Brennan Mulcahy is confident slow and steady will win the race for solar power supremacy

Brennan Mulcahy, co-founder, chairman and CEO, American Solar Direct

Brennan Mulcahy, co-founder, chairman and CEO, American Solar Direct

Brennan Mulcahy likes to keep it both simple and smart when he thinks about his growth strategy at American Solar Direct.

“It’s about providing high-quality, photovoltaic rooftop solar systems for residential customers in California,” says Mulcahy, the company’s co-founder, chairman and CEO.

“That’s it. So we’re focused clearly on that. There is a lot of opportunity for our business in other states and other jurisdictions, but we’re very focused on getting that part of our business right. I’ve seen too many companies try to be everything to everybody.”

The measured approach that Mulcahy takes toward growth at his 170-employee company is an effort to get it right the first time and prevent unnecessary mistakes.

He wants to get the right people in place, build a strong culture of empowerment and have an operational process that everyone understands. That way, when the business does take off, there will be far less uncertainty about what needs to happen.

“You’ve got to grow in a prudent manner,” Mulcahy says. “Companies that try to do too much, too fast risk destabilizing the business. So it’s finding a balance between high growth and controlled growth. We strive for high growth, but we also want to achieve controlled growth so that we’re managing the business and our resources responsibly.”

Develop your team

As you seek to prepare your company for a higher volume of business, you need to take a good, hard look at the team you’ve got in place and see how it matches up with your vision and company goals.

“You need to take a formulated approach so you understand not only where your weaknesses are in the organization, but also your opportunities,” Mulcahy says. “Identify those high-performers who are likely going to advance in their career.”

Mulcahy holds a weekly executive committee meeting where his department heads talk about the strengths and weaknesses of the organization from many points of view, including personnel.

“We look at how we’re performing across the organization on a regular basis,” Mulcahy says. “You have to identify, as you’re growing, the key positions you are going to want to fill six months, 12 months, even two years down the road. You can’t just go out and hire everybody you want on day one. So we work together to create that prioritization based on what we need in order to hit the goals and objectives of the organization.”

You need to keep your team engaged in this discussion so that everybody is moving forward with the same information and the same goals in mind.

“You work together to set those goals and everybody on your executive team has bought in to them,” Mulcahy says. “You want to create an environment that allows them to contribute and feel that they really can contribute meaningfully.”

One of Mulcahy’s priorities with regard to personnel decisions is to see if a need can be filled internally. Just as you want your leadership team to feel part of the high-level decisions, you want your employees to feel connected to the growth plan at their level.

“I’m a big believer in growing organically and offering opportunity for advancement in the organization to the extent that you can,” Mulcahy says.

Keep the makeup of your company’s work force in mind on a regular basis and think about how the players could be moved as your company grows.

“Identify who your superstars are, those folks who are going to advance in their career in the short term,” Mulcahy says. “Understand each department and who you have coming up in that department. The way I look at it is very formulated. I look at each department and who the critical senior positions are and then I look at who in the organization is below that could fill it at some point. Who may need additional training or support to continue to advance? Where do you have gaps in the organization?”

When you have a clear understanding of what you’ve got, you’ll be able to make smarter decisions when you have to reach outside your own walls to make new hires.

Be a good listener

As you build your talent level or do a better job of maximizing the talent you already have, you have to make sure you keep your ears open to the ideas your people bring to the table.

“You have to listen to people,” Mulcahy says. “That is something that is hard for a lot of leaders who have their idea and just do it. If you bring high-performing people onto your team, you have to listen to their ideas. You may not always agree with them, but you have to listen and weigh and consider their perspective. Engage as a team and allow people to feel comfortable challenging and debating ideas.”

This kind of engagement makes people feel like they are part of the plan to make the business grow. It also gives them comfort that there is a plan and that the work they are doing is building toward bigger goals.

“If you respect peoples’ perspective and you respect their point of view, you make them feel valued,” Mulcahy says. “Then as a team, you come together and draw conclusions. At the end of the day, once you’ve had the discussion and the debate, it’s important that everybody gets on the same page to execute a decision. But again, you have to allow for that opportunity to be heard.”

It starts with you. If you openly demonstrate that you value the perspective of the people on your leadership team, they will be more likely to do the same with their direct reports. The result is a group of people that don’t just view your business as the place where they come to work and collect a paycheck.

“I want to have a culture at American Solar Direct where people feel like they helped build it, not just that they work there,” Mulcahy says.

