Dustin S Klein

Publisher and Vice President of Operations

As Publisher and Vice President of Operations, Dustin manages operations and all things content-related. He is a veteran business journalist, author and speaker; and oversees the editorial content for Smart Business and its business conferences and awards programs; manages the production and circulation departments; the Smart Business Books division; supports the sales team; works with clients to develop customized content solutions; dabbles in business development; and has key responsibilities for the expansion and launch of new markets, and creation of new products and services. As part of his operational duties, Dustin is responsible for developing, implementing and managing the company’s editorial vision, guidelines and procedures.

A 1991 graduate of Kent State University, Dustin joined the Smart Business team in 1997 as a reporter after holding reporting and editing roles at three different daily newspapers. He has held numerous roles at Smart Business, including editor of the Cleveland and Akron/Canton publications and corporate executive editor, where he was responsible for all content-related operations for the publications. He also co-founded, and later sold, Pyramyd Air, an online retailer and distributor, as well as eSports Media Group, one of the Internet’s first pay-on-demand content providers.

Dustin is a native of Shaker Heights, Ohio, and a regular keynote speaker on innovation, leadership and entrepreneurship. He has authored or co-authored four books, and has helped more than 20 CEOs and entrepreneurs transform their ideas into books as an editor or development consultant. Among his works, Dustin co-authored Stella’s Way (Daisa Publishing), which chronicles the life story of an immigrant entrepreneur; and edited and co-authored the Amazon #1 Bestseller The Benevolent Dictator (Wiley & Sons, June 2011), which he co-wrote with the co-founder and former CEO of OfficeMax, Michael Feuer. His most recent book, The Unexpected: Breakthrough Strategies To Supercharge Your Business and Earn Loyal Customers for Life, hit the streets in April 2015.

Dustin has received numerous awards for his business writing, column writing and editing, including a 2013 Distinguished Sales & Marketing Executive Award from Sales & Marketing Executives International (SMEI), and several Best Publication awards for Smart Business magazine. Under his direction, Smart Business Network publications have been honored with more than 100 national, regional and local awards for journalism excellence.

Josh Harmsen

Josh Harmsen, principal, Solis Capital Partners

Often, business owners frame their own future in stark, binary terms — either I keep the business or I sell it. This binary thinking becomes most pronounced as business owners begin to contemplate retirement or an ownership transition. In reality, there are a variety of options that can span those two outcomes. For many business owners contemplating a retirement or transition event in the next five years, simply keeping or selling are suboptimal outcomes — either tying up critical value that could otherwise be used to diversify or foregoing the potential upside value in their business. In addition, these binary outcomes often overlook other important value drivers for business owners such as legacy, succession, well-being of current employees and the continuity of their current business. When evaluating which options to pursue, it is critical for business owners to first establish clear goals that define what they want to accomplish and when. This includes an honest assessment of their personal and professional desires and other value drivers (including those mentioned above). While these options each present unique opportunities and risks, they offer business owners a more tailored and optimized approach to achieving their future liquidity, retirement or transition objectives. Mezzanine debt recapitalization A mezzanine recapitalization will often allow business owners to seek partial liquidity or growth capital, without significantly diluting their ownership. Business owners can use the proceeds to diversify their holdings, while retaining equity control and the potential upside of the business. However, this option will add incremental, high coupon leverage to the business and could limit operational flexibility in periods of economic or business distress. ESOP — employee stock ownership plan ESOPs allow business owners a tax efficient roadmap toward partial or full liquidity while creating a mechanism for transferring ownership to employees. This allows business owners to maintain short-to-medium-term ownership and helps to preserve business consistency and legacy. It also rewards employees for their hard work and loyalty. However, once the ESOP has been established, it can significantly restrict ownership flexibility. MBO — management buyout MBOs allow business owners to achieve either partial or full liquidity while maintaining operational consistency throughout the organization. The MBO also rewards management’s loyalty and performance with the opportunity to acquire a significant stake in the business. However, MBOs often require management to partner with outside equity or debt providers — which can be time consuming and introduces new partners and influences on the business. Minority investment Minority investments from an outside investor (either institutional or individual) will allow business owners to seek partial liquidity, or growth capital, while maintaining a majority stake in the business going forward. The minority partner can bring valuable outside perspectives and skill sets to supplement your own. However, most minority investors tend to be only passively involved and often require onerous ratcheting provisions that could give them control if the business fails to meet operational objectives. Partnership transaction A partnership transaction will allow business owners to seek significant immediate liquidity while preserving some ownership and elements of control in the business going forward. Business owners can use the proceeds to diversify their assets, while maintaining potential upside in the business. The new partner can bring many valuable strategic and financial resources to bear to strengthen the business and pursue growth and value enhancement initiatives. However, new partners will seek elements of control and often utilize leverage to affect the partnership. Understanding the many options available to business owners will help lead to more tailored and optimal achievement of personal liquidity, retirement and transition objectives. Josh Harmsen is a principal at Solis Capital Partners (www.soliscapital.com), a private equity firm in Newport Beach, Calif. Solis focuses on disciplined investment in lower middle-market companies. Harmsen was previously with Morgan Stanley & Co. and holds an MBA from Harvard Business School.

How Timothy Yager led a strategy to get Revol Wireless winning again in the prepaid provider space

Timothy Yager, President and CEO, Revol Wireless

Timothy Yager, President and CEO, Revol Wireless

When Timothy Yager started at Revol Wireless in the fall of 2011, the company had been losing customers every month for an extended period of time. Late 2009 through the first half of 2011 were tough years for the organization — rumors of bankruptcy and new ownership were being floated around and the wireless communications provider was in desperate need of change.

“The company was having some financial issues,” says Yager, president and CEO. “So my arrival was a chance to hit the reset button for Revol, not only for our customers, but for our employees and say, ‘It’s a new day. The ownership change has happened and they’ve brought in new management and we’re going to focus the company on winning.’”

When Revol was first launched, it was a more than 300-employee, $100 million company. It had a reputation as being on the cutting edge of the prepaid wireless industry.

“Revol had a lot of success early on because it offered unlimited voice and those kinds of things on a prepaid platform,” Yager says. “They were the only provider in the footprint offering that type of service.”

In 2008 and 2009, other prepaid providers started moving in and the competitive forces grew. In a hypercompetitive industry such as wireless, Revol wasn’t as competitive as it should have been and it quickly began to fall behind.

“They needed some help getting the business turned around,” Yager says.

Here’s how Yager reinvigorated Revol Wireless with a strategy to get the prepaid provider winning again.

Evaluate the business

Prior to Yager’s arrival, Revol’s strategy and day-to-day operations were hindered by its capital structure, which brought about a slow-to-react atmosphere. Once the company was free from that structure, there were a lot of people who were looking for strong guidance, enthusiastic leadership and setting of general objectives to get the company back on track.

When Yager was first introduced to the team, it was a transformation in enthusiasm, direction and general motivation. Everybody suddenly had a place to go and a job to do. Yager brought a lot of that enthusiasm and direction to the table, and that’s exactly what people needed.

“Those first few days and weeks were really about analyzing the team that was here and where the strengths and weaknesses were,” Yager says. “The other thing was trying to change the focus and mindset of the company.”

Yager wanted to instill a strategy that said the company was in it to win it. It didn’t happen overnight, but employees started to recognize that there was a new philosophy.

“Revol had gotten mired in the minutia and a lot of times in companies that are struggling, people retreat from making decisions,” he says. “One of the biggest things I did was come in and start making decisions.”

Simple things like “yes and no” decisions went a long way toward starting to improve morale and helped employees realize there was a new sheriff in town. Yager represented new ownership, new direction and new thought.

