How Chip Conley uses emotional math to drive leadership practices at Joie de Vivre Hotels

Chip Conley, founder, former CEO and strategic adviser, Joie de Vivre Hotels

Going into 2008, Chip Conley was concerned about the future, and not just for the obvious reasons. Yes, there was the looming possibility of another economic downturn. And with his company launching 15 hotels in a 21-month period, he wondered like many business leaders what impact a recession would have on his organization and its 3,000-plus employees. The difference was Conley’s personal life was also in turmoil.

“We were growing as fast as we ever had at a difficult time,” says Conley, the founder of the San Francisco-based hotel group, Joie de Vivre Hotels. “I also had a family member who was going to San Quentin prison wrongfully. … I had a long-term relationship end. I had five friends commit suicide during that time.”

Soon, the CEO faced the repercussions trying to juggle so many emotions.

“I had my own flat-line experience,” he says.

After finishing up a speech in St. Louis, Conley fell unconscious. In the five to 10 minutes that it took the paramedics to arrive, his heart stopped.

While Conley fully recovered from the heart attack, his experience sent him through a search for meaning, a way to make sense of all the things happening in his life.

“CEOs — you sort of think that they’re above all the emotions and the difficulties and no one should be pitying any CEOs,” Conley says. “You know — ‘Don’t cry for me, Argentina.’ But the bottom line is that I was really confused by all of the emotions I was feeling — a lot of things were falling apart in my life at once.”

As the leader of a $250 million business, Conley knew that he couldn’t be the only one facing this challenge. To empower himself as well as other leaders he did extensive research on the psychology behind emotions and how this translates in business, writing “Emotional Equations: Simple Truths for Creating Happiness+Success.” The book focuses on how business leaders and individuals can become more emotionally fluent, and subsequently, improve their organizations. To date, his transformational leadership practices have been featured in publications from Time to Fortune and The Wall Street Journal.

“In business, what we want to do is influence things,” Conley says. “We want to have an impact. And usually it’s very external: how can I have an impact or influence the world? What I’m saying is if you can influence and impact your emotions, you can actually be more impactful as a leader in the world.”

Become a CEO (Chief Emotions Officer)

Conley’s research on emotions led him to the work of author Daniel Goleman and an interesting finding that the author made in his book “Emotional Intelligence” 16 years ago: that two-thirds of the success of business leaders comes from their EQ — emotional intelligence quotient — while just one-third is due to IQ level or experience. This statistic struck a powerful chord with Conley.

What it means for a CEO is that the best leaders have more influence and control over their emotions. The most effective CEOs are “chief emotions officers.”

“First of all, the more that you’re emotionally fluent and emotionally intelligent about what’s going on inside of you, the more effectively you’ll be as a leader and the happier you’ll be,” Conley says.

The first step in becoming a chief emotions officer isn’t an easy one for all, however. It begins with becoming more attuned to what’s going on inside of you by taking your ego out of the equation.

Conley notices that many young leaders tend to use talking to motivate people. They have a tendency to think that if they give a good speech or make a proclamation that that the emotion will get people excited. While this works sometimes, he’s learned over the years that trying to motivate people without good information can also backfire.

Frequently when people want to get things done, their ambition in tandem with success can lead employees to interpret it as narcissism, Conley says.

“What happens sometimes is a leader of an organization wants to get people fired up and people think that he or she is really out of touch with what they are seeing,” he says. “So it’s a fine line, because you do want to be a visionary as a leader and help people see things that aren’t as obvious, but you also have to keep your feet on the ground.”

Practicing empathetic leadership starts with becoming a better listener.

Conley uses the example of commercial airlines. When jet fuel prices went up and they started adding new charges for items such as amenities, luggage and so on. The exception was Southwest Airlines, which considered the impact on employees when it decided to maintain many of its pre-recession policies.

“The airlines teed off us — the customers — for charging for bags and for food and no longer handing out peanuts, except on Southwest,” Conley says. “So they upset us, but more importantly, they also upset the flight attendants. Because they were going to start charging us for bags, we brought all of our bags on the plane. You turn flight attendants into baggage handlers and the level of the satisfaction of the flight attendants went way down. And guess what? Customer satisfaction plummeted, except at places like Southwest.”

Understanding people’s feelings takes a two-way conversation. So instead of giving a speech about how it’s going to be, Conley now asks his people how they want it to be. As CEO, he frequently had dinners with different groups of employees, taught classes for team members and maintained an open door policy to encourage people to share their emotions and ensure they felt heard.

“When you can understand the subtleties and the nuances of what this person in front of you is looking for in their life, it allows you to deliver on those needs a lot better,” Conley says.

Identify the variables

The challenge in learning to control emotions for most people is becoming more responsive to them. Because people tend to react quickly when something happens to us, they often don’t take time to think about the root cause of emotions or worse, push them off, Conley says.

Due to the stresses of day-to-day business dealings, it might take CEOs days or weeks to realize that something has been eating at them because they were too busy to deal with it at the time.

“Sometimes efficiency takes us away from our emotions and we just ignore them, and then they come out in other ways,” Conley says. “We wonder, ‘Why am I so angry about this?’ and you don’t realize that yesterday this person sort of blew you off when you were supposed to have a meeting with them. And you just had other things to do so you didn’t focus on it.

“So something happens and we react. The lifespan of an emotion physically in your body is usually 90 seconds long, but we actually hold on to it a lot longer than that. It gets stale, but it’s still that emotion that you’re holding onto. Learning how to be more responsive and less reactive is a good thing.”

In a business culture, emotions are contagious, from smiling to yawning and frustration, to fear and anxiety. So not addressing the fear or anxiety of one person — or yourself — can quickly turn into the emotional neglect of many, causing creativity and innovation to suffer.

When Conley researched “Emotional Equations,” he found that although emotions seem fleeting and uncontrollable, they are actually quite predictable. Once you identify the emotion that you or your people are feeling, you need to examine ingredients that created it. Most can be broken down into simple math.

In a study done several years ago, participants were given two choices: get an electric shock now or get an electric shock randomly in the next 24 hours, but it would be half as painful. The vast majority of people in the study chose the option to get the shock immediately.

Why? They had more control over the situation by knowing when the shock would happen, lowering their anxiety.

“Anxiety has two different ingredients: uncertainty and powerlessness, or what you don’t know and what you can’t control,” Conley says. “Once you start to realize this you can actually influence the ingredients and then may influence the emotion.”

Other examples include (Disappointment = Expectations – Reality) and (Workaholism = What Are You Running From?/What Are You Living For?)

By dissecting emotions into variables, leaders can influence the variables to better control the emotions themselves. Take anxiety, for example.

If employees in a company harbor anxiety, they will eventually become distracted and less productive. So when leaders find out that people are anxious about their jobs and finances, they should look for ways to deplete some of the powerlessness and uncertainty they may be feeling.

“If we know that uncertainty and powerless is what creates anxiety, and we know that anxiety makes people less creative, less innovative, less engaged, less productive, then when we have bad news, we better figure out how to package it quickly and get it out to people,” Conley says.

“When people are just stewing about what they think will happen, it becomes a big distraction from what they really should be doing in their work.”

While reassurance with words is always helpful, you also need to take action. Set tangible goals. Provide comprehensive feedback. Get employees more engaged in innovation.

The same goes for anxiety of a CEO. By creating more certainty in your life and taking power over the areas that you can control, you reduce the anxiety that can paralyze you and your organization.

“Even in a time when people are worried about things like layoffs, they can feel like ‘Ah, I have some power or some influence in terms of my effectiveness if I do the following three things,’” Conley says.

Make it a commitment

CEOs who use empathy in their decision-making processes can create cultures with happier employees, who in turn, provide better service.
“What we saw is the more employees felt engaged, the happier they were and the more likely they were to give a great experience to our customers,” Conley says. “So our employee satisfaction went up and then our customer satisfaction went up as well.

“When you get more engaged employees in a service environment, you’re able to put an environment together that allows the customers to get solutions faster. And the employees are going to feel not just engaged but they feel like their fingerprints are all over the business.”

Seeing the power of emotional equations, Conley began teaching them to leaders at Joie de Vivre to help them better identify with their emotions and empathize with the emotions of others. And so far, the impact on organizationwide morale has been overwhelmingly positive.

“Initially people thought, ‘Oh God. Here’s Chip with his New Age stuff again,’” he says. “But honestly, the last few years have been an emotionally trying time for people in the business world. So the fact that I was being vulnerable and authentic about my own fears and frustrations and concerns about life meant that people felt like, ‘OK, I can breathe. I don’t have to be Superman.’”
Giving more voice to emotions doesn’t mean productivity has to suffer either. In fact, it should be the opposite. When people have the safety to express their emotions, they’ll be more empowered to make decisions because the fear of making a mistake or anxiety about their job security won’t be distracting them.

“If you have a problem in a hotel or any kind of business, you want the person right in front of you to solve it,” Conley says. “You don’t want to have them say, ‘OK, well, I’ll talk to my manager.”

While he’s transitioned from the role of CEO, Conley continues to promote the equations at Joie de Vivre as a strategic adviser. Today he focuses on creating one emotion in particular: joy (Joy=Love-Fear), which is also the company’s mission statement.

“Our company name is Joie de Vivre, which means joy of life,” Conley says. “The fact that we have an underlying message and many of us wear these wristbands that say “create joy” is a reminder that that’s what we’re in business to do.”

How to reach: Joie de Vivre Hotels, (800) 738-7477 or www.jdvhotels.com

The Conley File

Chip Conley
Founder, former CEO and strategic adviser
Joie de Vivre Hotels

Born: Long Beach

Education: BA and MBA from Stanford University

What was your first job?

The fries and shake station at McDonald’s

What is one part of your daily routine that you wouldn’t change?

Compensation is a right and recognition is a gift so I try to provide two honest and detailed forms of personal recognition to people I work with daily. If I slack off one day, then I add those to the next day.

What would your friends be surprised to find out about you?