This willingness to listen and consider other opinions is another opportunity for you to show that you want the company to be successful, but you want it to be done the right way.

“It’s a culture you have to embed in the organization,” Mulcahy says. “It’s not a process, not a policy you put up where you say we’re going to listen to our employees. It’s something you actually do and you start by doing it.”

Build customer relationships

Relationships are a key component of any organization, whether it’s between fellow employees, employees and management or a company and its customers.

“For our business, it’s not a one-stop sale,” Mulcahy says. “You can’t walk in, drop off the product and take a check. When we enter into a relationship with a customer, it’s a 20-year relationship because we lease them the solar equipment for 20 years.”

Customers make monthly payments for the equipment that allows solar energy to power their homes. In return, they expect responsive service if anything goes wrong.

“So when they visit for the first time and give them that presentation, it’s not just a quick in and out, see ya later,” Mulcahy says. “We have to come back and inspect the roof. We’re going to send installation teams in and put that system up on the roof. We’re going to have a long-term relationship so the salesperson has to do a good job in order to be successful.”

Whether you’re in the solar business or a different industry, you need to promote the philosophy that happy customers lead to confident salespeople.

“Salespeople who have a happy customer, they feel good about what they have done,” Mulcahy says. “That gives them a lot of confidence and helps them get more business because they feel proud of the job that they are doing. The second thing that happens is if you do a good job for a customer, you get referral business.”

Referrals have been especially strong in the past couple months and Mulcahy says that bodes well for the future.

“It makes their job easier,” Mulcahy says. “Anybody in sales loves a referral because you don’t have to go out and work as hard to get that customer. It indicates to them that we’re doing a good job with our frontline customers.”

Mulcahy wants American Solar to be viewed as a company that is reliable and committed to great customer service.

“It’s easier to get staff excited about doing a good job than it is going and doing a low-cost job or a mediocre job,” Mulcahy says. “We’re not setting out to be a high-volume, low-quality, low-cost provider. We’re setting out to be a high-quality, superior customer service product with a personal touch. We think that is something that makes everybody excited to be part of the team.”

American Solar Direct is expected to hit $60 million in sales this year and Mulcahy is confident that his team is in a strong position to satisfy the demand.

“We can educate the customer, provide the personal touch and make them feel comfortable with what they are getting,” Mulcahy says.

How to reach: American Solar Direct, (855) 765-2755 or www.americansolardirect.com

 

The Mulcahy File

Brennan Mulcahy

co-founder, chairman and CEO

American Solar Direct

What’s the best business lesson you’ve learned?

Communicate openly and honestly.

Why is that an important lesson?

It just saves so much time and energy. So often people spend hours or days beating around the bush and not getting down to the most important issue. I think you’ve got to really drill down to the nitty-gritty of what is important. Just be open and honest.

There is never anything to be gained by beating around the bush because you just confuse other people around you. Be very clear in what you think about something and what you want to do and just really get to the point in a respectful way if you don’t agree with somebody.

What traits are essential for leadership?

No. 1 has got to be the ability to listen. That’s critical. You often hear communicate, communicate, communicate. I agree with that. But I think the first pillar of communication is listening. People often get that backwards. They think communicating means you have to be doing all the talking. To be a good leader, you have to listen to people.

You need to be able to make decisions as well. I’ve often seen people who aren’t good at making decisions; they often spin their wheels around in circles. At a certain point, you have to make a choice and forge ahead. That doesn’t mean you always make the right decision. But you do have to make a choice sometimes and hopefully get it right more often than not.

Who has been a big influence on your life?

My brother, Tim Mulcahy. He got me started in sales when I was very young, and we started many companies together.

Takeaways:

Know what your team can do.

Engage others in decisions.

Get to know customers.

How Roger Andelin used the art of storytelling to change the face of Internet retail shopping

Roger Andelin, president, Rakuten.com Shopping

Roger Andelin, president, Rakuten.com Shopping

Roger Andelin believes in the power of storytelling — so much that even an e-commerce business composed of people from the impersonal sales and technology fields can benefit from the skills of a good storyteller.

Andelin had served as the CIO of Internet retailer Buy.com for six years before leaving to take the same position with The Washington Post, one of the most famous and influential newspapers in the country. It was during his stint with the newspaper that Andelin, an executive with a commerce and technology background, discovered how to take good storytelling and apply it in the world of commerce.

“I became a lot more aware of the power of storytelling and the power that can have in a business, especially on the commerce side,” Andelin says. “Commerce was missing that.”