“I think people started to feel empowered to be successful,” he says. “In a turnaround situation, one of the biggest things you’ve got to do is make decisions. So often companies get polarized with the fear of making the wrong decision that they make no decision, and I firmly believe that sometimes a wrong decision is better than no decision.

“If people are just constantly treading water and they don’t know whether they’re going up, down, right or left, it zaps the life out of a company.”

People respect leaders who come into a company and lay out a plan of attack, are upfront about the plan and who are forceful.

“I can remember that first meeting and saying, ‘I’m not going to do everything right and I’m not going to pretend to do everything right, but we’re going to make decisions, have short meetings, focus on what needs to get done and we’re going to get it done,’” Yager says. “In our wireless industry, where it is so competitive, we don’t have the luxury of taking six months to analyze everything.

“Sometimes you’ve got to look at the facts, make a decision and move on.”

Be decisive

Revol started 2012 losing customers every month, just as it had been the year prior, but with Yager on board the wheels were in motion for the company to move forward.

“When I came in, one of the first things I did was put some extra incentives out there to our dealers to sell some phones,” Yager says. “I was trying to buy some enthusiasm from our partners to get reinvigorated about selling the Revol brand.”

Another key decision Yager made was to get out in the field and visit a lot of the company’s owned doors and indirect doors to help get the message across that it’s a new Revol and a new day.

“Those were things that didn’t cost a lot of money, but helped move the business forward because it put a face with a name they were starting to see on emails,” he says. “It also gave them a chance to meet me and realize that I’m a relatively aggressive guy.

“When you’ve got five to eight competitors in a marketplace, you’ve got to be aggressive, and by people meeting me and realizing that I wasn’t just saying we were playing to win, they could tell by meeting with me that we want to win the game.”

One of the most crucial issues that Revol and Yager identified that needed to be changed was their network.

“Revol was still operating on an older technology called 1X and had slower data speeds,” he says. “In today’s world of smartphones, Androids and everything else, data is key.”

Shortly after Yager joined the company, the board approved a plan to upgrade the network to a 3G network.

“Our key initiative in 2012 was the company deploying 3G,” he says. “We launched that service in September last year and noticed an immediate uptick in our sales to customers as well as a stickiness of our existing customers.”

Move forward

Yager’s key to helping Revol right the ship was his ability to deliver on his decisions. He was careful not to promise too much.

“I came in and made a few simple promises — two or three key things and then I spent a year beating the drum on those things to do it,” Yager says. “Too often people come in and make a laundry list of 26 items they’re going to promise. No one can get that done in a reasonable timeframe and you lose credibility. Pick and choose what needs to get done and then deliver on it.”

In 2012 Revol was all about getting 3G launched. In 2013 the company is all about selling phones and keeping customers happy.

“When we launched our 3G network we saw an immediate turnaround to our gross sales and our net sales,” he says. “We have more than doubled our sales in January 2013 from January 2012. We’ve really seen that the successes are bearing out.”

Everyone at Revol had to put in the hard work to get the pieces in place, but now that that’s done, the company has seen noticeable improvement. To continue to see those sales and revenue numbers increase, the company has to keep a focus on growing its customers.

“I’m happy to report they are growing,” Yager says. “I’m excited about what we can achieve this year. Last year we had a hard time competing from a sales perspective because we hadn’t upgraded the network. This year we’ve got those key ground-level type things in place, so I’m looking forward to being able to execute and win.

“We have almost a singular focus in 2013, which is to grow the business. There’s really only one way to grow the business, and that’s to be successful in adding new subscribers and keeping existing subscribers.”

How to reach: Revol Wireless, (800) 738-6547 or www.revol.com

How Steve Bilt positioned Smile Brands to give patients the best dental care they can get

Steve Bilt, co-founder, president and CEO, Smile Brands Group Inc.

Steve Bilt, co-founder, president and CEO, Smile Brands Group Inc.

There are lots of ways to run a successful dental practice, which became one of the biggest challenges facing Steve Bilt and his leadership team as they contemplated the future of Smile Brands Group Inc.

“Defining a simple agenda that supports what your customer wants and needs, understanding who that customer is and then delivering that value has been a big challenge,” says Bilt, the $600 million company’s co-founder, president and CEO.

“I could look inside the 400 different units we support and say, ‘OK, you can find every model under the sun in some way, shape or form working. But if we’re going to continue to expand and refine our services and systems to better serve and support those units, there has to be more consistency in what we do.’”

It’s a question that any business with units spread across the country or around the world must answer for itself. Bilt says it’s only getting harder to come up with the right answer because the market and customer needs are constantly evolving.

“So what may have been a focused-enough strategy five years ago is a path to doom five years from now,” Bilt says.

But as the members of Bilt’s team began to wrap their minds around what needed to be done for the company’s 3,800 employees, more than 1,300 affiliated doctors and hygienists, and their patients, they kept coming back to one philosophical belief.

“There’s no one absolutely right answer, but the right answer is one answer,” Bilt says. “If you think that through, it’s not saying my way is better than your way. You don’t have to make that call. You just have to say, ‘Look. We have to decide on one way, which might be a hybrid of models with each of us bringing something to the table.

“‘But what we have to do as a team is decide on one way and pursue that one way and make sure our systems support that one way and our talk and our attitude and everything we do down to our DNA supports that one way of us adding value into the marketplace.’”

Provide the best service

The operational evolution at Smile Brands was a four-year process that included a number of different opinions, ideas and suggestions. But one of the core ideals that the group settled on was finding the best way to harness all the dental skill that existed in the organization in order for customers to receive the best care.

“We used to say let’s just create a cocoon of support around this doctor so they can just be a doctor, period,” Bilt says. “Don’t have any other level of resource for them other than the fact that they get all the freedom to be a doctor.”

The problem with that type of practice in today’s world is it wastes so much potential to share expertise and solve problems.

“Any peer group is going to have some people who excel at one thing and have a lot of experience,” Bilt says. “But if you’re out in the dental office by yourself staring at a problem you haven’t seen before, you say, ‘Oh boy, I’ll figure this out by trial and error,’ which is what you would do 15 years ago. Or you’d pick up the phone and say, ‘Here’s what I’m looking at. What do you think?’”

Bilt felt Smile Brands had the capability and thus needed to make it possible for dentists who encountered these unique problems to be able to connect with a colleague in real time and reach a solution in minutes.

“There’s this opportunity in this digital age to create an incredible peer group in a lonely profession,” Bilt says.

The ability to use technology to solve problems or even for training purposes was just something that was too good to pass up. And the best part, Bilt says, is that the integration of the right technology at Smile Brands would also reduce expenses.

“The customer has somebody who has access to stuff that is so much more powerful,” Bilt says. “That gives the doctor the ability to charge less, which is great for the consumer as well. The combination of doctors being able to be just dentists so that they can see more patients means they have an ability to charge less because they have higher volume, and all the technology helps them lever their cost structure down.”

Stay focused

You get a great idea for your business and everyone is energized to make it happen. It’s at this point where trouble can be lurking.

“We all love that rush of the initial front-end strategy planning and brainstorming session that we all do,” Bilt says. “What we don’t tend to love is the concept of change management and how do you get from here to there?”

It takes work and effort to make a change happen and some of that work can be painful. This can very easily lead to the drifting of attention away from one project that has suddenly become a lot of work to another project that seems so much more fun to talk about.

“You allow another shiny strategic initiative to start while the change management and implementation of the prior one is incomplete,” Bilt says. “You don’t go back and measure whether the first shiny initiative did what it was supposed to do and then you get distracted with the next one and forget about ever measuring the prior one. That cycle can go on for decades. That gets people into a lot of trouble.”

One key to avoiding stress and keeping your organization focused is to let people who have expertise in certain areas apply that skill to get the work done and isolate the flaws before full implementation.

