what your mother said: “If you’re bored, it’s because you’re boring,” so go out and push the envelope. ?
Terry Cunningham is president and general manager of EVault Inc., a Seagate Company. He founded Crystal Services, which was purchased by Seagate in 1994 and integrated into the company’s software division, which then became Seagate Software. He has also served as president and COO of Veritas Software and founded, built and led two other successful software companies.
When you stay in a hotel there are so many things that could go wrong. The hotel could lose your reservation, a TV remote control might not work, a light could be burnt out, the air conditioner may be noisy, or in David Kong’s case, the room may not contain an iron and ironing board.
On a trip to Germany to attend a black-tie event, Kong’s attire became wrinkled while traveling. His hotel had no extra irons or ironing boards, but the staff took his clothes and got them ironed. The next day, the staff bought a new iron and ironing board for his room and also sent a fruit basket to apologize for what had happened.
“My impression of the hotel went sky high, because they went out of the way to make it right,” says Kong, president and CEO of Best Western International Inc. “When something goes wrong, it’s an opportunity to build guest loyalty if you take care of the problem correctly.”
The customer experience is exactly what Kong is focusing on to keep the Best Western brand relevant after nearly seven decades. Headquartered in Phoenix, Ariz., Best Western International Inc. is the world’s largest hotel family with more than 4,000 hotels in more than 100 countries and territories. The company has 1,200 corporate employees and annual revenue of more than $6 billion worldwide.
Over the past eight years, Kong has been working diligently to build and capitalize on Best Western’s strengths surrounding the customer experience.
Here is what he and his team at Best Western have done to keep the company’s brand relevant through the years.
When Kong joined Best Western, most of his friends couldn’t understand why he would make the move to Phoenix to work for the midscale hotel.
“I saw tremendous potential at Best Western, and I wanted to be a part of the team to unlock that potential,” Kong says. “When I started as CEO, I wanted to define the key strengths of Best Western but also look at how we can make the brand more relevant and contemporary.”
The Best Western brand is 67 years old, making it the most senior hotel brand. Kong’s objective was to not appear as anything less than relevant and contemporary and to fit with today’s customer tastes.
“In that regard, we had a concerted effort in separating from hotels that detract from the brand, meaning they didn’t provide the cleanliness, upkeep or service that the brand should be known for,” he says.
Best Western split from more than 1,000 hotels during the last eight years and implemented standards that ensured delivery on the brand promise. The hotel family also created partnerships with Harley Davidson, Disney, AAA and others to not only penetrate those customer bases but better position the Best Western brand.
“We’ve done a lot in terms of how we keep the brand relevant and contemporary and deliver on the brand promise,” Kong says. “That was just step one. You have to do the basics.”
Kong also thought that Best Western needed to be known for certain aspects of the hospitality industry, so the company launched the I Care Clean program, which uses UV wands for cleaning and black light for inspecting cleanliness in rooms. It also launched the Descriptor program, which allows travelers to choose the Best Western that meets their needs out of the company’s three different hotels — Best Western, Best Western Plus and Best Western Premier.
“Ultimately, when I talk about unlocking potential and looking at who we are and what we stand for and capitalizing on that, it’s really about what is Best Western,” Kong says. “If you look at how Best Western is different from any other hotel brand, it’s because we have some very caring, sincere, salt-of-the-earth type of owners in our brand who are very passionate about the brand.
“The big opportunity for us was to capitalize on that, because that is something we have at Best Western that nobody else has and we want to turn that into something that’s relevant to the consumer.”
Connect with the customer
To drive that desire forward, Best Western crafted its vision statement to lead the industry in superior customer care. Today, everyone talks about customer service, but in this digital world, the human touch is disappearing very quickly.
“Everybody is focused on innovation, efficiency and productivity like using kiosks to check in and ordering food and beverage from a tablet computer, and there is very little chance to interact with the guests,” Kong says.
“Our industry is the hospitality industry, and it’s about hospitality and caring for people. We have made that our vision, and we started to create programs to capitalize on how we care more than anybody else.”