When the opportunity arose for Andelin to return to what had, in the interim, been renamed Rakuten Buy.com, he felt he could utilize the sum total of his experience as an executive, splicing together his e-commerce background with a newfound knowledge and appreciation of storytelling to open new doors for the company.

“When I sat down for the first time and heard about our chairman’s vision, it resonated through and through,” Andelin says. “The idea was [that] we want to give merchants a voice in our marketplace. Let’s connect our merchants with their customers; let’s bring a new shopping experience to the table.

“It was very different from the typical model in our space, which is you come in and search for a product, put it in your cart and check out. It really brought back a lot of the nostalgia in the commerce business, which was missing on the Internet and electronic side. We had a chance to bring that back to the whole process.”

After accepting the president’s role at Rakuten Buy.com — which was rebranded as Rakuten.com Shopping in January — Andelin set out to tell the story of the company’s new vision and how it would be realized. He wanted to get every executive, manager and associate in the Rakuten system to believe in the vision and to feel motivated to carry out the plans that would make the vision a reality.

Define your drivers

Any retail business — whether in the e-commerce space or reliant on a bricks-and-mortar network of stores — will always be driven by the numbers. The number of customers you can get to your site or store will convert to a number of sales, which will convert to a number of repeat customers.

But to realize the new vision for Rakuten.com Shopping, Andelin needed to promote something else. He needed to promote loyalty. It’s something that can’t be directly quantified on a balance sheet, but Andelin realized, soon after he took over, that it would be an essential ingredient in the success of the vision. It would be, in short, a primary driver of the business moving forward.

“The business really boils down to the number of visitors that come to our site and our conversion rate to how many of those visitors buy from us and what the average value of that order is,” Andelin says. “So once you look at those drivers, those KPIs [key performance indicators], you look into it and see what is it that drives that component. Traffic, or visits, are driven a lot by advertising but also by loyalty.”

As such, Andelin wanted his team at Rakuten.com Shopping to focus on driving customer loyalty and merchant loyalty. Since the staff at the company is, in large part, composed of people with technology backgrounds, it was a different concept.

“What happens is that technology departments often get focused on a feature,” Andelin says. “They’ve been asked to deliver A, B and C, and at the end of the day, they deliver that, but it doesn’t always yield the business value that was expected. So by shifting the emphasis away from the actual feature we’re delivering and getting the teams focused on delivering business value, it fundamentally shifts the whole project pattern in a very meaningful way.”

Andelin and his team began to implement initiatives, such as a reward points program, as a formalized way of building merchant and customer loyalty. But he also wanted to see his team deliver value in more fundamental forms.

“One of our objectives, for instance, is to increase the voice of our merchants online, to help them connect more with their customer base,” he says. “That is one of the main things that is going to separate us in a meaningful way from our competition. That technology stepping in and facilitating that communication is something that would be pretty unique for a merchant.”

Give people a voice

You can craft a well-thought-out vision that aims the company toward new heights of prosperity, but none of it will matter if you can’t achieve buy-in from everyone in your company.

It’s something that Andelin acknowledged early in his tenure, and it’s why he embraced the role of storyteller from his first day on the job. Employees can hear about the vision, they can learn the drivers, but until they see tangible ways that the vision will lead to a better, more profitable company — and by extension, more earning potential and job stability at their level — they won’t completely buy in.

“Alignment can be challenging,” Andelin says. “But I have found the best way to do it is to very clearly articulate the problem or very clearly articulate the vision and then explain why the solution we’re all working toward will resolve that.

“You start to get individuals to understand the vision or the problem by articulating it very clearly. They see it and recognize what you are doing and why you’re doing it. People generally get that. It’s when the communication isn’t there that the team starts to falter and lose the passion for what they’re doing.”

In order to tell a story, you need a means of communication. Authors have books, journalists have mass media and directors have the cinema. At Rakuten.com Shopping, Andelin has, among other things, weekly “asakai” meetings that utilize technology to bring together people from Rakuten’s U.S. operations and beyond.

During the weekly meetings, senior management reinforces the vision and values of the organization to employees throughout Rakuten’s footprint. The meetings are another way Andelin is using technology for storytelling.

“What we say at the weekly asakai meetings goes all the way down to daily huddles, where each department will get together and talk about their departmental issues,” Andelin says. “The thing to remember is the teams you are leading have to get it. The business leader has to be open enough and accessible enough, to the point where if the team has questions, they feel able to ask those questions.