Listen to their needs, their suggestions and their feedback on the best way to implement your new system.

“The docs are our thoroughbreds, and we’re the plow horses,” Bilt says. “If we’re doing it right, the plow horses plow and the thoroughbreds run. That’s really the point of the model. Let them be the thoroughbreds they are and let us plow the fields or build the track. That’s what we’re supposed to do.”

Define what you want to accomplish and get it into a plan that everyone understands and agrees to. Make sure they are aware that while there will be highs and lows along the way, the end goal will make it all worthwhile.

“My role is to help provide some vision for what we’re trying to do,” Bilt says. “What do we hope to accomplish? I try to provide support for people executing it so that they can do it properly to make sure the phases are properly led, staffed and resourced to have some level of establishing accountability for the results of each phase.”

Be a good communicator

Another major step in the transformation of Smile Brands was figuring out how to roll out the changes at each of the 400 locations. Who goes first? Who needs the upgrade most? Which locations will be the hardest to change?

Bilt says there’s no perfect way to roll out a big change. But he says communication is always the key to making it work.

“Most people are less attached to the outcome that they want in terms of where they are in the order of priority than they are in understanding why you made the decision you made,” Bilt says. “I love to know why you’re doing what you’re doing. That shows respect for me. Then I want to know how I’m impacted. Are you getting to me and if you are, when? What should I expect?”

Bilt poses a scenario in which somebody might feel strongly that his or her location should be the first to be upgraded because it is the company’s most profitable unit.

“You could say, ‘You know what, I agree with you,’” Bilt says. “‘That’s why you’re going last. You are the best market. You want to go first because you’re the best. I’m saying you go last because I’m not going to mess with you. I can’t afford it and it’s too risky.

“‘So I’m going to the worst market because if we screw it up, it costs us the least.’ We could have the exact same rationale and the exact opposite conclusion.”

Explain to people your thought process behind the implementation of change and they’ll be much more likely to be onboard with you.

“You have to do it multiple ways,” Bilt says. “I always say the rule of three when it comes to communication. If you have a new concept or an important concept, you better give it three passes to get it communicated because there is always a gap between what we think we’re saying and what people are hearing.

“It just takes multiple passes to get it right and allow them to process it and understand it.”

As Bilt looks back on the process, he says there are always things that could have been done better.

“Everything is a journey,” Bilt says. “So how did we go along that journey and how did we carry ourselves and how did we perform and how did we pick ourselves up and dust ourselves off when it got tougher than it was supposed to get? Those are the stories that make a career.”

How to reach: Smile Brands Group Inc., (714) 668-1300 or www.smilebrands.com

The Bilt File

Steve Bilt

co-founder, president and CEO

Smile Brands Group Inc.

Born: New York City

What was your very first job?

Delivering The Denver Post in the snow. Back then, it was a crazy job for a kid. You took capital risk. You had to buy your newspapers from the newspaper. You had to deliver them, collect your own money, then pay back your cost of the newspapers and you kept your margin. So if a grumpy old neighbor didn’t want to pay for the paper, it was the 13-year-old kid losing out and not the newspaper. So I learned a lot of lessons on that job.

Who has been your biggest influence?

I have to give a lot of early credit to my dad. He helped me when I was going to fall down too far in the newspaper job by helping me fold the Sunday paper or pull the cart through the snow when it was too deep to physically move it. He did help with that job to make sure I had some success or at least got that job done.

The other thing is he was really good about not knowing all the answers to the stuff he was dealing with in business. He’d actually bring up a lot of the questions he was facing at the dinner table and let me opine.

I got this notion that a business is a living, breathing thing that had to be managed and cared for and fed. It was very formative from that perspective to be able to hear and listen and participate in some of those conversations about what makes a business go and how does it go and how do you do it and how do you care for it?

Takeaways

Don’t try to do it all.

Communicate at every turn.

Finish the job.

How Lyndon Faulkner repositioned his team at Pelican Products for a new opportunity

Lyndon Faulkner, president and CEO, Pelican Products Inc.

Lyndon Faulkner, president and CEO, Pelican Products Inc.

As one company after another made dramatic spending cuts in response to the recession five years ago, Pelican Products Inc. found itself headed in the opposite direction.

It was December 2008 and Pelican had acquired its nearest competitor, Hardigg Industries, doubling its size to become the largest manufacturer of equipment protection cases in the world. Life was good at Pelican, but Lyndon Faulkner knew it couldn’t last.

“We always expected the growth rate to moderate because you couldn’t keep growing at those figures every year,” says Faulkner, the 1,300-employee company’s president and CEO.

The moderation began about two years later and unfolded more quickly than anyone had expected.

Government and military spending was a big part of Pelican’s business and a key factor in the company’s dramatic growth. It was obviously great news from a human perspective that the U.S. began to scale down its involvement in Iraq and Afghanistan. But it was trouble for Pelican’s military business, which was shrinking fast.

“It was happening bigger than we ever thought it would and over a longer sustained period than we thought it would,” Faulkner says. “These were things that instead of being in control of them, we would have to react to them.”

Faulkner gathered his leadership team to come up with an appropriate response.

“Managing the implications of a big portion of business going into decline behind five years of growth was something we had to work on with management and leadership,” Faulkner says. “It’s everything associated with that. It’s the emotion and management of those dynamics within a business that affects everybody.”

The effort to diversify the business was to some degree already underway. But as the decline in military spending continued to accelerate, the urgency to achieve more diversity became that much greater.

Develop an action plan

Faulkner gathered his leadership team and opened a frank discussion to get everyone on the same page with both the problem and the options the company had to fix it.

“You have to get what’s happening to the company out on the table to its fullest so you’re able to recognize the impact of the problem,” Faulkner says.

“It was nobody’s fault. It wasn’t a bad plan or something that we were doing badly from an implementation perspective. It was something nobody could have done anything about.”

You can prepare and hold meetings and draw up strategic roadmaps every week. But the reality is at some point, you’re going to face a situation that you didn’t see coming.

“Things are going to happen,” Faulkner says. “Being in control of the things you can be is all fine, well and good. But you need to make sure you are doing all the preparation you can around the things in your control and make sure that you are reacting properly to things that are not in your control.”

When it comes to dealing with things not in your control, such as what had transpired at Pelican, you need to make sure your people view these issues as opportunities filled with potential rather than challenges fraught with risk.

“You just sit down and discuss the problem and you discuss the impact of the problem versus just burying your head in the sand about it,” Faulkner says. “Find the opportunity. I wouldn’t say give up on the business because it was still a very important business stream to us. But accelerate your thinking on how we could offset the decline in that business.”

The pursuit of new product segments was clearly the way to go.

But Faulkner needed to bring structure to the conversation so that his team didn’t stray from what Pelican does best. This can become a challenge for companies as you try to toe the line between branching out into new areas and reaching beyond your ability to do it well.

“We understand our protective cases are used in the transportation of things in the military and with first responders, things of that nature,” Faulkner says. “But then we look at things like medical devices. We realize in the medical device business, they are shipping products that could easily have been converted to Pelican-type products because we have a better product for moving their devices around and the transportation of them.”

Another potential market to expand into was consumer electronics. There was great opportunity, but also great risk for Pelican in this space.

“We were able to bring out a product for the iPhone 5 that has all the DNA of Pelican,” Faulkner says. “It carries protection, it looks good, it’s well-known, it’s well-made. You can drop a product with it, and it’s going to protect the product. That would be true to our brand and that’s what people expect from us.

“However, bringing out a protective case with a million shiny beads on it or something with ‘Hello Kitty’ would not be true to our brand and would not be what Pelican is all about. So in that scenario, that’s a classic way we drew the line.”