I’m not sure that many people know that I have a 35-year-old stepson, a six-week old baby and three grandchildren, with the oldest being 17 and 3 inches taller than me. As much as Joie de Vivre and our various hotels were sort of like my children and family, I feel fortunate to have these kids and grandkids in my life as they remind me of what’s truly important at the end of the day.

If you could have dinner with one person you’ve never met, who would it be and why?

Herb Kelleher, the former CEO of Southwest Airlines who was in that position for 37 years. He created a compelling culture that walked its talk around the customer coming second and the employee coming first. The airline industry is brutal — cyclical, high fixed costs, lots of unions, big risks — so I’d want to learn more about how he dealt with the emotional roller coaster that came with being CEO for three dozen years. He outdid me by a dozen years since I was CEO of JdV for two dozen years.

How Tony DiBenedetto changed Tribridge’s growth trajectory by launching decision-making

Tony DiBenedetto, co-founder, chairman and CEO, Tribridge

Tony DiBenedetto will never forget “the watercooler incident.”

“We were in our very first office building, and at that time everybody was bringing in their own bottled water,” says DiBenedetto, who is the co-founder, chairman and CEO of the national IT services provider. “We wound up having this meeting to talk about what we were going to do about the water.”

He and the other two principals sat down to deliberate the issue: Would they use bottled water or filtered? What about enlisting a water service? The meeting ended two hours later.

“At the end of that meeting, I looked at my two partners and said, ‘Guys — we’re never doing this again,” DiBenedetto says. “This is insane.’”

Seeing the inefficiency around decision-making, the partners agreed that something needed to change. With Tribridge still in its infancy, they understood that the way they handled decisions in the beginning years would set the precedent for the company’s future.

“What it led to was an acknowledgement that we all three did not need to be included in decisions,” DiBenedetto says. “In partnerships, a lot of times everybody feels the need to vote on every single issue and talk about every issue, and it doesn’t allow you to grow very fast.”

Assign roles

What the watercooler incident demonstrated is the age old problem of “too many cooks in the kitchen” combined with the mistake of bringing in the wrong cooks. When there are too many people involved in a decision, it’s hard for people to accomplish anything quickly or efficiently.

And if people are also participating in decisions that don’t concern them, they won’t have time to handle the issues that do.

What DiBenedetto and his partners realized early on was that most people at Tribridge, themselves included, didn’t really know what decisions were and weren’t their responsibility. They needed to divide the decision-making so that each person and department had clear areas of decision-making authority.

Today, each of the company’s partners has specific items that fall under his decision-making jurisdiction. For example, anything involving strategy lands within DiBenedetto’s arena, and sometimes, all three of the partners.

“I feel like my role here is to drive strategy, so if we’re going to stray from the strategy that is a decision I would want to be involved in,” DiBenedetto says.

Not all decisions in the company should be pushed down the ranks either. When it comes to large financial transactions, debt, M&A or strategy, you definitely want your top leaders to take the lead. As CEO, DiBenedetto still offers his input if there is a major decision that people want feedback on or when it’s a hire or fire decision where his expertise may help.

At the customer level, however, he’s rarely involved in decision-making. When the company opened its first office in Dallas, for example, DiBenedetto told Managing Director Bobby Priestley that he was charged with making all the decisions concerning Dallas — and not just some of them, but all of them.

“People closest to the decision make better decisions,” he says. “We have consultants in the field and 3,500 customers. They’re out there making decisions for a customer. They are in the best position to make the decision. They understand the customer’s needs. They understand what the firm can do.

“So to have them elevate that through a series of management layers is ridiculous.”
Rarely if ever has DiBenedetto seen a good decision that satisfied a customer but impacted the company negatively. That’s because the customer feedback loop can typically tell you whether or not employees are on the right track with their decision-making.

“We’ve got a nice built-in check and balance there — where if decisions are good for the customer, they’re good for Tribridge,” DiBenedetto says.

“In my 14 years at Tribridge, I’ve never felt like, ‘Oh my gosh, this person is such a rogue decision-maker, and I have to reel them in.’ I’ve never felt that at all — zero.”

Say what you need to say

When you have a lot of people making decisions every day, effective internal communication becomes much more critical. If communication breaks down, and decision-making becomes siloed, your company invites conflict within departments and across them.

“We probably have 100,000 decisions made a day, and the way our business works, we have 450 people making those decisions every day,” DiBenedetto says.

“A lot of times we make decisions but we don’t tell somebody either why we made it or even that we made a decision. So you might do something for a customer and not tell them, or you might do something internally and not tell somebody. Being able to communicate the decision is another lesson learned.”

One way to keep everyone apprised of important organizational changes or information while preserving decision-making autonomy is to have set meetings to share updates, talk strategy and discuss progress on goals.

At Tribridge, the company currently holds a monthly meeting for its national leadership team in Tampa as well as an all-company meeting each February, where more than 400 employees meet in-person at a chosen location. In addition, it conducts an all-employee phone call once a month.

Regular meetings are a great opportunity for people to bring topics to the table, submit questions and voice any issues or concerns that could require outside attention. But a two-hour meeting about bottled water? Absolutely not, DiBenedetto says.

In the case of the watercooler incident, it wasn’t the meeting itself that caused inefficiency. Rather, inefficiency occurred because the people in the meeting didn’t need to be there. So instead of vilifying meetings, which can contribute to productive, creative and helpful communication, the company does the opposite — it encourages them.

“One of the culture points for us is the very open communication process,” DiBenedetto says. “Most people here are very comfortable raising topics. So anybody can call a meeting. Titles are not involved. We don’t put titles on our business cards. It’s an open culture where people can call a meeting if they need to.”

However, another rule at Tribridge is that if anyone ever feels like they are in a meeting that they don’t need to be in, they are completely free to excuse themselves.

“They can say, ‘Hey listen, I’m not going to contribute to this meeting, so I don’t need to be here,’” DiBenedetto says. “It’s not looked upon as a bad thing. The culture of the company is not just to meet for meeting’s sake.”

The bottom line is that you don’t want to shackle people with endless meetings or ask them to check in constantly about their progress. This defeats the purpose of pushing out decisions in the first place. Once you give people power over decisions, you also need to give them the freedom to succeed or fail.

“I can’t come back later and constantly start micromanaging,” he says. “So part of it is a leadership point that you’ve got to allow the decision and the success or failure to happen. If it doesn’t happen, then nobody learns from it.”

So after any big decision is made at Tribridge, whatever group that is involved in that area of the business, whether it is a client, a region or the entire company, is also involved in a debriefing process. This step reinforces that every decision, good or bad, is a learning experience for your business and your employees and the key to continuous improvement.

If the decision was good, ask why was it good? How could an OK decision have been better? And what went wrong with the bad ones?

“You have to be able to keep learning from it,” DiBenedetto says. “It’s a skill set. So you get better at making decisions the more decisions you make. The fact that we have these hundreds of thousands decisions being made every day means our people are better decision-makers than if they worked somewhere else.”

Empower the right people

In the tech business, where you’ve got to be rapidly changing and adapting your business all the time, you can’t afford to have a culture that puts individuals on pedestals, DiBenedetto says. When you trust people to make important decisions that impact your customers, you need to feel confident they’re focused on helping the customers, not themselves.

That’s why DiBenedetto prioritizes a person’s cultural fit over his or her resume when he hires someone for a position of authority at Tribridge. Specifically, he looks for whether the person has the trait of “entrepreneurism.”

“The first thing we tell people who come to work here is that when we say ‘think like an entrepreneur,’ there are two elements of that,” DiBenedetto says. “One, keep improving Tribridge; two, really on an everyday basis when you’re working for a customer, pretend that you’re one of their shareholders. When you’re thinking like a shareholder for them, you’re making the best decision in their interest.”

Hiring for entrepreneurism doesn’t mean you only want people who plan to start their own companies or create new products. Instead, it defines a person’s willingness to take risks, make changes confidently, and guide the decisions based on how he or she thinks the customer’s business is going to go, DiBenedetto says.

“Culturally, it’s looking for people who have an entrepreneur’s mindset, who are comfortable making decisions in risky situations,” DiBenedetto says. “The easy decisions aren’t the ones that you are worried about. It’s the tough decisions where you want somebody who has more of an entrepreneur’s mindset making them.”

To get a feel for this trait when hiring, the company’s recruiters first ask job candidates to provide broad situational examples, such as a time when they used teamwork or faced a tough challenge. Then they use “critical behavioral interviewing” techniques to analyze the candidate’s behavior in those different situations. What they did when they made a mistake or when they had to give negative feedback?

“We’re looking at how they handled it, not the answer to the question,” DiBenedetto says.

“You’re not asking them about being honest. You’re asking them about teamwork or something else; and they start telling you the story. And you keep drilling down until you get to a situation where you have witnessed through their story what their behavior was. So it’s a crafty way of doing it.”

In behavioral interviewing, recruiters also look at the way people phrase statements and the subtleties of what they say. This can help you identify red flags in a person’s cultural fit. Big egos, for instance, don’t bode well when you’re making decisions for a team.

“Sometimes you’ll ask somebody, ‘Tell me what someone else on the team does,’ and they’ll answer the question by telling you what they did,” DiBenedetto says.

People who are new to an organization with decentralized decision-making may not feel confident making lots of big decisions right away. But by hiring people that fit well with the culture, demonstrate entrepreneurism, and are team players, DiBenedetto finds that most people can succeed in this kind of empowering environment.

“When you surround employees with people who help them all the time, that aren’t in it for themselves, that plan a team environment, and they are empowered to make decisions, they tend to like it,” he says.

“It translates into better decision-making, faster decision-making and therefore things happen quicker here. There’s a sense of urgency to get things done as a result of that, and that leads to growth.”

While DiBenedetto had some initial reservations about using a decentralized decision-making structure, today he can’t imagine doing things differently at Tribridge. From 2006 to 2009, the company grew its revenues 272 percent, generating $65 million in 2011.