“If they have concerns, they have to get those concerns out on the table and walk through them.

“One of the most powerful ways to reach consensus is not by reducing the conversation but by increasing it. It is through conversation that leaders and managers are able to convey the vision and get individuals to come on board with the direction of the organization. Communication is absolutely key.”

Show your wins

Every story has a beginning, middle and end. In Rakuten.com Shopping’s case, the story is still in progress. If you don’t have final results to show your people, you need to show them progress and trends. Keeping employees in the loop is another essential way to bring them on board with your vision. You have to demonstrate the wins you are tallying and the progress you are making toward realizing your vision.

“As an example, we ran one of our summer sales at the end of August, right after I started,” Andelin says. “We measured the sale based on year-over-year performance — so, how we did on these days versus the same days the prior year? That event ended up giving us a fairly sizeable increase in our number of orders, in visitors coming to the site, all of the key metrics that we’re looking at. Those wins really help focus the team.”

If you’re going to tell a story that it’s going to serve as a motivator for your people, the story has to inspire. That doesn’t mean your people have to leave the meeting or conference call ready to climb Mount Everest, but it does mean that they leave as believers in what the company is doing.

“It’s a fairly basic idea that winning is contagious,” Andelin says. “It builds confidence; it helps you to solidify a repeatable process. It shows us what we need to do to drive sales during a particular event. If we get really good and learn those things, we can repeat it, and we can grow our business to improve step-by-step, by improving those processes. Everybody gets excited, and it really becomes a companywide initiative, because everybody has a little piece of it. So when you start to achieve your vision, everybody feels good.”

How to reach: Rakuten.com Shopping,
(949) 389-2000 or www.rakuten.com

The Andelin file

Roger Andelin
President
Rakuten.com Shopping

What is the best business lesson you’ve learned? You want to take accountability for when things don’t go smoothly and perfect. At the end of the day, if you screwed up, take responsibility for it, figure out what happened and move forward. That is one of the most relieving principles in business. It’s a liberating principle for all leaders, as opposed to passing blame and making excuses.

What traits or skills are essential for a leader? Having a vision and being able to communicate it on both an individual and group level. Leaders have to be approachable, accept criticism and be able to defend their positions with logical, rational arguments backed by data and facts. Authoritarian leadership doesn’t fly nowadays. You have to win the minds of intelligent people who are used to thinking for themselves, are well-educated and have fabulous opinions.

What is your definition of success? There is a sense of irony around it, because as soon as you start to define success, you limit yourself. If you define success as you see it, you just cut yourself off from other areas where you could be a success. You have to kind of know success when you see it, just like knowing what art is, or knowing what sounds good in music. So many things drive success, to define it is almost impossible.

 

Takeaways

Tell a great story.

Communicate it to your people.

Show evidence of success.

Lisette Poletes steps lightly, then finds her groove to take Global LT to new heights

When Lisette Poletes joined up with her mother, Hortensia Albertini, to help lead Global LT in 2009, she did so with an air of curiosity.

“Probably for the first eight or nine months I was here, I took an approach where I really just watched what was going on,” Poletes says. “I had to build my own ideas of what I thought was working and not working coming from a different background.”

The numbers show it was time well spent. Global LT, a language training and translation provider, closed 2009 with just more than $9 million in revenue. When 2012 wrapped up, that figure had risen to more than $20 million.

“We’ve had one of the worst economies ever, and we’ve managed to not only survive but thrive,” says Poletes, the 101-employee company’s owner and CEO. “I’m very proud of what the team I work with has done. It’s to their credit.”

Earn employee trust

Poletes joined Global LT with extensive sales and marketing experience from her education at Michigan State University and her prior work experience with Pfizer. But she had not been a part of Global LT, so she had to earn employee trust.

“I wasn’t coming in to take it apart, to sell it, to bring a venture capital firm in,” Poletes says. “I was in it for the long haul.”

Words are one thing, but Poletes backed it up with action.

She invested in new accounting systems and customer relations databases and elevated employees who had worked hard into management positions. She also instituted a profit-sharing program for employees.

“We basically put a plan in place where I don’t take a dividend out of the company if they don’t all get paid,” Poletes says. “It’s fostering that environment where we all feel like we’re in this together.”

Make use of good ideas

Poletes does not need to be the lead voice on every new idea at Global LT.

“We’ve done a lot of different things based on someone saying, ‘This process doesn’t work,’ or, ‘This works in my department,’” Poletes says. “My response is, ‘Let’s make it a best practice and see if we can make it work across all departments.’”