Pelican understood that its customers look to the company for protective products, not ones with lots of bling.

Lend a helping hand

The next step in the Pelican transition was the people side of the business. When you’ve been doing one thing and you’ve done it well, it’s not always easy to put a stop to it and tell those people that they now need to start doing something else.

“A lot of the people who were working on the military stuff did not have the skill set or muscles for the consumer market,” Faulkner says. “So what we’ve done there is we were able to move some of the military guys to the commercial space, industrial and things like that.

“Safety markets and first responders were not an issue for them. But as it relates to starting the new businesses up, we had to do that with a lot of new people or people who we brought on board from the business sector. They just speak a different language.”

It’s a clear illustration of why so much thought needs to go into making changes in your business. You can sit in your office and think about how easy it would be to start selling this widget when you’ve already been making that one. But it’s usually not as easy to make the change in actual practice.

“We’re finding the work we have to do for the consumer business — marketing, selling, product development, bringing products to market — it does have a very different clock speed and language than what Pelican has had before,” Faulkner says.

When you decide you want to expand your business in a certain direction, it’s your responsibility to get people the training they need.

“That’s part of your schedule,” Faulkner says. “I don’t think you’re busy and then you have to do that on top. Part of your busy schedule is to make sure you’re working with people so they are developing themselves. That’s just a basic fundamental of what I’m here to do and recognize if they don’t have the runway for that growth.”

At Pelican, this meant creating shadowing opportunities for people who wanted to be part of the new organization.

“So we had sales people, people who sold to the military extensively who have now gone out and shadowed people in the commercial space,” Faulkner says. “Most people have learned their trade by going to work with somebody in the other divisions.”

Strive to be the best

One of the lessons learned going forward was the need to hire individuals with more diverse skill sets and to make sure training is ongoing to develop more skills in the people already onboard at Pelican.

“If I’m a guy and all I’ve been doing my whole life is building products that can be dropped out of a helicopter and now I’m being told I’ve got to build great products, but they don’t have to be dropped out of helicopters anymore,” Faulkner says. “and if I make a case for that market that is made to be dropped out of a helicopter, it won’t sell.

“It’s something you have to instill and educate and teach because it’s not the way they’ve been working. It doesn’t mean that they can’t work that way. It just means they haven’t been asked to work that way.”

Regardless of what Pelican does, Faulkner says his expectation will never change. He wants it to be the best.

“People say what sort of company are you,” Faulkner says. “Are you a product company? Are you a sales company? Are you a marketing company? Are you a technology company? Are you driven more by operations, technology or finance? When we look at the different disciplines of the business, we charge our guys, the heads of each department, with being world class in everything.

“If we’re good in sales and product and marketing, we don’t expect our operations guy to just be there for the ride,” Faulkner says. “We expect our operations guy to have his own plans for being best in class in operations. What you’re doing is building the best in breed in everything. That’s what really floats the performance of the company.”

How to reach: Pelican Products Inc., (800) 473-5422 or www.pelican.com

The Faulkner File

Born: Newport, Wales. I was born at the Celtic Manor Resort, which is where they played the last Ryder Cup.

What was your very first job?

My very first jobs were a paper route and milk rounds. They used to deliver milk in those days in the U.K. and you would earn extra money by helping the milkman deliver milk. My first real job was coming out of school when I worked on construction in the summer months. It was making tea, doing errands and driving the dump truck around. But it was primarily making coffee and tea for everybody.

Who has been your biggest influence?

It starts at home with your parenting and your upbringing. I had parents and brothers and sisters who were very aspirational in trying to do better and do more. I had parents that instilled hard work in us all. None of us were frightened of going out and working hard and making things happen for ourselves instead of hoping things would happen.

How does competitiveness in sports compare to business?

In team sports, you have to have everybody pulling together and you can’t have a lot of people pulling in the wrong direction or in a different direction. That goes with attitude as well. You want everybody of a similar attitude and a similar style working with each other to help each other out. That’s a style I like to see instilled in a business. That breeds success.

Takeaways:

Focus on the opportunity.

Give people the right tools.

Always strive to be the best.

Andrew Liveris leads Dow Chemical by finding and developing talent that can achieve both short-term and long-term goals

Andrew Liveris, chairman, president and CEO, The Dow Chemical Co.

Andrew Liveris, chairman, president and CEO, The Dow Chemical Co.

This past November, Andrew Liveris went to the White House for a meeting with the president. That in and of itself is a pretty significant life event, but in Liveris’ case, it was as much about the journey as the destination.

Liveris is the chairman, president and CEO of The Dow Chemical Co. A native of Australia, he’s held numerous positions at Dow over the span of nearly 40 years — roles that have taken him to places such as Hong Kong and Thailand, before eventually moving to Dow’s Midland, Mich., corporate headquarters, where he became CEO in 2004 and chairman in 2006.

As the head of a $57 billion corporate giant, Liveris was among a group of influential CEOs invited to the White House to take part in a meeting on jumpstarting American business with President Barack Obama.

The Australian who came to America by way of Asia now sat in a room with the leader of the free world, among those tasked with helping to chart a course to rebuild key economic drivers as the country — and world — continues to recover from the recession.

“The conversation we had, with a dozen CEOs across various business sectors, it felt like a different meeting than any previous we have had,” says Liveris, who spoke as part of a presentation at the 2012 Ernst & Young Strategic Growth Forum.

“The president has had a lot of things written and said, and he takes it pretty personally when he hears that he doesn’t know business. Frankly, the evidence over the past 3½ years is that he doesn’t work with business and doesn’t know business.

“So in this meeting, he didn’t talk all that much,” Liveris says. “He let us give it to him, and we let him know what it would take to create a growing America again.”

For Liveris, it was an opportunity to step back, reflect on where his company had been over the past few years, and where it was headed —  and what steps he and other influential business leaders would need to take to ensure that their companies, and the whole of American business, would remain strong into the future.

Understand the landscape

By his own admission, Liveris was kind of naïve in his first couple of years as a CEO, particularly when it came to the business community’s relationship with government.

“I thought I would go to Washington, talk about the things that matter to my company, then I would leave and something would happen,” Liveris says. “That clearly did not work.”

After a number of trips to Washington with little progress in developing the business-government relationship to the point that it produced results, Liveris realized that no one on either side truly had a grasp of the game they were playing.

“I remember when I was watching TV and hearing about how American manufacturing had to die, how it had to move overseas because of labor costs,” he says. “That’s when I realized that absolutely no one was getting this.

“No one understood innovation, technology, or how one invents. No one understood the business models of creation, of new wonderful things that help humanity, things that are an American right.

“We have done this for over 200 years and yet we’re saying we should no longer manufacture, and we should just be a service economy,” he says. “If you want to be a service economy, go to the U.K. and see how it worked for them.”

Liveris says Silicon Valley is a hub of innovation, in large part because it is full of big companies who try to maintain a small-company mindset. If you can marry the resources of a major corporation with the flexibility and creativity of a smaller enterprise, you can hit an innovative sweet spot. It’s a position Liveris has tried to assume at Dow.

“Silicon Valley is an intersection of incredible academic institutions and entrepreneurs inventing, innovating and allowing startups,” he says. “That’s what I do. I have $1.7 billion in R&D, and I’m doing that every day. I’m innovating and trying to scale up. That is manufacturing.”

Liveris wants Dow to set a tone for innovation throughout the country. He wants companies, both large and small, to think in terms of innovation and developing ideas.

“This country needs dozens of Silicon Valleys,” he says. “It needs innovation hubs throughout the country. That was recommendation No. 1 from the meeting with the president. The president will give legs to an advanced manufacturing partnership, within which we have identified 11 technologies that America can win on a global basis.