“We’ve grown dramatically over a 10-year period,” DiBenedetto says. “We’ve had 9/11, multiple wars — we’ve had a tech bust, a real estate bust, a credit crunch. Yet our company continues to grow organically pretty quickly, and it’s because we have decentralized decision-making.”

How to reach: Tribridge, (877) 744-1360 or www.tribridge.com

  1. Give people clear responsibilities.
  2. Make meetings more efficient.
  3. Hire people who can make decisions.

The DiBenedetto File

Tony DiBenedetto
Co-founder, chairman and CEO
Tribridge

Born: Brooklyn, NY

Education: Florida State University

What was your first job?

A paper route

What is one part of your daily routine that you wouldn’t change?
Waking up my daughter

What would your friends be surprised to find out about you?
I write a lot, especially poetry.

What’s the biggest challenge in the future growth of Tribridge?

The strategy for us to get to the next level has been built around something we call ‘Concerto,’ which conceptually is the brand that we’ve coined for the business we’ve moved to the cloud. If you think about Tribridge, we do services for customers and we use a lot of different technology. We’ve built a private cloud and we’re offering this technology that’s some Tribridge intellectual property as well as Microsoft’s applications. We’ve integrated that and offered it to our customers. … The next five years if I look at tremendous growth — that is it. With that come some opportunities and challenges. One is where are the next 500 consultants going to come from? We’ve got to find the next 500 team members.

What trait does a leader need to be successful in today’s business environment?
With the really turbulent economic times we’ve had the last 10 years, we’re lacking the thinking big — blind confidence. We’re lacking the ability for our leaders to think bigger. Because it’s humbling to know that things are unpredictable, we all get stifled in our decision-making. Thinking bigger is something I see as an attribute that allows people to fight through the stifling news that you get from watching or reading the news. We’ve got to ignore that, keep thinking big, expect more. Expecting more is really about how can I make this better? How can I keep getting better? So if I’m thinking big and expecting more at the same time, that’s just driving success.

Paul A. Larkins: Achieve peak performance

Paul Larkins, President and CEO, SquareTwo Financial

Every organization has a culture, whether it is purposefully created or not. A great culture, when combined with great operations, contributes to a healthy, productive work environment that spurs employees to reach their peak performance.

Culture is multifaceted. It is unique to each organization and grown organically, which makes it difficult to define. That said, culture is best described as the personality, character and soul of a company. It includes the concrete aspects of work life, such as compensation, benefits and career development, as well as the non-concrete characteristics formed through employee and leadership attitudes, behaviors and values.

Culture is also an extension of your brand and reputation, which means it impacts all your stakeholders, whether clients, partners, investors or the public.

Unfortunately, some companies discover the important role of culture only after they’ve had a crisis, whether a disgruntled employee, product failure or financial misstep. A company that allows operational achievement to rule the day can quickly lose sight of the importance of building strong culture. While operations might determine what goals must be achieved, company culture defines how those goals are met, and to what degree of success.

Recipe for a strong culture

The secret to creating a strong company culture is two-fold: equal parts tightly-knit community and recruitment and retention of a team of A players who focus on the what and the how of peak performance achievement. Top performers are driven, ambitious, innovative and hardworking, and they typically excel at working as a team toward a common goal.

Building a strong culture doesn’t happen overnight. It is an active process that is the responsibility of every employee. Culture cannot be “handed down” from the top, although it is leadership’s responsibility to create an environment for culture to flourish.

For a strong culture to take root, management must provide employees with the tools they need to excel — from health insurance benefits and fair compensation plans to the right technology and resources to do their jobs.

The company also needs to nurture a healthy cultural environment that inspires participation and engagement from the entire workforce. This includes building a work community that inspires camaraderie between colleagues and helps employees feel eager to come to work each morning. In such an environment, employees are working under the best possible circumstances and motivated toward peak performance as individuals and as an organization as a whole.

Putting values into action

Once a company has the plan in place for strengthening its culture, the next step is to define company values and put them into action. The values of SquareTwo Financial are focus, alignment, accountability, integrity and trust. Here’s what it takes to transform those values words into daily practice.

Alignment

Every company operates as an interdependent community where it is in everyone’s best interest to help colleagues succeed. The finance and HR departments may not seem to have much in common when, in fact, employees from both departments are looking beyond their specific roles to advance a common company purpose.

Accountability

Employees are encouraged to evaluate their own actions and their consequences, and are rewarded for being action-oriented, results-driven and passionate. Top-performing companies don’t overlook accountability. Instead, they are deeply obligated to excellence, with employees expected to bring their A game to work every day.

Integrity and trust

Character is essential to long-term success, personally and professionally. Sound moral and ethical principles are part of culture; they are traits that hiring managers look for when recruiting. Employees are encouraged to — and recognized for — always acting in the company’s best interest. They also strive to build strong, meaningful relationships with each other, partners, clients and other stakeholders.

Focus

All employees are focused on achieving individual goals as well as the company’s strategic objectives. Employees have a deep understanding of how they fit into the broader organization. And as a result, they are constantly evaluating how to better achieve their goals, and goals of their department and the company.

Paul A. Larkins is president and CEO of SquareTwo Financial, a leader in the $100 billion asset recovery and management industry that along with its network of legal partners employs about 2,000 people in North America, including 160 in the state of Florida. For more information, email [email protected] or call (303) 296-3345.

How Rick Dawson addressed the challenges of growth at Bal Seal Engineering

Rick Dawson

Rick Dawson, president and CEO, Bal Seal Engineering Inc.

At some point in the past few years, it hit Rick Dawson: He had hundreds of experts working in his business, but no one was really working on the business.

The president and CEO of Bal Seal Engineering Inc. had 450 employees around the world. Just about all of them were performing at a high level, helping to vault the industrial solutions company into an era of growth, while most businesses were dealing with the effects of the recession.

“That has been the good news for us,” Dawson says. “A lot of businesses have been struggling, but we have been growing at a rate of just over 15 percent per year.”

Last year, the company generated $75 million in revenue, up from $64 million in 2010. The sailing was smooth, there were no alarm bells ringing at the company’s headquarters. Bal Seal was in a rare place of peace amid tumultuous economic circumstance.

Yet, Dawson sensed trouble forthcoming if he let the company continue to ride on its own momentum. Specifically, he saw a company that could strain itself by growing too fast, and growing without a well-defined strategic plan.

“We have been expanding into new markets and new regions,” Dawson says. “That definitely puts a strain on your capacity and resources. So, working with our leadership team, it has been important to establish clear goals and objectives of what our on-time delivery expectations are, what our product development requirements are, what our sales goals are. Then, make sure everybody clearly understands the direction and measures those results.”

Dawson has worked with the leadership team at Bal Seal to formulate a strategic plan that could help the company better manage growth, but that is only part of the equation. He and his team have also needed to work tirelessly to create alignment on plan throughout the company’s associates, spread among offices in Colorado, The Netherlands, the Czech Republic, Hong Kong and Japan, in addition to the company headquarters in Foothill Ranch.

Start at the top

Like many businesses, Bal Seal organizes yearly strategic planning meetings. In those meetings, Dawson and his management team plot out the umbrella goals and objectives for the coming year. The companywide goals are then used to formulate goals for each division and team within the organization.

“We develop functional goals and objectives for our operations team, sales team, health and safety team, and so forth,” Dawson says. “Those are then put into even more specific goals and objectives.”

The goals and objectives are what Dawson terms “smart goals” — specific, measurable, achievable and realistic. Dawson wants his employees to stretch beyond their comfort zone at times, but not so far that they’re reaching beyond the realistic capabilities of themselves or the company at that point in time. Goals need to be ambitious, but still realistically achievable.

Dawson and his team monitor the progress of the departments in implementing the cascaded goals through a series of stoplight meetings, which got their name from the three-color system assigned to the progress level of each objective.

“It’s a two to 2½ hour meeting each month, and each department manager is responsible for reporting the progress on their goals,” Dawson says. “Green means there are no problems and there is nothing to really talk about. Yellow means you have a problem, but you have worked within your own departmental team to come up with a solution. Red means you have a problem and haven’t been able to come up with a solution. If you have an objective that you have classified as “red,” we can then schedule a separate meeting to assist in dealing with that problem.”

Though Dawson likes to limit the number of meetings throughout the company, he has found value in the monthly stoplight meetings, which have helped to identify and address problems before they become major issues that compromise the pursuit of a department’s goals.

“The operations team was working on an on-time delivery objective, and what they found was that they were struggling to get a specific order out on time,” Dawson says. “It was an aerospace customer, and we had lead time issues with getting materials in on time. Then on top of that, we were having capacity issues.

“But by communicating with the sales team, those of us on the management team were able to identify exactly what they were struggling with, and the history of the customer that were impacted.

“Once we did that, the sales team was able to step in and get some relief from the customer. We were able to explain the delay, which was resulting from raw materials that were delayed offshore. Once the customer understood, it provided relief to the operations team, which helped us get the orders ready on time.

“Because we were able to get together and talk about it, we were able to identify the customer and the problem, and the problem was resolved before the product was late to the customer.”

Create alignment

As the layers and locations within your company increase, creating and maintaining alignment on organizational objectives becomes a more difficult and more involved task to accomplish. With 450 employees, Bal Seal doesn’t face the communication challenges of companies that employ many thousands. But with locations around the world, the management team still had its work cut out.

To help strengthen alignment, Dawson does what a lot of CEOs do: he logs air miles, visiting each of Bal Seal’s facilities twice a year, and having in-depth meetings with the facility directors at each stop.

“It’s important that you’re promoting the message to everyone, from the machinists to the managers,” Dawson says. “I also want to reinforce the messages laid out in our plan at the start of the year. We know at the beginning of the year what the schedule is for Europe, for Asia, but it is a constant challenge to make sure the staff remains aware of it, and is kept up to date on what is going on.”

There is a limit to how far down in an organization a CEO can, and should, reach. If the company is large enough, your place is not managing the factory floor. But you still have to construct a system that allows you to connect with everyone in the organization, from the top to the bottom.