A great example is the suggestion that was made to bring together the people who recruit teachers and translators around the world for the company’s language training department under one leader.

“It was something that had been tossed around in the past, but she came up with a great proposal and a great plan, and we said, ‘Let’s try it,’” Poletes says. “That’s probably been in place the last two or three months and seems to be working well. It may be that we move all our talent to do the entire recruiting under one giant umbrella instead of just for language.”

Keep pushing ahead

As Poletes looks to the future, she sees endless growth opportunities for Global LT’s language services in emerging markets such as China and Brazil. She also sees opportunity in the government sector.

“We just obtained our GSA certification, which allows us to go after government contracts,” Poletes says. “That will be a brand-new focus that has a ton of potential growth.”

And you can be sure that her employees will be part of the pursuit of those new opportunities.

“If it doesn’t work, you can always go back to the way it was,” Poletes says. “But you can’t move forward unless we try these new ideas and who better to come up with them than the people who do the work every day?”

How to reach: Global LT, (888) 645-5881 or www.global-lt.com

Irene Rosenfeld hopes Mondelez International can create delicious moments of joy

Can you imagine a world without Oreo cookies? Anyone who has taken one and dipped it into a glass of milk before popping it into his or her mouth to savor the flavor would shudder at the thought of such a scenario.

But when Irene Rosenfeld returned to Kraft Foods in 2006, she found that the company was on verge of delisting the Oreo brand in China.

“We took a U.S. product and jammed it down the throats of the Chinese consumer,” Rosenfeld says. “We were losing money, and it was a very unattractive proposition. We had a $60 million factory in Beijing, which was sitting empty because sales had not materialized. So we were about to delist the product.”

Rosenfeld and her team at Kraft decided to reach out to people in China before taking such a drastic move. They asked what it would take to make the Oreo brand a success in their country.

“They very quickly told us that the product was too big and too sweet for the Chinese consumer,” Rosenfeld says. “When we allowed our local managers to redesign our product for the local taste and local customs, we had a phenomenal turnaround.”

The Chinese Oreo is smaller and less sweet and actually comes in a green tea flavor. It’s not at all what American consumers want when they open their package of Oreos, but different cultures have different tastes. Rosenfeld knew in that case she needed to adapt to earn the business of the Chinese consumers.

The effort has paid off thanks in part to China’s own Yao Ming, a former star basketball player in the United States.

“Who is the best symbol in China but Yao Ming?” Rosenfeld says. “He’s our spokesman, and we actually go to the local guy. It has been a phenomenal business in China with almost $800 million of the $2 billion business from Oreo worldwide,”

The willingness to adapt played a large part in the move completed last fall to split Kraft into two groups. Kraft Foods Group now holds the company’s North American grocery business, which is led by iconic brands such as Oscar Mayer and Maxwell House.

Kraft Foods Inc. is now Mondelez International Inc. and will focus on high-growth global snacks.

“Our dream for this company is to create delicious moments of joy,” says Rosenfeld, chairman and CEO for Mondelez. “The opportunity for us is to create a $36 billion start-up. It’s an opportunity to take an incredible roster of brands that are household names, brands like Oreo, Ritz, Chips Ahoy, Trident and Cadbury, and put those together.”

Joe Nettemeyer diversified Valin Corp.’s business one acquisition at a time

Joe Nettemeyer, CEO, Valin Corp.

Joe Nettemeyer, CEO, Valin Corp.

It could be a deal. It could be a business strategy. It could even be a house. Whatever the project, Joe Nettemeyer is all about making it bigger, better and more successful.

“I had a boss tell me once that I was not a person that he would put into a business to sustain it,” says Nettemeyer, CEO of Valin Corp. “He’d always put me into something that he wanted to build because I couldn’t help but start trying to re-engineer anything I wanted to get my hands on. Building something is an ongoing challenge, but the results give you a huge amount of satisfaction.”

A builder was exactly what Valin Corp. needed when Nettemeyer joined the industrial solutions business in 2001. Despite years of great success in the semiconductor capital equipment business, Valin has been a fast casualty of the computer-chip industry downturn. With a whopping 90 percent of its revenue coming from chip manufacturing, the company’s revenue plummeted by two-thirds in six months.

“Everything crashed, equipment owners crashed, and we went from being a $75 million business to a $25 million business in about 120 days,” Nettemeyer says. “We didn’t lose market share; it’s just that the slides of the market opportunity dramatically contracted.”