“We have picked the technologies where America can win, not by creating winners and losers among companies, but by designing an innovation hub so the best minds in America can participate, including entrepreneurs, big companies and some government money to stimulate creativity and scale things.”

Invest in human capital

Innovation needs fertile ground. It needs companies that invest in the resources that enable innovation. It needs executives and managers that sustain a culture capable of promoting innovation. You need programs that reward and promote innovative thinking.

But those factors alone won’t drive an innovative mindset. You need to recruit the talent to innovate.

Even if you don’t budget for R&D the way Dow does, Liveris says innovation-minded talent is a must for any organization that wants to grow and evolve.

“I am a great believer that rigor mortis sets in unless you create a burning platform,” Liveris says. “People get comfortable and complacent quickly, especially the larger you get as an organization. You have to change things.”

When Liveris was named CEO of Dow, he called up a number of successful CEOs who had succeeded in driving large-scale change throughout major enterprises, asking for advice on preventing complacency and enabling innovation.

“One of them gave me this great piece of advice,” he says. “It had to do with the phases of change that cause the human pipeline, the talent pool, to respond and be its very best.

“It’s about the moon shot, the mission. If I can be inspired by the mission, be energized by that, that’s the key. I have to create that dynamic inside the top and middle ranks of the organization, and more importantly, the front line people.”

To Liveris, leaders get elected every day. Each day is an opportunity to create buy-in throughout the organization, an opportunity to inspire employees to follow the path blazed by leadership.

“You lead change,” he says. “You build a team around change. You have to do it with the long vision in mind, but with the idea that the short-term needs have to be met. We all suffer from ADD.

“We have become an ADD society where everything is breaking news, so the dynamic around a company — particularly a public company — can kill the long vision. You have to deliver in both the short-term and the long-term, and if you live those two paradigms, you need a unique type of human talent.”

Liveris calls it “living intersections” — finding and developing talent that can achieve both short-term and long-term goals.

“No longer do we do single-lane highways,” Liveris says. “We’re living intersections all the time. The intersections between the short-term and long-term require a unique type of talent — sometimes we call that change manager a change leader but that’s too high level.”

The managers you bring in to help spur change and formulate a vision for the future while delivering short-term results have another important set of opposite-end factors to master: They must understand the business from a global level, while still grasping the effect of the vision and goals of the organization on individuals working at ground level.

“You do still have to get down to the three-foot level,” Liveris says. “What does it mean to the person on the floor? What does it mean to the R&D leader? What does it mean to the salesperson?”

And no matter what position a given person fills, that person’s talent will only reach its potential if you can tie their individual and department goals to the overall goals of the organization, and then reinforce innovation-centered values that emphasize a willingness to create, experiment and learn from mistakes.

“You can’t box people into something and say, ‘Go invent,’” Liveris says. “You have to give them a chance to fail. You have to let them be a part of the entrepreneurial activity. You need to motivate them to see how their project, their work, can change humanity.”

How to reach: The Dow Chemical Co., (989) 636-1000 or www.dow.com

The Liveris File

Liveris on Dow’s history of success: We’re actually one of nine companies that are still around from the inception of the New York Stock Exchange. There are only eight others who were there since the beginning. We’re not afraid of change. I didn’t get this gray hair easily; it came hard. We have in our DNA the willingness to face reality and take the change and bet the company. To be companies of size, that’s a lot of heavy lifting. I’d like to say we’re in the seventh inning … from a portfolio point of view. We have the technologies. We have the weapons but we’re in the second or third inning from a cultural point of view.

Culture is every person in the company, and Dow has a value proposition at the personal level. As a young chemical engineer, I had a lot of offers, but I chose to leave my great country of Australia to live in this great country, not because I think you’re greater but the company called Dow has a better value proposition to a human being. I was attracted by the people.

Liveris on sustainability: One day Dow Chemical won’t be known as Dow Chemical; it will be known as Dow. Dow sticks to the brand of the diamond (logo). The brand will stand for … our commitment to sustainability, but not sustainability as a noun, sustainable as an adjective. Sustainable business, sustainable profits, sustainable planet are the same things. How you actually marry the intersection between environment, economy, society, business, government, society.

Takeaways

Understand your industry.

Value innovation.

Find and retain great talent.

Tim Smith faced a big challenge at Verizon PA/DE, but he had the confidence and track record to win over the skeptics

Tim Smith, region president, consumer and mass business markets, Verizon PA/DE

Tim Smith, region president, consumer and mass business markets, Verizon PA/DE

When Tim Smith arrived to lead Verizon’s Pennsylvania/Delaware Operations, he found a group that thought it was performing quite well both from a metrics perspective and in the way it served its customers.

Unfortunately, the data Smith had reviewed painted a different picture of what was happening in the PA/DE region of the $115.8 billion broadband and telecommunications company.

“The challenge I had was taking a group of individuals that had a lot of tenure, with most of them having been in their positions for more than 10 years, and convincing them that they really weren’t as good as they thought they were,” Smith says. “We had a long way to go to provide a compelling service experience.”

Smith was in the midst of a transition from Verizon’s vice president of operations in Florida and Texas to his current position in Pennsylvania/Delaware.

“I had come from an environment in Florida and Texas where, when I left, the operations budget was $4.5 million under budget,” Smith says. “When I came to Pennsylvania/Delaware, they were $7.8 million over budget.”

These numbers were clear evidence of a problem. But when Smith met with operations directors and later with his sales directors in the 3,100-employee region, he sensed very little energy to get things turned around.

“I said, ‘Do you believe that you can get better?’” Smith says. “And they said, ‘Well, yeah, but we’re No. 1 on this and No. 1 on that.’ I looked at the numbers and said, ‘You may be comparing yourself to a certain part of the region. But if you look at this team nationally, you’re not No. 1. That may come as a surprise to you, but you’re not.’ At that point, you could see the expression on their faces change a little bit.”

It was becoming clear to Smith that he had a tough job ahead of him.

Get people actively engaged

As Smith emerged from his first meeting with regional leaders, he felt he had to take immediate action.

“The first thing I wanted to put in place was for them to work with a sense of urgency,” Smith says. “The numbers were decent, but they weren’t where they needed to be or where they could be.

“I talked to them about how they needed to work with a sense of urgency and mapped out where I thought we could be both on the service side and on the expense side and then eventually on the revenue side so we could turn the margin picture of Pennsylvania/Delaware around.”

With that initial message conveyed, Smith then wanted to speak to everyone who worked in the PA/DE region and make sure they understood what he was trying to do.

“I wasn’t just dealing with my direct reports,” Smith says. “I had to make sure the messaging that I wanted filtered down into the organization and got down to the technician level so that they really understood what was going on.”

To get that message across the way he wanted, Smith gathered the directors to develop a new mission statement that had proven effective for him in the Florida/Texas region.

“I changed just a little bit of it so that it fit exactly what was going on in Pennsylvania/Delaware,” Smith says. “I worked with the directors because my philosophy around how I lead is I want to make sure that the team is involved in everything I do. I don’t just create something and throw it out there and see if it sticks and then move forward.”

Smith didn’t want it to be his mission statement. He wanted the directors to take ownership and feel like it was a mission statement that spoke for the entire group.

“I brought in the directors, gave it to them and said, ‘How can we change this to make sure it really fits what we’re going after?’” Smith says. “‘What are our goals? What do we want to do? Do we want to be best in class? If we want to be best in class, how are we going to do that? How innovative is this team? How innovative have we been?’”

Smith talked about innovation, culture, competition and revenue. He wanted to drive home the message that eventually, complacency would lead to bigger problems.

As a means of continuous reinforcement of the mission statement, Smith made sure the statement was always visible to his team.