If you can keep your finger on the pulse of the mood and attitude of your lowest-rung employees, you are in a much better position to determine whether your messages are permeating every layer of the company. You are also in a much better position to cut off the rumor mill, should issues arise.

“For example, we’re currently building a second facility in Colorado Springs,” Dawson says. “When I said we were building a new facility there, what everyone in the company heard was,‘We’re moving the company to Colorado Springs.’ That wasn’t the case. We’re expanding there. That’s where having a means of staying connected to everyone in the organization is so important. I had to reaffirm that we’re continuing our growth and expansion, not relocating.”

Dawson didn’t have to reinvent the wheel every time he presented the message to a new audience, but he did have to tweak it in a manner that addressed the questions and concerns of whichever group within Bal Seal was receiving the message.

“It’s important that you’re promoting the message to everyone, from the machinists to the managers,” Dawson says. “To the machinists, you’re promoting the idea that the expansion allows for more job security. You’re soliciting input from the managers, and on the executive level you’re promoting the vision for the overall corporate goals, and the deliverables in order to achieve those goals.

“The communication and interaction is something constant, something that you can’t push into the background.”

Another aspect of alignment centers on the widely-held business truism, “What gets measured, gets managed.” If you want to create alignment around organizational goals, you need to create universally-understood methods of measuring them. Usually, that means measuring the statistical categories most important to the success of your business.

“I measure cash, I measure sales, I measure on-time delivery, and I measure safety, which is my number one category,” Dawson says. “So you’re monitoring those on a regular basis, and talking with your managers about it.

“You are going to view your management team as something of a mouthpiece, since you can’t be everywhere at once. So you have to help them stay aligned on the plan, and monitor what they’re saying to their teams. You just continue to provide guidance.

“If you manage the relationships with your managers, you can better manage the flow of communication throughout the company. You oversee those relationships with your managers by ensuring that you are comfortable, and they are comfortable with the vision and direction, and thoroughly understand it.”

Build your team

Consistency is one of the biggest keys to maintaining a message for a large audiences over an extended period of time. That means consistency in how you communicate, when and where you communicate, but it also means maintaining consistency in the structure of your management team.

Turnover will occur. If a member of your team is talented and driven enough, and has reached a ceiling in your organization, that person will likely leave when a better opportunity comes along. So it’s prudent to develop new leaders from within.

When the time comes to fill a space on his management team, Dawson prefers to promote internally, looking outside the organization only when he believes there is a need. Internal candidates have proven that they can help promote and execute the strategic plan. But even when promoting from within, it’s not an exact science when looking for those who have the right competencies and right attitude.

“You break your people into quadrants,” Dawson says. “There is willing and able, willing and unable, unwilling and able, and unwilling and unable. Obviously, you’re looking for willing and able. If you have someone who is willing and unable, you have a performance issue. If you have someone who is unwilling and able, you have to see if you can educate them in the process. If you have unwilling and unable, you’re probably not keeping them.”

To hit for the highest possible willing-and-able average, Dawson wants to see prior evidence of accomplishment, creativity and integrity in the work experience of job candidates.

“A lot of people will come into an interview and say ‘I’ve been the manager of sales,’ but when you ask them how they ran their sales organization, when you ask them about their vision and direction, they can’t get down to specifics. If that’s the case, they’re probably not the right fit for the organization.

“After you hire someone, you’re continuing to assess them. You’re working with the person to set goals and objectives, and if they’re complying and conforming, you’re doing great.

“If you are seeing a continuous pattern of not meeting goals and objectives, then you have to be willing to be very honest and candid with the person, explain to them what the issues are, and from there, you can assess the next level of whether they’ll be a fit for your organization moving forward.

“But it is important to continue to work with the person to help them succeed. Building a team is a continuous process of communication and direction.”

How to reach: Bal Seal Engineering Inc., (949) 460-2100 or www.balseal.com

The Dawson file

Rick Dawson

President and CEO

Bal Seal Engineering Inc.

Education: Mechanical engineering degree, California State University, Long Beach; MBA, Pepperdine University

What is the best business lesson you’ve learned?

The No. 1 rule I’ve learned is that you can never run out of cash. You need to have liquidity in the business. You also need to have an ability to make strategic and tactical changes. If you have a strategic plan, implement it and then measure it.

What traits or skills are essential for a business leader?

I think the No. 1 thing is communication. On top of that, you need perseverance, because things don’t always work out the first time. It is also important that as a leader you are willing to take the time to understand your people and communicate with them.
What is your definition of success?

To meet the plan you set out to accomplish. If you want to grow the business at a certain percentage, success is meeting that number.

Drybar takes LA by storm with its attention to detail and the love of its customers

Michael Landau, CEO, Drybar

Alli Webb, founder, Drybar

It was a dream that made absolutely no sense to Michael Landau. But this was his sister and he loved her very much and so he set out to help her make it happen.

“I not only knew nothing about the hair and beauty business when this started, I also have no hair,” Landau says. “I’m completely bald and I didn’t understand why women would want a [professional] blowout, why they needed a blowout or why they would pay someone else to get a blowout.”

Landau’s sister, Alli Webb, had launched a small mobile hair blowout business in Los Angeles and it really took off. It was so successful that she couldn’t keep up with the demand, so Landau decided to step in and try to take the concept to the next level.

“I lent her the money to do her first store,” Landau says.

The response was staggering.

“We had an eight-chair shop in Brentwood,” Landau says. “When you’re in the restaurant business, sometimes it’s a good problem to have when you can’t get a reservation because you seem hot. For us, our clients were getting so annoyed that they couldn’t get in.”

Landau and Webb quickly opened three more stores and they were just as jammed with business. This new company named Drybar simply could not grow fast enough. Waiting lists were 40 and 50 people deep on the weekends and customers were driving from all over the city to get their hair blown out.

“It was fast and furious,” Landau says. “For the first year, it was all hands on deck, chaotic, working around the clock 24 hours just to keep the door open and everything happening the way it should.”

The company has grown in a little more than two years to more than 850 employees who do about 24,000 blowouts each month. A dozen new locations are expected to open this year, doubling the size of Drybar.

“It was just amazing how people were coming from what felt like all walks of life and they were traveling an hour or an hour and a half from different cities all over L.A.,” Webb says. “It was really amazing and humbling and gave us the fuel to keep going.”

So what’s the key to succeeding when your business grows infinitely faster than you ever imagined it could? Landau says it all comes back to satisfying your customers, even if that means chasing them out the door, following them down the street and buying them a cup of coffee to make them happy.

Keep your customers content

If you asked Webb about the moment her brother chased a disgruntled customer out the door at Drybar, she might tell you Michael had it coming. It was his zeal, after all, that often left the store bursting at the seams.

“In those very early days, Michael would be in the shop sitting in the back answering the phone and telling anybody, ‘Yeah, come in, come over!’” Webb says. “I was like, ‘No, stop, because we had a line out the door.’ We didn’t have enough stylists, but Michael couldn’t say no because he was just so happy and excited to have all the interest.”

But back to the unhappy customer. She saw a sign that said walk-ins were welcome and came in, but quickly discovered it was going to be a long time until she was serviced. Then she had a bad experience with a cashier and that just made things worse.

“I witnessed this whole thing,” Landau says. “I watched the woman leave the store so upset. So I followed her out and ran down the street because I was determined to not let this person leave so upset.”

He brought gift certificates and tried to give them to her as a peace offering. She wouldn’t accept it and continued walking and Landau thought he had indeed lost her. But then he decided to give it one more shot.

“It was in front of a Starbucks and I said, ‘It’s going to ruin my week if I can’t apologize properly to you. Can I buy you a cup of coffee?’” Landau says. “She actually got a kick out of it and we went inside, and I bought her a cup of coffee and I started talking to her.

“The bottom line is this woman ended up not only becoming such a great client, but she told so many of her friends about that story and how the owner did this and did that.

“We learned early on that you can take a negative situation and really turn it into a positive. It’s one thing when people just like you. But it’s another thing when a leader is put to the test in terms of dealing with a negative situation or a problem. That’s where you can show your true colors and turn a customer around and keep them for life.”

When you have a business that is really taking off, that’s obviously a great thing. But there’s also the potential to create hard feelings if someone doesn’t get to experience your business because of the high volume. You won’t please everyone, but you’ve got to try.

“We’re dealing with a high volume of customers and sometimes, things go wrong,” Webb says. “Michael and I established early on that we care so much about the customer and the customer experience and we want everybody to be happy and we don’t want to let even one person leave unhappy. You see that with our girls and all our people in the shop how they bend over backward for the customers.”

In an attempt to ease the chaos in the stores, and reduce the risk of another disgruntled customer storming out of the store, Landau and Webb decided to move the act of taking reservations to an off-site location.

“We hired and trained very quickly a call receptionist who could work from home and just plug in the Internet phone to the computer and we could route our phone calls to them,” Landau says. “It was such a breath of fresh air because now our customers were calling and it was a quiet place where they could have a conversation, the client could hear us and we could hear them. That really took the pressure off in one certain aspect in a major way.”

Manage your culture

In the styling business, it’s obviously critical that you have people who can do great things with their hands. But if their personality is abrasive, you may not get much return business.

“We’ve come across great stylists who are amazing at hair, but they are just not all that friendly or personable,” Webb says. “To us, that’s not a winning combination and that’s not what we look for. Unfortunately I’ve had to let stylists go who were fantastic at hair, but they were divas or they didn’t share our over-the-top customer service. That is definitely a challenge.”

Landau learned just how much people value great customer service and a welcoming personality when he finally gave into his sister and let a stylist go who had great skills, but not a lot of personal skills.

“Alli really wanted to get rid of her and I was so scared because she had such a following and so many people coming to her,” Landau says. “We debated ad nauseam over it and Alli won and we got rid of her. I have to tell you she was so right. The whole attitude in the shop changed. There was such a change in the energy and the vibe of the shop in terms of the other stylists and how they got along.”