As Valin’s new CEO, Nettemeyer realized the 38-year-old chip manufacturer had two options: Continue in the same direction and fall apart or rebuild as a much more diverse business. Here’s how he transformed the floundering company into one of the nation’s fastest-growing businesses.

 

Shake off complacency

With such a large percentage of Valin’s income tied to shrinking revenue streams, Nettemeyer looked for ways to create new sources of income — and quickly. Acquisitions would allow the company to efficiently diversify its portfolio and grow new business lines.

“When I came in, I realized that we had such a great dependency on too few accounts,” Nettemeyer says. “It was such a huge risk. We had to move into acquisitions. So right in the midst of that turmoil I went out and started borrowing money and buying businesses.”

Not everyone was as excited as Nettemeyer about diversification.

“Experimentation brings rewards and risks that make people uncomfortable,” Nettemeyer says.

“It was challenging for people because they were in a comfort zone. They’d done extraordinarily well for 20 years doing what they were doing, and we were pushing them outside of it.”

In the past, Valin focused on small diameter process management, working with quarter-inch or half-inch tubing. Suddenly, the company was working with up to 60-inch pipe.

Recognizing that he was asking people to make some big changes, Nettemeyer made sure that he and the leadership team were transparent and thorough when they laid out the acquisition strategy to employees.

“I walked the management team through a plan, and we talked about how we could integrate these different technologies and provide solutions versus just selling parts and pieces,” he says.

“There was a lot of communication. I selected all the individuals that I felt were key leaders and we had monthly leadership meetings. We reviewed where we were at, and we had an open book approach to financials. We were measuring the initiatives that we were undertaking. Through that 24-month real crucial period, we were giving monthly feedback.”

Employees appreciated the fact that Nettemeyer didn’t sugarcoat the changes.

“I wasn’t going to pretend that this would all pass,” he says. “There was a core group that really came together and embraced what we had to do.”

At that point, employees who still wanted to take a “wait and see” approach to the market — including two members of Nettemeyer’s leadership team — were asked to go their separate ways.

“I think it’s my responsibility to the company to leave it a better company than it was when I came here,” he says. “That means we’ve got to get out in front. That gives you some heartache and pain. It gives you sleepless nights and scary moments. You have to celebrate the successes, but you also have to say, ‘That was really a dumb idea — let’s stop it.’

“I had to replace some of the management team because they wanted to sit and wait. They thought that the semiconductor industry was going to continue what it always did — it was only in a short-term contraction. Well, that contraction lasted for three years.”

 

Systemize integration

Soon after making Valin’s first acquisition in October 2001, Nettemeyer began buying businesses and product streams that were within the company’s technical bandwidth and that could provide it a competitive advantage. Some acquisitions were a natural expansion of things that the company already did, such as safety devices. Others helped flesh out Valin’s expertise to transform it from a parts provider into a resource for customers.

“We have to find new ways to do things because if you’re going to stand pat, you’re going to get slowly sliced up in the marketplace,” Nettemeyer says. “The biggest struggle we face is the fight against the complacency you get with maintaining the status quo.

“Every year in our planning process, we say, ‘Is this the way that people are going to want to do business with us 10 years from now?’ When you ask that question, everybody says no, and then the next question is, ‘Well, what should we be doing about it?’”

Valin has completed 28 acquisitions since Nettemeyer joined the company 12 years ago, building on technology, and moving more aggressively into light manufacturing, medical devices and service lines. Instead of chip manufacturing, Valin’s biggest markets are now energy, oil and gas. The diversification strategy has allowed the San Jose, Calif.-based company to more than double its size and value over the last five years.

One of the reasons that Valin has been able to integrate so many new businesses so effectively is by having a clearly defined integration process that provides ongoing support.

“The smallest business we’ve bought had $500,000 in revenue,” Nettemeyer says. “The largest we’ve bought had $25 million in revenue. I’d say we spend most of our time buying businesses in the $3 million to $20 million range. We just have to make sure that we take them on at a pace that’s digestible.”

Valin’s integration process goes like this: After purchasing a business, the company converts the business’s IT systems in one weekend. Next, Nettemeyer brings in a team for one week to teach employees how to navigate and enter information into its ERP system. After the tech teams leave, an expert is assigned to stay and work with the business over the following months.

“You teach people, but they forget how to do that and how to make connections,” Nettemeyer says. “We have an embedded expert there for 60 days because we find that’s about how long it takes to get people comfortable with it.