“I put together a mission statement that I wanted everyone to put in their cubicle, their office and in their garages,” Smith says. “I sensed that if my direct reports were complacent, then there was no question the rest of the team would be that way as well.”

Making the tough call

Smith had offered some tough feedback to directors in the region about their performance. But it was about to get even tougher when he came to the realization that the team needed an overhaul.

“I came in and within the first 30 days that I was here, we reduced almost 400 technicians and a director,” Smith says. “We called it an ISP offering, an income security plan. It allows individuals in the business to elect to leave the business if they so choose. We sweetened it with a pretty good chunk of money. Not only did they get their years of service, but they also got a huge stipend to leave the business.”

It was obviously a difficult decision to make, but Smith felt it was the right call to get things turned around in the PA/DE region. It also made it clear that the status quo was not going to be acceptable.

“I had to be really self-confident in the decisions I was making when I came into this job,” Smith says. “And that had to be really consistent with my values and my belief system. You need to trust that gut instinct that you have to make the right decisions. I didn’t have a whole lot of folks that were cheering for me to do the things I did or make the decisions I made.”

If he did not produce any results, Smith would face a lot worse than the lack of cheering and he understood that. But that confidence he had in his leadership abilities, and the knowledge that he had done it before and succeeded, kept him moving forward.

“I had to show them I could get results and I had to show them I could do it in a relatively short period of time,” Smith says.

Implementing change

Smith’s goals were to cut expenses, improve customer experience and energize employees to work as hard as they could for the company and its customers.

One of the key metrics Verizon looks at is the meantime to restore high-speed Internet due to outages from weather, equipment malfunctions or other problems.

When Smith arrived, he was coming from the best-run operations region in the nation. “We were running in Texas and Florida right around 30 hours for restoral,” Smith says. “In Pennsylvania/Delaware, it was around 56.”

There were other metrics in which PA/DE was way behind as well. And Smith set out to create a sense of accountability at every level of the region.

“I taught them how to look at what I would consider the numbers or the metrics and put together action plans that really drove those numbers where we wanted to go,” Smith says.

As he looked at the team and who knew how to do what, he discovered that some people weren’t trained in all that they needed to know.

“They had groups of individuals that just focused on one piece of the install,” Smith says. “I said, ‘We can’t do that. We need everyone to be accountable for every install every time.’ So we changed our philosophy.”

The key to making this type of improvement work is listening to your team and working with them to bring everyone up to the desired level.

“I have a call with my directors and second-line managers every Friday,” Smith says. “It’s not a call I beat people up on. It’s a call where I hold them accountable and we talk about the actions they had taken the previous week and how those actions either helped them or didn’t help them.

“If it didn’t help them, now I’ve got the team on the call to help them so they can improve the next week. Leaders need to excel at giving feedback and it has to be quantitative feedback.”

Smith says the efforts of the team have paid off in a big way for the company, the region and its customers. The budget has been trimmed, everybody has clearer goals and the end result is actually less work that now needs to be done.

“When I came in here, the amount of work we had every day was more than double what we have today,” Smith says. “Once we reduced it down, we were able to provide a more compelling service experience for our customers. We improved our business meantime restore by 49 percent over the past two years and reduced our overtime by 31 percent. So it speaks to the quality of life our employees now have.”

How to reach: Verizon,  www.verizon.com

Tim Smith

region president, consumer and mass business markets

Verizon’s Pennsylvania/Delaware Operations

Born: Fort Wayne, Ind.

Education: Bachelor’s degree in business administration, Indiana Wesleyan University.

What was your very first job and what did you learn? Danny’s Pizza Shop. I was making $1.25 an hour. I didn’t live close to the pizza shop, so I had to get up and catch the bus because I wasn’t of age to drive. It taught me discipline. I wanted to sleep in, and I couldn’t sleep in because I had to catch the bus. If I missed the bus, there was nobody at home to take me to work.

Who has been the biggest influence on your life?  My parents always instilled in me a good work ethic. I watched my dad work, and I can’t remember my dad not being at work through the week, other than vacations. Even a few hours on Sunday, he would go in. My mom was the same way. I watched them do the best they could to make ends meet for our family.

What one person would you like to have met? Martin Luther King Jr. It is not because he’s an African-American, but it’s the vision he had for America. Most people have a hard time creating a vision for their own life or household. When I look at my job here at Verizon, I want to make sure I have a vision for not only growing revenue, margins going up and expenses going down, but there are more than 4,000 individuals that count on me to make the right decision. I don’t take that lightly. Meeting a person like Martin Luther King Jr. would just help me even today to solidify the vision that I not only have personally, but it would also help me in business as well.

Takeaways:

Be confident in yourself.

Think before you act.

Instill accountability.

How upfront planning leads to a higher return on your investment

Some leaders take an “old school” approach to change management — employees get a paycheck, so they’ll deal with any changes without a need for much explanation. But that sets the organization on a path toward failure.

“The biggest problems are when leadership does not account for the fact that resistance is definitely an option,” says Mark Deans, practice leader in Organizational Development & Change Management at Sequent.

“You could build a perfectly streamlined business process, or add the most efficient tool, but if employees don’t understand how to execute it to meet your expectations, it’s not going to succeed. Try as you might, you can’t make people do things,” Deans says.

Smart Business spoke with Deans about ways to ensure successful implementation of a change process.

What is involved in change management?

It’s supporting a change in business processes or systems, technology, etc. The practice of change management applies to any significant change in an organization, including leadership change as part of an acquisition or divestiture. It’s about how employees are supported through the change process.

The methodology is that there is a journey the organization, departments and individuals go through, and each has a completely different time path. Two people might do the same job, but each has his or her own change capability, and it’s a matter of identifying and managing all of those within an organization to make the change as seamless as possible.

How does the change process work its way through an organization?

First and foremost, leadership must be on the same page. Start with getting leaders aligned so they can be the driving force behind the change, helping each individual understand his or her part.

Organizations are taking a more holistic view nowadays. A change might mean more work for some departments but provides an overall net benefit for the organization. It used to be that each silo fought for its own interests. Now, it’s about how departments operate together, and some teams taking a hit if necessary to ensure the overall organization is as successful as possible.

One of the first steps is acknowledging the need to change, and the benefits. There should be some compelling reason, whether it’s regulatory changes, an attempt to improve market share or boost the bottom line. If the overarching goal is to improve margins, explain what that means for each group, and ultimately for each individual. You have to manage change upfront and get everyone onboard at the start rather than waiting for problems. It’s analogous to going to the dentist. If you see your dentist on a regular basis, keep your teeth clean and get X-rays, you can catch cavities when they start and are easier to fix, instead of not going for a long time and having major damage. The same holds true for change management, if you start a project and haven’t thought about how to communicate it to employees, going back and fixing it is much more difficult.

Is it important to state a desired outcome?

Absolutely. That is where some companies fail as well. They make a change and aren’t sure why. A company buys hundreds of iPads as part of a mobile technology strategy without addressing the intended use. So people are updating their Facebook status or playing Angry Birds because they don’t have a burning business reason to utilize these tools. That might be a ridiculous example, but there are plenty of cases in which companies want to hurry up and do something because it’s a shiny, new object.

You also need to accept it if a change didn’t work. Evaluate the success of the change, including what happened and didn’t happen as planned. Change projects always take longer and cost more than expected. Organizations that handle change well go back and figure out what they did well, and what could have been done differently. Then they remediate anything that did not get executed as well as planned. They learn from the experience so the process can be improved next time.

Insights HR Consulting is brought to you by Sequent

 

Take a deep breath…and read how Trina Gordon sold her team on big changes at Boyden World Corp.

Trina Gordon, president and CEO, Boyden World Corp.

Trina Gordon, president and CEO, Boyden World Corp.