Webb says you can’t underestimate the value of having team players who your employees and customers like being around.

“If you’re causing problems with the staff and the stylists and bringing things down, it’s just not a good fit,” Webb says. “It’s not going to work.”

Landau says Drybar has found success by developing leaders and grooming them for more responsibility in the company.

“As we grew and became more sophisticated organizationally, we tried to bring in more experienced managers,” Landau says. “It didn’t work as well. They didn’t have the respect of their co-workers. For us, it just works so much better when we bring people from within that we’ve had a chance to get to know and we’ve nurtured.”

You need to share with people what your vision and culture is all about and make sure they understand it so they can live it with your customers.

“There’s a lot of training that we do, but I think it’s more philosophical,” Landau says. “We’ve worked on defining and articulating what our core values are as an organization and making sure our key managers have an active part in that.

“That way, there can be broad-based buy-in for that, and you’re making sure you’re building a foundation where people really understand what the vision is. They can become leaders within their individual organizations and kind of extend that.”

Get good people

When a business is growing as fast as Drybar, there can often be a lot of pressure when it comes to hiring. You need people fast and you may be tempted to skip a few steps just to get people out on the floor faster.

It would be a mistake. But there are ways you can learn more quickly whether a person is a good fit for your organization.

At least for me personally, I feel like I can tell when I’m interviewing somebody if they’ve done their homework on Drybar,” Webb says. “They know a lot about us. Our website is pretty extensive and they come in with that hunger and excitement saying, ‘Oh, I’ve been looking for something like this. I love styling hair and I really want to be part of it.’

“You can get that as opposed to the person who comes in and says, ‘Oh, you guys don’t do haircuts?’ That person hasn’t taken the time or the interest to really see who we are. That would create a huge red flag for me. You haven’t even checked out our website.”

If a prospective employee is more concerned about their own future, that’s not always a good thing. You want people who want to grow as individuals, but in an interview, you want people who are excited about what you do.

“You really have to dig deeper,” Landau says. “We would rather have somebody who is so passionate about what we’re doing and our brand and about what’s going on and who really wants to be here because that person, we can teach certain stuff. But you can’t teach that passion. You can see that attitude.”

Webb says she always has her eyes open for people who show the ability to be a leader so that she can provide encouragement and get them to show even more.

“We’re always looking at people and we’re always even encouraging stylists who are showing more leadership capability and tremendous enthusiasm and passion for the brand and the company to consider management,” Webb says. “We put a bug in their ear and that starts it.”

How to reach: Drybar, (877) 379-2279 or www.thedrybar.com

The Webb and Landau Files

Born: We were both born in Long Island, N.Y., but grew up in Boca Raton, Fla.

Education: For 25 years, our family had a retail clothing store that both Alli and I grew up in, sweeping the floors. It’s where we really learned many of our philosophies on customer service. We come from a family that is a fourth-generation retailer.

It was just what all the kids in our family did.

Webb on working with her parents: I feel like I learned so much early on. My first job was actually in retail because that’s all I knew and that’s what my parents did. But I remember so well being young and treating wherever I worked like I owned it because that’s what my parents did.

I feel so incredibly grateful for how much of those values we got from our parents without even really knowing it. A lot of that comes through in our business now and it helps us to be successful.

Who has been the biggest influence on Landau?

Seth Godin. I speak to him or e-mail him on a daily basis and he’s just been a mentor of mine. His philosophies on marketing have shaped everything that I do and I definitely, without being overly dramatic, wouldn’t be who I am today without Seth.

Who has been the biggest influence on Webb?

Michael thinks it’s Michael. He has taught me a lot, even in Drybar, with more of the business side. I still kid him that I’ve taught him about the hair side. But I think if I had to pick, it’s probably mostly my parents.

Takeaways:

Keep your customers happy.

You can’t cover up a bad attitude.

Encourage people who show leadership.

How Jim Snow and Gold’s Gym confronted an attack by discount competitors

Jim Snow, President, Gold's Gym International

When Jim Snow became president of Gold’s Gym International three years ago, he stepped into a tough challenge. The recession was in full swing, and retailers were closing left and right, leaving behind a glut of cheap, readily available retail space. This void presented a ripe opportunity for operators of tiny, low-overhead gyms offering super-low-priced monthly memberships.

The discount gyms were feasting on the opportunity, thereby cutting into the market share of many of GGI’s smaller gyms, in some cases deeply.

“It was pretty clear; when I arrived, I started holding meetings with all of my stakeholders to learn about the business environment, and this was one of the key threats to the business that everybody was searching for an answer to,” says Snow, who took the helm at Gold’s Gym International in 2009 after having worked for five years as regional vice president at Omni Hotels, a sister company of Gold’s.

In its many years of existence, Gold’s has carved out its territory as an operator and franchisor of full-service gyms: large facilities covering 40,000 to 60,000 square feet that offer a wide array of fitness services and amenities. The company, which has 700 gyms and more than 3 million members worldwide, has always fared well in the full-service segment of the fitness market.

In more recent times, GGI has also begun operating and franchising fitness-only gyms — midsize facilities covering 20,000 to 25,000 square feet that offer fewer services and amenities than the full-size gyms, at somewhat lower membership rates. These fitness-only facilities were the ones that were feeling the pinch from the rise of the discount microgyms when Snow came aboard.

“Our full-service gyms are really made up of two kinds of gyms,” Snow says. “We have the big full-service gyms with all the amenities: pools, basketball courts, group exercise programs, etc. And as we looked at the marketplace, we saw that these gyms continue to compete very well because they offer so much value.

“But then we have a segment of fitness-only gyms that are in that 25,000-square-foot range. They don’t have the basketball courts, the racquetball courts, the pools, those kinds of things. They were more susceptible to this new low-cost discount gym that was coming into the marketplace.”

The discount operators were opening scads of smaller gyms — 8,000 to 15,000 square feet — in areas near GGI’s fitness-only gyms. And because the microgyms operate on lower overhead and can therefore afford to offer super-low membership rates, they began luring Gold’s customers away.

“In those markets where they built the discount gyms, there was a lot of attrition,” Snow says. “We started feeling the effects of the low-cost gyms on our product. Sometimes it was as much as 25, 30 percent of the volume. That can be pretty significant to an operator, especially an independent operator or franchisee who’s got their entire life on the line and is personally guaranteed against everything.”

The proliferation of discount gyms had begun a couple of years before Snow joined GGI, and the company hadn’t taken any action to counter it.

“This started happening in ’07, ’08, and it grew from there,” Snow says. “I came in October of ’09, and it had not been addressed. So it was a pressing priority. It was critical that we resolve this problem.”

Weigh risks, benefits

Snow and his leadership team began looking at the idea of creating a new type of gym to compete directly with the discount microgyms that were cutting into Gold’s market share. There were pros and cons to be weighed. The weigh-in became a prolonged process. Eventually the pros prevailed.

“Once we decided to consider this opportunity, we pulled my team together,” Snow says. “My stakeholders in this were the GGI team, the senior executive team, the management team, the franchisees and the board of directors at our parent company, TRT Holdings.”

Adding a new product line to Gold’s traditional full-service line of gyms would be a major shift for a company that hadn’t changed its offerings much since its birth in Venice Beach, Calif., in 1965.

“Nothing had been added to our gym line in 45 years,” Snow says. “We’d been the same company offering the same product, basically, for a very long time. So this would be a major change in direction. We had to think it through: Should we compete in this low-cost, high-growth segment?”

There were significant risks to take into account.

“We had potential risks to GGI that we needed to work through and get everybody comfortable with, and I needed buy-in from the senior team here,” Snow says. “One of the major risks was possible damage to the brand. Not all line extensions work.

“So we went through a pretty long and arduous process of understanding this line extension before we jumped into it, because our brand is the most valuable asset we own. The Gold’s Gym brand has been around a long time. It’s a storied company. It has tremendous value, and you don’t want to damage that brand by making a mistake.”

The company also had to weigh whether it had the financial resources and manpower it would need to put a new brand into the marketplace.

“You don’t just go out and launch a brand,” Snow says. “It takes a tremendous amount of work from everybody and financial commitment. There were many questions that needed answers. Did we have the internal talent required to do it? Could we build these gyms? Could we put them up quickly? There were a lot of pieces to the puzzle when you start looking at launching a new brand like this. So we had got a lot going on here, because we’ve got a lot of divisions, and this would be a major undertaking by Gold’s if we decided to move forward with it.”

On the other side of the ledger, GGI’s leadership team also determined that the potential upside was significant.

“It seemed like an interesting opportunity,” Snow says. “As a full-service gym owner and operator, as well as a major franchiser, the low-cost gym seemed to provide a lot of advantages to our brand.”

Among those advantages: A new line of low-cost gyms would enable GGI to quickly increase its distribution of gyms across the country because the gyms could be built quickly. The gyms would be relatively easy to run, requiring only about half the management team that a full-service gym needs. In addition, they were projected to become profitable quickly.

“In the end we determined, after we’d gone through this process, that there were enough potential advantages and the risks were low enough that it warranted proceeding,” Snows says.

Lay out the plan

The next steps involved conducting consumer research studies, creating the new brand’s concept and image, creating financial models with best- and worst-case scenarios for the new line of gyms, getting the company’s franchisees on board with the new concept, and then, ultimately, presenting the idea to the company’s board of directors. It was a yearlong process in all.

“We presented it to the board of directors in the late fall of 2010,” Snow says. “We had a finance analyst who had completed a compelling set of financial models, and we presented those to the board. And the board, after quite a bit of discussion, agreed to fund the Gold’s Gym Express development on a beta-test basis. That gave us the funding mechanism we needed to move forward, to build between six and eight Express gyms.”

Over the next year, GGI wound up building six Express gyms in a variety of markets around the country to test the concept. The Express gyms offer Basic Memberships for $9.99 and Gold Memberships for $19.99 a month, as compared to the $30 to $50 monthly memberships at GGI’s full-sized gyms. All the Express gyms have performed well in their test markets.