“Then after that we have a call desk that they can call at any time, and they continue to have technical support. It’s getting them integrated into our system quickly that gives us good control over our assets, inventory receivables and cash flow. We’re excellent at doing that.”

 

Invest in education

While contracting revenue forced Valin to shrink its employee base to 45 employees in 2001, acquisitions enabled it to transition into a variety of new markets. By 2011, chip manufacturing — previously the company’s bread and butter — accounted for just 25 percent of the company’s $150 million revenue. This growth also meant Nettemeyer could begin hiring again, adding employees to expand the company’s businesses across the country.

However, there were some challenges stemming from Valin’s diverse and growing footprint.

On one hand, Nettemeyer and his team — like many manufacturing companies in the U.S. — have had to deal with a dwindling talent pool, specifically, the lack of highly qualified engineering talent in the market. Taking advantage of new business opportunities requires a well-trained work force with the sophisticated skills.

To attract and retain talented people, Nettemeyer has worked to create fellowships with IBM, Texas A&M School of Engineering and The Ohio State University to open opportunities for employees at Valin. Each year, for example, the company sends two promising managers to participate in the Texas A&M School of Engineering master’s program in industrial distribution so that they can learn critical skills to drive the business forward.

“Part of our educational effort is we’re monetizing education and teaching engineers how they can run their facilities more efficiently and prevent downtimes — a huge expense,” Nettemeyer says. “They are more likely to be thought leaders, and you get thought leadership through education.”

Investing in education, both formal and informal, also helps you provide a framework that enables employees to come together and be successful. Having employees aligned behind common goals and a common vision has been critical in a culture that gives Valin a competitive advantage.

“If I have five presenters going around trying to teach something, they are all going to teach it differently,” Nettemeyer says. “We wanted to get uniformity in the message. We wanted to make sure that we’re highlighting the things that we think are important.

“If you don’t do that, people on their own will spend their time managing their own basket and not managing to the goals and objectives that we have to achieve.”

Today, Nettemeyer and his leadership team spend much more time visiting with managers to talk about their priorities and responsibilities as owners. Being a 100 percent ESOP business, it’s important for Valin to have a consistent message about what ownership is and the responsibilities owner have to suppliers, shareholders and customers. Three years ago, the company also hired a doctorate in education employee to develop online training modules that give Valin’s 240 employees in nine states and 15 locations a common process and common approach to management and establishing priorities.

“The education component is critically important for us,” Nettemeyer says. “You buy different companies, and they all have their different approach. Everybody thinks that their way is better. What we have to strive for is being consistent. Being consistent means that people have to have a repeatable positive experience when they interact with our company, and we see training as a huge part of that.” ●

How to reach: Valin Corp., (800) 774-5630 or
www.valin.com

 

The Nettemeyer File

Joe Nettemeyer
CEO

Valin Corp.

 

Born: St. Louis

Education: St. Louis University

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

I get up at 6 a.m. every morning and read for about an hour and a half, usually something that pertains to work. I have a responsibility to the organization as CEO to stay current with contemporary business. Most of the material I read is focused on economics, insights on how to make better decisions and improve the business or how to sustain our business for the long term.

 

What do you do to regroup on a tough day?

After a tough day, I like to go home and have dinner with wife of 36 years, talk about our family — four children and three grandchildren — because they are the cornerstone of my life.

 

What is the toughest business decision you made recently?

I’m making tough business decisions every day, whether it’s the decision to make an acquisition or walk away from an opportunity. These decisions are the challenge of a healthy struggle.  If you think it’s easy, you are missing something.

 

What do you like most about your job?

We’re pushing the envelope. Organizationally, we’ve committed ourselves to being students of our industry … I find that intellectual stimulation to be really gratifying.
How do you find good people?

I remember Ross Perot when he wrote his book, he said, ‘Eagles don’t flock together. You have to go find them one at a time.’ You have to find the people, and you’ve got to have people that have passion and commitment and want to accomplish bigger things. They want to be part of something that they have major accomplishments … you have to be looking all the time for people with that profile.

How Michael Barry made the tough calls that helped Quaker Chemical rebound quickly from the recession

Michael Barry, chairman, president and CEO, Quaker Chemical Corp.

Michael Barry, chairman, president and CEO, Quaker Chemical Corp.

Five dollars a share.

That was the new reality when Michael Barry became chairman, president and CEO of Quaker Chemical Corp. in 2008. The manufacturer of specialty industrial chemicals, which trades on the New York Stock Exchange, had a stock worth $30 a share just several months before.