If you’re looking to keep your brand relevant or expand upon it, you have to find what you want to be best at.
“Take a look around you, study the environment and assess what the unmet need is,” Kong says. “I talked about us living in a fast-paced digital world and ‘humanity’ is disappearing because people are so focused on efficiency and productivity. So our unmet need was that ‘humanity’ was disappearing.
“Then you have to define yourself. Look at yourself and see if you have any attributes that can be leveraged to capitalize on that unmet need. The third thing is to begin to develop a plan to meet your end goal. The last thing is you set measurements and you make continuous improvement.”
To make the message of caring and top-notch customer experience stick, you have to ingrain it into your culture.
“That cultural shift is what we are working on now,” Kong says. “To live our vision, we have to make sure that every single employee cares. We have put together a cultural change initiative that involves selecting the right employees and giving them the right training and resources.
“It involves aligning all our business systems and business processes along this caring initiative, so at the end of the day, all our people, systems and processes are all aligned to deliver superior customer care.”
Creating this culture change is so important because a lot of companies simply have a program of the day, which is a one-time event rather than a system for creating a company mentality.
“Employees can see right through that,” he says. “It doesn’t stick. You have to have the right people in place. They have to feel empowered. They have to feel like they have all the tools to do what it is that you want them to do. There needs to be compensation systems and performance management systems aligned with that, and it has to be customer-centric.
“All those things need to be lined up. That’s how you can affect the cultural change.”
In addition, the leadership team has to be involved for the cultural change to take effect and for it to be sustained.
“If the leader doesn’t walk the talk, then employees see right through it,” Kong says. “If the leader is always, every day, every moment, living what he is preaching, then people get invigorated and inspired by that. The leadership is everything.”
Through these brand relevance initiatives, Kong and his team at Best Western want to be the dominant player in the broad midscale market.
“If you take all the industry measures, whether it is revenue per available room, market share in that respect, our relationships with all the major buyers, whether they are travel agencies, big corporations or independent travelers — in all those aspects, we want to have the superior market share,” he says.
“Every company should set goals for themselves, because if you don’t set goals, you don’t know whether you’ve gone there or not, and you can’t stay on that path.” ?
How to reach: Best Western International Inc.,
(800) 780-7234 or www.bestwestern.com
Back in 1988, actor Paul Newman wanted to find a way to give back to children, and not just any kids but kids who were in serious need of a chance to act like kids. So Newman started the Paul Newman Association of Hole in the Wall Gang camps dedicated to serving children with serious illnesses.
Today, the association is called Serious Fun Children’s Network. It comprises 14 camps, one being Flying Horse Farms in Mt. Gilead, Ohio, that provide summer activities where kids can be kids and forget their illnesses for a week.
“We serve children with heart disease of all kinds, including heart transplants, children with all forms of pediatric cancer, kidney disease, severe asthma, children with autoimmune disease, and children with gastrointestinal disease and blood disorders,” says Mimi Dane, Flying Horse Farms’ president and CEO. “We do traditional camp activities like archery, swimming, boating, fishing, arts and crafts, and a canine program.”
Flying Horse Farms was founded in 2009 and became a member of Paul Newman’s Association in 2011. The group serves children ages 7 to 15. This year will be Flying Horse’s third summer season of camp.
These camps hit home for Chuck Fowler when he was first introduced to the Serious Fun Children’s Network by Cleveland Clinic’s head of pediatric cardiology, Dr. Gerard Boyle. Fowler, who is CEO of Fairmount Minerals, a producer of industrial sand, lost his 14-year-old daughter, Angie, to melanoma.
“One of her great desires was to be able to get outside and play rather than be sitting in the hospital room the whole time, and she wasn’t able to do that,” Fowler says.
Fowler has since been extremely active at Flying Horse Farms. He joined the board of directors, the finance committee, and the building and maintenance committee.
“We took this as an opportunity to honor our daughter Angie but also make it possible for other kids to experience camp and the outside and, as Paul Newman said, ‘Raise a little hell,’” Fowler says.