Trina Gordon looked at her company’s clients and could see that they wanted more. It wasn’t that Boyden World Corp. had done a bad job of meeting their needs. They just had more needs to be met.

“What we began to notice out of this downturn was challenges in the macroeconomic environment continued to persist globally,” says Gordon, president and CEO at the professional services firm.

“Clients, particularly global clients and emerging global clients all over the worldwide landscape were becoming more demanding about greater consistency and quality of service from their advisers,” she says. “What that meant was we needed to take a really hard look at what was an effective client advisory relationship.”

It can be a tough pill to swallow when you feel like you’re giving maximum effort to help your clients and then you find out that you could be doing it better.

“There’s a little bit of that in your psyche that says, ‘I want to hear the great things I’m doing,’” Gordon says. “I’m not sure I want to hear where I didn’t do as well or where I need to improve. But it’s the only way we’re going to get better at what they want us to do and deepen the relationship.”

Sometimes, you’ve got to set your ego aside, even when you’re a top 10 global executive search firm with 250 associates in more than 70 offices and 40 countries around the world.

“Sometimes partnerships tend to be more process-driven and internally focused and concerned with the practices and processes of how we do our work,” Gordon says. “In this case, we had to turn that perception completely around and push our organization facing outward at potential and existing clients. We had to build a foundation for how everything we did focused on what they told us they needed and how we performed against those needs and requirements.”

Get to the point 

In the simplest terms, clients were looking for more bang for their buck with Boyden.

“Clients were no longer saying we have talent or human capital needs in emerging markets and anybody sitting in an emerging market can help us,” Gordon says. “What they began to say was we want real sector expertise, sometimes even deep functional expertise. You need to understand our business in a unique way. We began to see as a board, as a partnership, a real tipping point in how clients look at the professional services sector.”

Gordon wanted to respond swiftly, but methodically to this change in the marketplace. It needed to be done, but it needed to be done right.

“The challenge for a firm like our’s is how do you respond to those trends in a way that really adds differentiating value to clients,” Gordon says. “How were we going to uniquely stand apart from our competition and ensure that we could meet those client needs at an increasingly and more complicated demand level?”

One of the first things Gordon did was meet with all Boyden’s global partners and her leadership team. It would serve as a foundational meeting to begin developing a strategy to transform the firm.

“The message was we have this opportunistic window in our own retained search business to drive this concept forward and lead it as a premier global search firm, the first to do so,” Gordon says.

One of the next steps was a global conference in Asia where many of the firm’s key leaders sat down and defined the things that they felt the firm needed to represent going forward. These leaders had spoken with clients and gathered feedback. Now it was time to lay it all out there so Boyden could begin to shape its strategy.

“Part of what clients have shared with us is we want to have a singular kind of experience with you,” Gordon says. “That means you need to understand who we are and what our business strengths are. Understand our business. Get under our skin. Be sector specific with us. You have to demonstrate a genuine understanding of who we are, which meant the difference between a robust client relationship and one that isn’t robust.”

Know what you don’t know

There is a word of caution that must be addressed for any firm that is looking to adapt what it does for its clients. You better have a good idea of what you stand for before you begin the transformation.

“When we stray from our core expertise and we stretch out and try to do something we’re not capable of doing, we’re no longer acting with integrity and it ultimately will affect the client relationship,” Gordon says.

“We have to be able to know what our strengths are, be true to them and have the courage to say, ‘This is how we can best help you.’ We also have to be honest with the client and say, ‘This is what we can do and this is what we can’t do well.’ We’re not going to risk our relationship for the sake of saying we can be all things to a client.”

If you don’t know what your core beliefs and expertise are, then how will you know whether the thing you’re being asked to do fits in? You have to be clear about it so that you can give your best effort and performance on the project.

“It’s one thing to stretch in an area where we have done some work and there’s expertise elsewhere in our firm to help us and guide us and draw upon and bring into the client equation,” Gordon says.

“It’s another when it’s completely further afield from the core expertise of the firm. That’s where you can get into trouble with a client. And it’s very hard to recover a relationship that you’ve damaged.”

Be methodical

Boyden is a big firm and so there was a ton of information and data to sort through as this transformation took place. It was incumbent upon Gordon to not let it overwhelm her team.

“It’s important to take a step back, center yourself and think through what’s really important,” Gordon says. “Prioritize and move in steps. You’ll overwhelm the organization if you try to do much too soon without a coherent message, without responsible buy-in and without a very clear approach to staying true to who you are. “We’re still evolving as an organization because change is not always an easy thing. What I’ve learned is to take a deep breath and make sure you’re confident in the people around you and confident in what your clients are telling you.”

You want to please your clients and that’s obviously the most important thing. But don’t let it affect your work and force you into a pace that will result in a substandard final product.

You also need to make sure you’re cognizant of your personnel resources. What skills can your people jump right in and take on and which ones will require some level of training?

“You can’t just assume you have a completely homogenous organization that all can move forward at the same time toward this enhanced approach with clients,” Gordon says. “One of the things I tried to do very early with our leadership team was reach out to those key voices inside our firm who embody this work already and who are our greatest client advocates.”

You undoubtedly have some people in your company who can be trainers and who can help their peers grow. Tap into that resource and put it to use. And for other people who need to learn some new skills, do what you can to help them.

“There’s a lot going on inside a complex organization,” Gordon says. “Not everybody can drink from a fire hose at the same time. So you need to be able to call upon your leadership, those individuals that people respect and know that already embody this expertise with clients and utilize their knowledge base and their talent to train, teach and enrich younger partners or partners that are new to the profession. That is a continual process.”

It’s a process that will likely never be completely wrapped up. There’s always more to learn and more to figure out and Gordon says they’ll just keep on trying to do the best they can for their clients. But this process has already put the firm in a better position to serve those clients.

“Our dashboard is built, our metrics are built, so all of it is now launched,” Gordon says. “We’re at this exciting period where you’re diving off the board hand in hand with your client into this brave new milieu. I see it as a continual evolution that our own firm and each and every one of our partners will sort of continuously travel together.”

How to reach: Boyden World Corp., (312) 565-1300 or www.boyden.com

 

The Gordon File

Trina Gordon, president and CEO, Boyden World Corp.

Born: Alliance, Ohio

Education: Bachelor’s degree, political science; master’s degree, public administration, Auburn University

What did you want to be growing up?

From the time I was little, I always wanted to be an equine veterinarian. So my interest in Auburn, at least prior to going there, was they have one of the finest equine veterinary schools in the country. When I went there, I fell in love with the philosophy of the university, the campus and the people. But I found that the pre-veterinary program, I didn’t have the constitution for invasive medicine. So my dream of becoming an equine vet versus the leader of a professional search firm is quite different. So I switched majors, I stayed and I loved it.

What was your very first job?

In the summer, my brother and I ran a custom car detailing business part of the day out of my parents’ garage. Then in the afternoons, I ran a daycare nursery school for kids in our area. I had about 10 to 12 kids at a time and they were ages six to 10.

Who would you like to meet and why?

I love history, so if I had the opportunity to sit down with anyone, it would be Elizabeth I. I would like to know how a woman who was the first leader of a powerful, yet fledgling nation was able to bring a divided country together and bring them to global prominence. How she was able to unify them behind an individual who heretofore in their history, had never been a woman and reign long and lasting over a very respectful populace. She was able to gain the credibility of all the men around her and win respect around medieval Europe.

Takeaways:

Be clear about your goals.

Understand your limitations.

Don’t rush just to get it done.

Financing deal at Silverado Senior Living proves company has a business model that works

Loren Shook, chairman, president and CEO, Silverado Senior Living Inc.

Loren Shook, chairman, president and CEO, Silverado Senior Living Inc.