“The beta-test gyms are performing much better than our original models projected,” Snow says. “One of the things we look at is upsell percentage: the percentage of customers who buy the Gold Membership instead of the Basic Membership because of the extra benefits that come with it, like tanning, massage, half-price drinks, and unlimited guest passes.

“Our models projected that these test gyms would have an upsell percentage of about 20 percent. We ended up with an upsell percentage over 50 percent — much higher, obviously, than we thought we would experience, and also much higher than the industry average.

“Our projections are at least a year ahead of schedule in terms of what we thought these test gyms would do. They break even much faster than we thought they would, and they’re growing to maturity very quickly, much quicker than we had projected in our pro formas. Also, they’re ranked right at the top of all of Gold’s Gyms in terms of service and customer satisfaction — and that’s coming right out of the chute.”

Based on these test-gym results, GGI decided this past spring to move forward full-throttle with development of the Gold’s Gym Express line of small, low-cost gyms.

“In the last couple of months, we made the financial commitment to move forward and to build up to 50 new Express gyms in 2013,” Snow says. “That’s where we’re at right now. We have 30 to 40 leases that we’re working on. My guess is we’ll build 10 in the first quarter of 2013 alone. And we’ve got a few gyms that will have leases done this year; we’ll probably get another six to eight done this year. Then we’ll probably get an additional 25 to 50 done next year. Our franchising division has about 30 gyms lined up right now for new franchisees.

“We’ll probably end up with between 50 and 100 Express gyms by the end of ’13, including those that will be in the pipeline. So we feel good about that. It’s right in line with our projections.”

Proceed with caution

Asked what advice he would give executives faced with similar challenges posed by low-cost competitors moving in and grabbing market share, Snow says it’s important to avoid the knee-jerk reaction of simply lowering your price and your standards to meet the competition head-on.

“Don’t jump to conclusions about discounting until you’ve researched and understood all the possibilities available to you,” Snow says. “Discounting is typically the first reaction that everybody has, and it’s typically one of the worst things you can do. Your services and your product line are based on certain things you did when you built the product to maintain certain margins.

“So just going and cutting your rates and allowing your product to stand as is, while this will probably drive some volume, will destroy your margins. And it will be very difficult to ever come back from that.”

Snow also recommends that if an executive is considering introducing a new product line that will affect the company’s overall brand, it’s crucial to avoid getting ahead of yourself and hurrying the process.

“There are times when you would like to move faster as a leader,” Snow says. “But it’s difficult to move fast until your internal teams have bought in. You can’t go forward without them. Now, not everybody is going to jump on board right away. But as long as they jump on board once the decision is made, you’ll be OK.”

In the end, as with most important tasks that businesses face, teamwork and group sacrifice were key elements that enabled Gold’s Gym International to successfully grapple with the tough competitive challenge it faced.

“There’s no problem that we would cross here in this company that any one person believes they have the perfect answer to,” Snow says. “We operate as a team. It’s a team environment. The team works together to help work through problems. We use the leadership and knowledge and expertise from all our people coming from different backgrounds to help us make the right decisions and move forward.”

HOW TO REACH: Gold’s Gym International, (972) 444-8527, www.goldsgym.com

THE SNOW FILE

Jim Snow

President

Gold’s Gym International

Born: Manhattan, Kansas

Education: Bachelor’s degree in marketing, Kansas State University

What important business leadership lessons did you learn during your time in school that you use today?

My marketing classes helped me understand the value of consumer studies, customer focus and the need to drive top-line revenues. Today, my primary role is to balance revenues, customer service, and the owners’ priorities. And everything starts with revenue. You’ve got to look for it everywhere and drive it incessantly.

What was your first job, and what important business leadership lessons did you learn from it?

One of my first jobs coming out of college was with Marriott Corp. Marriott gave me an excellent basis of training for my future career. One of the things they taught is that they expect their managers to work hard and perform at a very high level. I took that credo and told myself I’m always going to be the hardest working person I know, and I’ve tried to do that throughout my career.

Do you have an overriding business philosophy that you use to guide you?

You’ve got to have a dynamic culture that supports your associates. And you’ve got to have an organization that takes the needs of the customers into account, and a mentality that doing those things will take care of your owner’s requirements.

What traits do you think are most important for an executive to have in order to be a successful leader?

You’ve got to be transparent. You’ve got to be courageous enough to go the uncomfortable route when you don’t have complete buy-in. You’ve got to be confident in your direction. You’ve got to think big. And you’ve got to be willing to swing the bat.

What’s the best advice anyone ever gave you?

Be aggressive and set the expectations very high for your company.

G.A. Taylor Fernley: Like a boss, or a leader?

G.A. Taylor Fernley

G.A. Taylor Fernley, president and CEO, Fernley & Fernley

The big challenge for so many executives is that they have been reared in “boss mode” rather than in the culture of leadership.

Bosses too often believe that they have to come up with all the innovative answers. Consequently, their people will sit and wait for the boss’s next epiphany. It’s old-school thinking!

Most entrepreneurial ventures are born because someone on a lower level within a company had a good idea, but the boss didn’t listen. When companies instead have leaders of the ilk defined by Thomas L. Friedman in his June 2011 The New York Times column, they continue to flourish and evolve toward the next level as opposed to becoming stifled and destined to “expire.”

Friedman says, “The role of leaders today is to inspire, empower, enable and then edit and meld all that innovation coming from the bottom up.”

Why? Because even bosses eventually run out of creative ideas. With that in mind, you have to ask yourself if you are an extreme or a reluctant boss.

With some bosses, in extreme cases, there’s not much that can be done. They build a cadre of yes-men around them and everyone waits for their command or their next crazy idea to execute. But at least the yes-men have jobs — although sometimes at pay beyond their true value because of blind obedience and loyalty.

In these challenging economic times, there are also many enterprises stagnating because their people wait for their boss to paint the picture of what the company will look like going forward. These reluctant bosses don’t know any better. They have just grown up in different organizational cultures.

On the other hand, good leaders build up the confidence and talents of people around them and nurture their creative ideas. That’s call new-school thinking.

Here are three behaviors that will transform reluctant bosses to effective leaders:

  • Education and learning: Good leaders have a great appetite for learning, especially in regard to cultivating more effective ways of motivating people and building positive and innovative environments. Good leaders focus on thought leadership and create a learning environment for all. Bosses, on the other hand, participate in little of the education and learning aspects because they believe they know it all already. Sound familiar to anyone?

When executives stop learning, their leadership prowess begins to wane.

  • Focus on your people, not yourself: Traditional bosses are generally described as people with big egos. In other words, they’re more focused on themselves and their own prowess and generally have scant regard for the capabilities of their people.

On the other hand, smart leaders focus on building and encouraging their people. They invariably have associates around them that they respect and appreciate. Humility trumps ego every time.

  • Let people take risks and make mistakes: Once you take a leadership posture toward people, you will be open to letting them learn from their mistakes. Remember, creating an atmosphere of risk-taking is very healthy. By doing so, they will discover and innovate. Who knows — one out of every five interesting ideas may bear real potential.

As their leader, your job is to assemble resources and talents, as well as create a vision for the company, focused on innovation. Whenever setbacks occur, and they will, you must encourage the innovator to hang in there — your support and patience will be required.

Again, remember that innovation comes from all those talented people operating within your organization. Your people probably have many unrecognized talents, which, when harnessed properly, could put your enterprise on an exciting new track.

So give up on being an atypical boss and try leadership instead — the results will speak for themselves.

G.A. Taylor Fernley is president and CEO of Fernley & Fernley, an association management company founded in 1886. Reach him at [email protected], or for more information, visit www.fernley.com.

Steve Rendle guides VF Corp. to strengthen the bond between its brands and consumers

Steve Rendle, vice president, VF Corp. and group president, Outdoor and Action Sports Americas division

On Monday morning, the watercooler talk among VF Corp. employees looks more like a Yelp review than the typical weekend replay. Employees chime in about The North Face jackets they wore skiing, the Lucy yoga pants they tested out and the Jansport backpacks they took hiking.

Steve Rendle, vice president of VF Corp. and the group president of its Outdoor and Action Sports Americas division, says this comes with the territory of being part of the world’s largest apparel manufacturer — with $7 billion in revenue and a portfolio of global consumer products brands.

“We choose not to sit in our ivory tower and predict what the consumer wants,” Rendle says. “We’re fortunate that our employees to a great degree are our consumers.”

A 25-year veteran in the outdoor industry, Rendle was president of The North Face for seven years before heading up VF’s Outdoor and Action Sports Americas unit last year. Based in San Francisco, he manages a portfolio of eight, activity-driven brands, including three worth more than $1 billion each — The North Face, Timberland and Vans.

Rendle is tasked with leading the brand strategies that will resonate with VF’s customers over the world. When it comes to front-end operations, he says there are very specific skills sets that help the company cultivate connections between its brands and consumers. The most significant is how the company develops its brand strategies: by making them a lifestyle. The company calls this “the art and science of apparel.”

“It’s that deep immersion into that consumer and understanding the consumer’s needs and expectations of our business that helps us really fine tune how we apply our business initiatives to grow our businesses,” Rendle says.

Here’s how Rendle uses these strategies to develop VF’s fastest-growing division of brands.

Dive deeper

The first step in developing a brand lifestyle is figuring out who the brand’s potential customers are in the marketplace.

“It’s taking an approach of first understanding who the consumers are,” Rendle says. “The ‘who’ aspect is a very important part, and we invest a tremendous amount of money corporately and from our brands to understand our consumers through global segmentation studies.”

While research from focus groups and surveys is beneficial from a targeted point of view, understanding a customer’s lifestyle takes a deeper level of interaction, beyond a phone call or email. You can look at annual research or employee feedback to get ideas about what customers are going to want, but to understand who they are requires a deeper level of knowledge only possible through one-on-one interaction.