Flying Horse Farms hosts camps for families, a residential camp for the children with serious illnesses and a sibling camp for brothers and sisters who aren’t ill but would still enjoy having fun at camp. Flying Horse offers two things that make it different from most other camps around.
“One is we have a full-time medical staff here,” Dane says. “We have a full-time medical director and a full-time nursing director for each camp that we have.”
The other thing that makes Flying Horse different from most other camps is that because having a child with a serious illness is a big weight on the shoulders of those families, the camps are free of charge.
“As a consequence, we really rely on our corporate donors, our individual donors and fundraising,” she says. “It costs about $2,500 a camper for a person to come to camp.”
Organizations such as Fairmount Minerals and individuals like Chuck Fowler are critical to the work that Flying Horse has done.
“The corporate support that we’ve had, both at the CEO level from Chuck and from Fairmount Minerals, has been invaluable to us,” Dane says. “Chuck has been very supportive with his time, talent and treasure.”
In addition to serving on the board, Fowler and his wife helped put up the capital to get Flying Horse Farms started.
Much of that success depends on the support of Flying Horse Farms’ donors and fundraising efforts. Flying Horse and Fairmount host an area event called Campfire. This year, the event will be held at Severance Hall on April 19.
“It is a celebration of the legacy of Paul Newman and of Flying Horse Farms,” Dane says. “A reception will begin the evening followed by a performance within Severance Hall and then a dinner and dessert reception will be afterward. We will be joined by Clea Newman, Paul’s daughter. ”
The first Campfire event was held in 2011, of which Fairmount Minerals was a presenting sponsor. It will have that role again for the 2013 event. ?
GrafTech International is pleased to announce that three of its scientists have been recognized for their achievements and contributions to graphite material science.
Dr. Julian Norley, GrafTech’s vice president of corporate R&D, is one of five international experts and the only North American scientist selected to present a plenary lecture at the Annual World Conference on Carbon in Rio de Janeiro, Brazil, in July 2013.
Dr. Tracy Albers, manager of advanced materials, was honored at the Women in Science, Technology, Engineering and Production Awards in Washington, D.C., in February 2013. The award recognizes the achievements of women in science and manufacturing.
Within the GrafTech organization, Dr. John Chang, senior corporate fellow, received the 2012 Chairman’s Award in recognition of his innovation and initiative in the development and commercialization of super-premium needle coke, a key raw material in premium graphite electrodes.
Cleveland Clinic has named a new member to its board of directors and four new members to its board of trustees.
Named to Cleveland Clinic’s board of directors is James A. “Jimmy” Haslam III, owner of the Cleveland Browns and chairman of Pilot Flying J and Pilot Logistic Services, which includes more than 650 retail locations and 25,000 employees.
Those named to the board of trustees are: Tom Glocer, the founding partner of Angelic Ventures, a private investment firm focusing on financial services, media and health care, and previously, he held the post of CEO of Thomson Reuters; Stewart A. Kohl, co-CEO of The Riverside Co., a private equity firm focused on investing in smaller market-leading companies; Jonathan Korngold, a managing director at General Atlantic, where he is a member of the firm’s executive committee and investment committee, head of its global financial services sector and co-head of its global health care sector; and Michael B. Petras Jr., CEO of AssuraMed Inc., a distributor of medical supplies for patients with chronic diseases, and previously, he served as president and CEO of GE Lighting.
Dix & Eaton, an integrated communications consultancy, announced that Chas Withers, president of the firm and a member of its board of directors, has assumed additional responsibilities as COO.
Withers, 47, has been with Dix & Eaton for a total of 15 years but in two separate stints. In his broadened role, he will be responsible for day-to-day operations, client service, staff management and development, practice development, and marketing.
NAI Daus has announced that it elected Alec Pacella as the firm’s new managing partner.
Pacella brings 24 years of experience in real estate investment strategies to NAI Daus. Pacella’s main objective as managing partner of NAI Daus is to continue to attract and maintain a growing base of clients with the best and brightest results-oriented brokers. ?