A lot of people gave money to help Silverado Senior Living Inc. become a national leader in providing care to people with memory impairments. Fourteen years later, Loren B. Shook felt like it was time to give them a return on their investment.

“We made stock options to many staff members through those years,” says Shook, the company’s co-founder, chairman, president and CEO. “No one got paid anything. All of the money we made went back into expanding the company. At some point, we needed to monetize peoples’ investment.”

In addition to Shook, his co-founders, James P. Smith and Steve Winner, and those staff members, investments were also made by the private equity firm Riordan, Lewis & Haden. This funding was instrumental in building a company that has 2,800 employees and provides invaluable care to senior citizens who need it across eight states.

“A lot of people think it’s just about the money, getting the equity and the debt partners,” Shook says. “But money is just part of it. The bigger part is what kind of partner are they going forward with you?

“All of them understood the vision of the company, which was to give life to our residents in our assisted living communities, our clients in home care and our patients in hospice. The vision is to give life to their families and give life to each other as associates and colleagues in the company.”

Shook knows all too well that without money, none of it would be possible and that Silverado Senior Living would have never gotten off the ground. But the financials have never been his focus and he strongly believes that is a key reason why the company is so successful today.

And so it was through that prism that Shook and his team set out to find a way to provide a return on past financial investment while simultaneously strengthening Silverado for many more years of meaningful patient care.

Find your soul mate

One of the best options that the Silverado team initially came up with was to take the company public. But as they began to look at what that involved, they quickly soured on the idea.

“Every year, you’re spending $1.5 million to $2 million for accounting and legal fees just being a public company,” Shook says. “You’re taking up a lot of time for the CFO and CEO that could otherwise be providing service more directly to our customer base.”

Soon, their thoughts turned to Health Care REIT, a real estate investment trust that had been working side by side with Silverado since its inception.

“REDIEA is an acronym that stands for Real Estate Development Investment Empowerment Act,” Shook says. “It was very new. Health Care REIT had done one REDIEA with an LLC corporate structure. We’re a C-corp. It was a very detailed process. It took a lot of action to overcome a lot of hurdles that had never been addressed before.”

One of the biggest hurdles in any business deal is the relationship between your company and the financier you want to partner with. Shook flashes back to 1996, when he and Smith were looking for financial support to start Silverado.

“Whenever I started a meeting with a potential financial partner where there was equity or debt, I always started the meeting by telling them what the vision of the company was,” Shook says. “If they didn’t have an interest in the vision and the purpose, the meeting was over because we were not in alignment.

“A lot of experts in raising money would say, ‘Don’t do that. Go down the path of return on investment, the capital you need and the numbers.’ I never believed that was the right way to start a meeting because it’s more than just about the numbers. No one I met with was upset that I started the meeting that way.”

The fact that Silverado had built an established relationship with Health Care REIT over the years made it a lot easier to move the process along with the REDIEA. But that relationship only developed because Shook and his team took the time in the beginning to find partners who shared their vision.

One of the most important things you can do to help you find that kind of partner is to talk to people who have done business with the investor in the past and ask what happened when trouble arose.

“Tell me the hard times you went through and what it was like,” Shook says. “I want to know that I have a partner that has the experience and has been through the ups and downs and is going to be by my side when we’re going through difficult times.”

As Shook looked to finalize the REDIEA deal, he wanted to make sure there was alignment and a shared vision, just as there had been 14 years earlier.

Lean on your culture

As the REDIEA deal was being consummated, Shook was also very aware of his staff and the responsibility he felt to keep them appraised of what was happening. But he also felt confident he had established a track record of trustworthy leadership.

“The culture has to be there before big decisions come about,” Shook says. “You don’t create the culture at the time you have a big decision where you need people to be confidential and you need people to come to you and say, ‘I heard what you said in the conference call. But here’s what I’m worried about, Loren.’ You have to have that kind of open trust in the company. That has to be there before those issues come up.”

Shook shared what was happening with his senior leadership team and asked them to keep it from going public since the deal was still being finalized. He shared the good parts of the deal being discussed with Health Care REIT and the cons.

“There’s always a negative side to everything we do,” Shook says. “Here are the pros, here are the cons and here are other alternatives of what we could do to capitalize.”

Shook reiterated that there was no pressure being made to enter into this kind of deal from anyone.

“Riordan, Lewis & Haden wasn’t saying that you have to recapitalize the company,” Shook says. “They were very patient. It was just the right time and the right thing to do.”

Shook says finding employees who can thrive in your culture and have trust in the way you do things requires a similar approach as when you’re doing your due diligence on possible lenders.

“Our vision is to change peoples’ lives,” Shook says. “So people who work within a company like our’s, in order for the culture to exist, would have to have an alignment or purpose in life with that. Their individual purpose in life doesn’t have to be the same purpose, but it needs to be something that is compatible with the major purpose of the company.”

In order to stay healthy, a culture needs to be such that it can allow people to leave without creating a big problem. Even the strongest culture has people who sometimes lose their connection to the organization.

“Lives will change,” Shook says. “Where it was the right place to be before, maybe it’s not anymore. We want people who get more than they give out of working at Silverado. We want the company to get more than it gives out of having that person work with us. If both are positives, it’s a tremendous source of energy coming together. If one is negative, there is a drain on that energy and a drain on that company.”

Believe in what you do

With a strong relationship with Health Care REIT and a strong culture that trusted in its leadership, Silverado was ready to make a deal. The $298 million partnership closed in January 2011.

“Technically, we did sell the company,” Shook says. “But all of us investors, including Riordan, Lewis & Haden reinvested a great deal of money back into the company. I personally reinvested 50 percent of my proceeds back into the company.”

Silverado is poised to continue growing with seven new communities under construction, joining the 23 communities, eight hospice offices and five home care offices already up and running. Another hospice office and home care office are also in the process of opening.

“Before we started in this industry, people said the model we pursued would not work,” Shook says. “They said we would be bankrupt right away because they couldn’t connect the things we do. They would say it’s either a medical model or a social model and they couldn’t understand how both could happen.”

Shook is confident the results have proven those critics wrong.

“People who invest in business want to make a difference too,” Shook says. “If you get a good return on your investment and make a difference in peoples’ lives as well, then you will win attracting that capital to your company compared to somebody else who is just giving them a return.”

How to reach: Silverado Senior Living Inc., (888) 328-5400 or www.silveradosenior.com

The Shook File

Loren Shook

Co-founder, chairman, president and CEO

Silverado Senior Living Inc.

What’s the best business lesson you ever learned?

One of them is to understand my own strengths and bring in people who have strengths that I do not have. In other words, I don’t want to spend my energy trying to do things that are not my strengths. I’m good at seeing things that can happen that are disparate or ideations, or seeing things that people don’t see and then connecting them.

I can put together the big picture deals like a REDIEA, but I’m not good at the details. Tom Croal, my CFO, he’s good with the big picture. But he’s also terrific with the details. There are enormous numbers of them and he’s very good at that. So I have a CFO who is excellent at that and I’m not.

Shook on value: People will pay for what they value, and I should not impose my financial limitations on them. I don’t know their means and I don’t know what they value. I couldn’t afford to have a person living at home 24/7 taking care of a loved one. So one would think, ‘Who can afford that and why provide that as a service?’

Well, nonsense. We have a number of people we take care of at home 24/7 and there are plenty of people who can afford that. It’s expensive, but it’s not a problem for them. If they can afford it, they should be able to have access to that service.

We’ve taken someone’s mother with Alzheimer’s on a cruise to Mexico. We staff it 24/7 and make that cruise possible and she has a great time. Don’t put your limitations on what other people want.

Takeaways:

Vet your financing partners.

Stick to your culture.

Don’t give in to doubt.