“First and foremost, we’re an organization built of passionate consumers,” Rendle says. “But that’s not enough. We want to go into the marketplace. We want to think about our brands globally and do a lot of qualitative and quantitative research to engage with these consumers and understand how they think of our brands. What do they expect from our brands? And more importantly, how would they like us to communicate with them?”

Branded events are one way that Rendle and his team get answers to these questions. Sponsoring fun, action-oriented events that engage consumers allows the company to interact with people in environments that reflect their interests and lifestyles, giving the company a better idea of “who” they are.

“We’re able to engage and understand how they’re thinking about us, how they’re thinking about this particular event and learning about their product needs,” Rendle says.

In addition to the millions of followers that Vans and The North Face have in the digital realm, both brands also generate a tremendous following by putting on popular outdoor events. Rendle frequently travels with the product and sales teams to see how the brands are represented in retail, but also attends the key brand events to learn how they are connecting with consumers.

The North Face hosts its “Endurance Challenge,” a series of endurance races across the globe that attract 1,000 to 3,000 runners per event. These races are a great opportunity to meet runners who fit the brand’s performance market as well as hold mini “expos” for families so that they can interact with the brand, Rendle says.

Similarly, Vans uses its national Vans Warped Tour, a day-long outdoor music and action sports event to connect with some of its key consumer groups, from skateboarders, to musicians and BMXers. With a history as the original skate shoe manufacturer, Vans now focuses on the broader market of men’s and women’s footwear and apparel. So as the partial owner and operator of the summer concert series — the longest running in the U.S. — it draws more than 600,000 people each year and offers a direct line to its youth audience.

“It’s a very impressive music-driven event, but it’s also an event where we’re able to touch the consumers and listen and learn as they interact with the music culture how they’re thinking about the brand, the brand’s products and how the brand is communicating from a marketing standpoint,” Rendle says. “Events are a powerful tool to not only tell the stories of our brands but to interact with those consumers.”

Ask the experts

It’s important to understand not just who your customer is but also what he or she expects from you. Because there is whole host of running footwear and running apparel competitors for The North Face, for example, the brand can’t gain market share just by resonating today’s consumer trends today. It also must stay abreast of the running lifestyle and how it’s changing. To do that, the company uses brand ambassadors.

Each of VF’s Outdoor and Action Sports Americas brands, specifically The North Face and Vans, partners with teams of professional athletes to participate with the brands at a high level, engaging with different products and contributing ideas. The North Face has more than 70 such athletes active around the world.

These brand ambassadors help provide insight into what the brand’s customers want and will want in the future.

“The North Face is the best example, where we have the mantra of ‘athlete-tested, expedition proven’ as that primary input into our product engine,” Rendle says. “We can make sure that we’re building the most authentic and technically relevant products possible that enable our consumers to enjoy their outdoor experience to the greatest degree.”

Tapping brand ambassadors is also useful for brand innovation and product development. Your “experts” in a brand lifestyle can help you identify pain points or product ideas that you may not spot or study based on customer or employee feedback alone.

A prime example is when The North Face runner Kami Semick participated in a high altitude race in the French Alps. After nearly contracting hypothermia from the cold, wet environment, she helped the brand identify a key need for lighter-weight apparel to protect athletes from adverse moisture and weather. Semick worked with the product teams to design a new technology for the brand’s fabrics that eliminates the distraction of moisture when during athletic performance. This year, the company is releasing about 100 new products featuring the FlashDry technology.

“North Face is the brand that provides the ultimate outdoor protection,” Rendle says. “So we bring that thinking and that knowledge base into running apparel.”

Concentrate your efforts

With global brands, you need to do lot of work to identify who your potential customers are. But equally important is figuring out your brand identity. To put it into perspective, brands such as The North Face are trying to capture market share in a $320 billion global market in the outdoor and action sports business, Rendle says.

Figuring out how to position these brands in the marketplace requires Rendle and his team to spend a lot of time looking at the macro-market to size up opportunities.

“That’s building the business strategies using the consumer insights and the market intelligence to help us craft very clearly focused strategies that we execute on five-year basis,” he says. “It’s always the rolling five-year plan and looking very specifically at where those opportunities are to drive our growth.”

Looking at the larger, macro market data, VF applies filters to examine the size of different opportunities:

What is the business doing specifically from a retail standpoint? What are the best ways of communicating to the consumer within those specific segments? Who are the competitors?

In this process, it’s necessary to look at brand competitors from a very critical point of view as far as what are they good at, Rendle says.

“We’re trying to understand what makes them unique — what are their points of difference and what things are more parody,” he says. “Then we look for those white spaces where we know that our brand naturally plays or places that we should be focusing to look for incremental growth.”

The points of difference are unique to your brand, whereas your points of parity are things you need to do just to stay in business — fit of garment, for example.

“It’s not really something that we would own, versus a specific focus or an innovative platform might be a unique point of difference and gives us an emotional connection to the consumer,” Rendle says.

An example is the women’s yoga brand, Lucy. While Lucy was the first brand in the women’s training space, it lost its way before VF acquired it in 2008, giving the Canadian brand Lulu a lead in sales and brand recognition.

“When we look at the difference between those two consumers — the Lulu consumer and the Lucy consumer — we see some very distinct differences in how she thinks, how she acts, how she wants to interact with her brand and honestly how she looks at those activities,” Rendle says.

The company also uses its brands’ leveragable platforms, or things that each brand does well, to position fellow brands stronger in the marketplace. The key is to utilize each brand’s strengths, without losing sight of how each brand consumer — and consumer lifestyle — is different.

“We focus on understanding the brand’s purpose and really understanding what we stand for and what our unique value to our consumer is,” Rendle says.

“It’s making sure I help those brands remain autonomous because it is those specific brand identities and cultures that make these brands successful. At the same time, it’s helping them leverage the VF platforms to scale and access capabilities at a much more effective price.”

After applying these kinds of lenses to see what a brand does well, you can learn how to build “permission” with customers to bring new lines to market where you don’t have established expertise, Rendle says.

The ability to introduce new products to consumers is a critical step in making a brand’s products part of a “lifestyle” the can continue to grow and evolve. Currently, The North Face is trying to do this with the footwear segment — using running apparel to break into running shoes.

“For us to sell footwear it needs to be uniquely different and bring some specific value that other brands are not,” Rendle says. “Where we know we have permission to compete first is in the trail, so really playing off of that outdoor heritage and enabling consumers to run off the road and onto the trail.”

The way the company creates its brand strategies is also changing the way Rendle and his employees think about the business, Rendle says. By creating brand lifestyles that resonate with consumers, the Outdoor and Action Sports Americas division has grown from less than 10 percent of VF’s total sales in 2000 to close to 50 percent.

“It’s helped us understand that this deep connection into the consumer’s lifestyle gives us a unique point of difference, and a unique way of competing against the many number of other choices that consumers have to make in their apparel purchases,” he says.

How to reach: VF Corp., (336) 424-6000 or www.vfc.com

Takeaways:

1. Use events to connect with customers.

2. Create brand ambassadors.

3. Find your points of difference and parity.

The Rendle File

Steve Rendle
vice president and group president, Outdoor and Action Sports Americas
VF Corp.

Born: Spokane, Wash.
Education: Bachelor of science, the University of Washington

What do you like most about your job?

I get to get up every day and come to work and participate in businesses and touch activities that I really love. I grew up skiing. I grew up climbing. I’m a very active outdoor user. I’ve dabbled in surf. I’m not a skater but I absolutely enjoy those people as much as I do those that I’ve grown up with. I get to live and play in a marketplace that I’m just deeply passionate about. To also build that passion of building success, in this case successful businesses that add shareholder value — I may very well have one of the best jobs in our company.

On his transition from president of The North Face to division group president: First you have to immerse yourself in the businesses. I’m fortunate enough that I’ve worked with each of these brand leaders as a peer for many years. But I needed to take a step back, remember that my job is not to only think only of The North Face, but to think about eight specific brands, their contributions to our portfolio and the larger VF. It is just to take a step back and forget about what I loved so much, and begin to understand that I have eight things that I get to love.

How do you regroup after a tough day?

My best tool for sorting out a difficult day is to get outside for some sort of physical activity. My favorite choice is to jump on my road bike and roll out for a long ride. No distractions. Just time to focus on the activity and subconsciously sort out my thoughts.

Honoring the best of the best

For more than 25 years, Ernst & Young has celebrated the entrepreneurial spirit of men and women pursuing innovation and entrepreneurial excellence in their businesses, their teams and their communities.

The blood, sweat and passion they’ve poured into their businesses and the triumphs they’ve achieved stand as a testament to the role they play as visionaries, leaders and innovators. Ernst & Young founded the Entrepreneur Of The Year Program to recognize this passion for excellence and to build an influential and innovative community of peers.

We have gathered here and in 25 other cities in the U.S. to welcome the men and women who are regional finalists into our entrepreneurial Hall of Fame and to toast their commitment to succeed. We applaud them for launching start-up companies, opening new markets and fueling job growth.

So let’s celebrate their achievements, their perseverance and their tireless pursuit of business excellence.

Ernie Cortes is the Entrepreneur Of The Year program director. He can be reached at (408) 947-5462.

2012 Finalists and Honorees

Emerging
• Geoffrey Barker, RPX Corp. (Winner)
• John Woolard, BrightSource Energy Inc. (Finalist)
• Hubert Thieblot, Curse Inc. (Finalist)

Life Sciences
• Lawrence Blatt, Alios BioPharma (Winner)
• Guo-Liang Yu, Epitomics Inc. (Finalist)
• Robert W. Duggan, Pharmacyclics Inc. (Finalist)

Marketing Services
• Tom Bedecarre, AKQA (Winner)
• David B. Goldberg, SurveyMonkey (Finalist)
• Bill Demas, Turn Inc. (Finalist)

Media and Entertainment
• Nicholas Woodman, Woodman Labs Inc. d.b.a GoPro (Winner)
• Matt Mullenweg, Automatic (Finalist)
• Lars Buttler, Trion Worlds Inc. (Finalist)

Retail and Consumer Products
• Dale Carlesen, Sleep Train (Winner)
• John Foraker, Annie’s Inc. (Finalist)
• Neil Grimmer, Plum Organics (Finalist)

Services
• Lisa Im, Performant Financial Corp. (Winner)
John Boncher, Cupertino Electric Inc. (Finalist)
• Mike Sechrist, Elana Whorton, ProTransport-1 (Finalist)

Technology
• Tarkan Maner, Wyse Technology (Winner)
• Lee Chen, A10 Networks (Finalist)
• Tasso Roumeliotis, Location Labs (Finalist)

Technology Services
• Matthew Monahan, Brian Monahan, Inflection (Winner)
• Larry Augustin, SugarCRM (Finalist)
• Bruton Goldfield, TriNet (Finalist)

Emergency Medicine Physicians drives a companywide vision for improved patient care

Dr. Dominic J. Bagnoli Jr., founder and CEO, Emergency Medicine Physicians Ltd.

Dr. Dominic Bagnoli Jr. has more customers in his waiting rooms than ever, and that’s the problem.

As health care costs rise and unemployment remains high, people nationwide are waiting longer to seek medical care when they think that they have a health issue. The result is that emergency departments staffed by companies like Emergency Medicine Physicians Ltd. are filled with patients.

“Not every patient needs to be in the emergency department,” says Bagnoli, the founder and CEO of the privately owned medicine group, which has hospital partners across the country. “So the question is, ‘How do we provide them a level of care where they get just as good of care but reduce the cost?’”

While there is no question that national spending on health care is not on a sustainable track, Bagnoli says that the healthcare industry has never been swift to embrace change.

“In medicine, we’re typically slow to change because we like to hide behind the art of medicine, hide behind this is the way that is has to be for patient care,” Bagnoli says. “But there are a lot of things that can change and a lot of things that need to change for the health care system to continue to evolve and improve.”

EMP has created a culture where employees and physicians don’t just buy into change, but are excited to lead the transformation. Here’s how Bagnoli inspires the company’s 1,200 employees to buy into EMP’s vision for more efficient health care.

Connect the dots

Bagnoli knows that having talented, passionate employees isn’t enough to drive change if they aren’t inspired by your company’s vision and mission. You need everyone in the organization working toward these common goals.

“It’s a team game,” Bagnoli says. “It’s like any successful team — if everyone is not on the same page, then you’re not going to win.”

That’s why he looks for ways to connect employees at all of levels of the organization to EMP’s vision for delivering patient care, not just the physicians who deal with patients every day.

“We’ve let everyone know that every person in our organization, from the person who answers the phones to the person that helps submit the bills to the person that answers the customer service calls, that what they do every day is not those little things,” Bagnoli says. “What they do is help physicians take care of patients.”

But how do you get someone in a corporate office to feel just as inspired as the person who helps care for a sick patient or helps solve a customer problem face-to-face? One way is to create a culture that feels small, even as you organization grows.

As one of the ten largest emergency medicine groups in the country, EMP has more than 1,200 employees and physician partners today, including 800 doctors and 400 non-physician associates. But Bagnoli says the company’s communication and employee education keeps everyone in the organization thinking about how they as individuals can impact the big-picture vision for improving patient care.

Dr. David Packo, president, Emergency Medicine Physicians Ltd.

President Dr. David Packo says that the company is known for its high quality, so it lets employees and doctors know whenever the organization is being recognized to keep motivation high. Its award-winning online portal for physicians also gives doctors access to everything from personal productivity statistics and patient satisfaction scores to expense accounts and educational materials for their practice.

“We create opportunities for them to see news reports and data reports from all over the country so that they can review those and start thinking about how they can improve things as well,” Bagnoli says.

Another piece is employee development. In July, Bagnoli says the company has plans to open a new educational center in Canton that will accommodate 250 people for physician training and company meetings. It will also be equipped with the latest technology for streaming and teleconferencing.

By investing in employee growth and development, you show people that they are a valuable part of the vision. When people feel connected that way, they’ll want to take on bigger responsibilities and roles in your organization.

“Our employees like being part of a company that’s growing and learning and teaching and helping people,” Bagnoli says.

“They like the fact that they know that we see almost three million patients a year and what they’re doing here in the company office in Canton is helping a physician in Hawaii or Connecticut take care of a patient, and maybe, save a person’s life. That builds a culture and is a reason why people enjoy working here.”

Give people ownership

Unlike many of its large competitors, which are public companies, EMP is privately held by its physicians and splits its profits with them every month.

Before implementing the profit-sharing program several years ago, the company found that more employees tended to push off work to others, creating silos rather than engagement in the overall success of the organization and its vision.

“What we used to have prior to the institution of the program is employees looking out for their own,” Packo says. “When we would add business, they would look for us to add new employees because they didn’t want the work.”

When people have a financial stake in the success of their organization, they are more engaged in innovation and support changes that can make the company efficient and contribute to its vision for growth.

An example is the growth of the company’s Physician First program, which makes a physician the first point of contact for patients who register at an emergency department. When EMP launched the program at its partnering hospital in Parma, it quickly made a huge difference in improving patient outcomes and wait times. Getting the buy-in from this first group was enough to convince other physician owners who saw the positive results to try it.

“By capturing the minds of a few people who are willing to be early adopters and try a process and then spreading that process through results and publicizing those results, you get people to buy in on a large scale,” Bagnoli says.

As the company implements new programs or operational changes, connecting people to each other in ownership is also beneficial because it helps eliminate silos in operations. That’s because employees and doctors benefit from helping colleagues succeed and getting more involved.

“We ask them to do their jobs to the best of their ability, and when they do, they get rewarded for it,” Packo says.

“Now they want to take care of things themselves and do more so they can win more. So that was a huge piece of being able to grow and keeping expenses down yet growth up.”

As the company grows in size, Bagnoli says the profit sharing is even more important in motivating physicians to be leaders in the organization as the industry continues to evolve.

“We’ll be more successful than everybody else because our physicians will directly benefit from that change,” Bagnoli says.

“Passion can carry you when you’re a small organization. If you believe in what you’re doing and you can inspire other people to follow you, you can lead a small organization fairly easily. But you get to a point once you get to a certain size that if you don’t have good people around you that you trust that you allow to lead, you’re not going to make it.”

Make life easier

Bagnoli says that he’s always looking for opportunities for EMP to partner with health systems, technology companies and service companies in order to develop solutions that make providing quality patient care more efficient.

“We typically look to see if they can provide a better process for us or a better service for our patients,” Bagnoli says.

The company has been involved in two of these significant technology projects in the last three years. In both of these cases, Bagnoli says the company thought long and hard about the value for its employees and physicians who would be learning and using them.

“In general, if you give someone a piece of technology that doesn’t make their lives easier, it’s never going to get used,” Bagnoli says.

“Technology for technology’s sake isn’t always the answer. But we’ve been very careful to develop products that help people do their jobs.”

Often, employees will be worried that new technology or new processes will make their jobs more difficult with extra steps, operational disruptions or functionality issues. So if it will make their jobs easier, they’ll probably be happy to make the change if you show them why and how it will help.

“It’s people,” Packo says. “You realize a lot of companies and the ones that are successful are the ones that grow their people along and empower their people to do what they need to do. That’s been a big piece of what we do.”

Through its partnership with Stat Health Services Inc., the company recently took a huge step by developing a telemedicine program. The technology gives qualifying patients 24-7 access to certified physicians, so they can receive treatment for minor complaints and illnesses through the Internet. As an early investor in the iTriage, it’s also now incorporating technology that allows patients to use their smartphones to identify illnesses and get care information through mobile channels.

“Any way to deliver health care in a less expensive manner, but keeping the quality there is going to be a big win, whether it is by telemedicine or other venues,” Packo says.

The same goes for the new protocols such as Physician First.

“So we’ve created a new process that’s been successful and we’ve implemented it at over half of our hospitals across the country,” Bagnoli says. “It makes a huge difference in the patient experience, improves the quality of care and lowers the risk.”

Improving care delivery and the way that people interface with the health care system empowers the company’s employees and physician-owners to do their jobs better, so patients profit and the company profits. As a result, it remains one of the consistently growing companies in Northeast Ohio.

“We’ve improved the patient experience, we’ve lowered the cost of care, and we think that we’ve improved the outcomes as well,” Bagnoli says.

How to reach: Emergency Medicine Physicians Ltd., www.emp.com

Takeaways

1. Help people see their role in the vision.

2. Give employees a stake in growth.

3. Empower your team with new technologies.

The Bagnoli/Packo File

Dr. Dominic J. Bagnoli Jr., founder and COO
Dr. David Packo, president
Emergency Medicine Physicians Ltd.

Born:
Bagnoli  – Canton, Ohio

Packo Toledo, Ohio

Education:
Bagnoli – The Ohio State University and Wright State University Boonshoft School of Medicine

Packo University of Notre Dame undergraduate, The Ohio State University College of Medicine medical school
If you could have dinner with one person you’ve never met, who would it be and why?

Bagnoli Unfortunately, Steve Jobs has passed, so my second choice would be Bruce Springsteen because he’s the Boss.

What is your favorite part of your job?
Bagnoli – Leading a growing, dynamic business that helps people. Now as CEO, I come in and I don’t exactly know what I’m going to do each day, but I know that there is going to be 50 or 60 problems that I get involved in or projects, and at the end of the day I feel like I’ve contributed and helped the organization grow. Also it goes back to helping the physicians that are out there taking care of patients and making it easier for them to do so.”

Packo – Helping partners to better work life.

What would your friends be surprised to find out about you?

Packo – I boxed in college with some tae kwon do and wanted to cage fight but never did. I still would be interested in MMA (mixed martial arts) if I were younger or if it was around when I was younger.

What would you being doing if you weren’t in health care?

Bagnoli – I’m a college football freak. So if I could do any job I would love to be on college game day televising games on Saturdays and going to the best college football games in the country every weekend. If (ESPN analyst) Kirk Herbstreit ever retires, I want the job.