Then the economy’s bubble burst, and almost as quickly as a lightning strike can fell a tree, Barry was left staring at the shattered remnants of his company’s once-healthy stock.

Five dollars a share. And the end of the free fall was nowhere in sight.

“We went from making money to losing money, almost immediately,” Barry says. “And nobody knew how bad this would get. Nobody had perfect visibility about how long this was going to last.”

With less than a year on the job, Barry was immediately thrust into the crisis of a career.

“We had to take some really dramatic action,” he says. “We pulled together our senior management team, trying to get everyone involved at the senior-management level, helping us to make some of the important decisions we would need to make.”

Barry and his leadership team made the decisions that many leaders made in that time frame: They slashed the global workforce of Quaker Chemical, eliminating between 10 and 20 percent, depending on the region.

They cut the company’s 401(k) program, eliminated all bonuses and tried to spread an even coating of adversity throughout the entire organization.

Along the way, Barry acted as a guiding hand for his reeling team, keeping them as informed as possible, every step of the way.

“We communicated all the steps we had to take and did it continuously,” he says. “Maybe people weren’t happy with the news, but they felt we treated them fairly. They felt we did a good job of keeping them informed.”

Don’t clam up

In a time of crisis, your instinctual reaction might be to perform damage control on your company’s reputation. While you should take steps to salvage your company’s good name, if your methods of reinforcing your company’s reputation extend to sugarcoating, half-truths and other opaque messages, you’ll end up creating more harm than good —particularly if that’s your communication strategy with your own employees.

It’s difficult to swallow your pride and tell your people that you don’t have all the answers, to admit that the future is uncertain, but it’s a necessary step in maintaining long-term trust with your people.

Barry realized that early on and made it a point to maintain a frank, honest and ongoing dialogue with his team. It’s something that has continued throughout Barry’s tenure.

“Making communication a dialogue is, admittedly, something we have struggled with,” Barry says. “What we have done is, during our meetings, myself or my direct reports are talking, and we try to get people engaged and involved with the conversations. We turn it into a town-hall type of meeting. That concept evolved, and then we started bringing together smaller groups of people, including the people who report to my direct reports — so a couple of layers down in the organization.”

The people on that level then bring the messages from those meetings to their own teams, and facilitate dialogue within their area of the company.

“In a smaller group with their manager, your people might feel more comfortable asking questions,” he says. “So we try to give all those managers talking points and answers to frequently asked questions.

“With those kinds of sessions happening all around the globe, we’ll gather the questions people have been asking to see if there are any underlying themes — something everybody is asking, but we’re not doing a good enough job of telling them. But you need to keep that dialogue going, make those meetings a two-way street.”

When enduring hardship, particularly on a global level, culture becomes an increasingly important topic to address as the storm clouds gather. When your business is in survival mode, you might find yourself focused on the financial steps you need to take in order to guarantee your company is still operating at the end of the month or end of the year.

But neglecting to focus on your core values, mission and vision for the future — even if that vision is years away from realization — can have damaging effects to morale, employee confidence and, by extension, your company’s ability to keep its talent pool intact.

“We have spent a lot of time on culture,” Barry says. “We communicate it frequently because it is such a critical aspect of how we operate, how we feel, how we collaborate. You have to consistently reinforce what you are as a company, and we’re a very collaborative company. It’s a key to our business model.
“So during that time period when we were going through the worst of the recession, we talked about it a lot. We even put it on our computer screensavers, highlighting messages that reinforced the core values of the company.”

But messaging on your values and culture is like a booster shot. The real dosage of medicine comes from your actions.

“If you don’t live the culture, people will figure that out pretty quickly,” Barry says. “If you have people in the organization who don’t live the culture and you don’t take steps to correct that, it becomes a problem. A large piece of this is the ability of you and your leadership team to walk the talk.”

Add to the momentum

Though some of them were unpleasant to endure, the initial steps that Barry and his leadership team took in late 2008 and early 2009 helped Quaker Chemical to not only weather the worst of the recession but to quickly emerge from its down cycle in an aggressive growth mode.

Within six months, the company had started to grow again. After employing a workforce of about 1,300 in mid-2008 and dropping below 1,200 after the rounds of cutbacks, Quaker Chemical now employs about 1,600. Net sales for 2011 topped $683 million, an increase of more than $139 million from 2010.

Whether your recovery takes six months or six years, you need to show your people the progress that the company is making. Victories and milestones, however small, can help increase employee confidence. During the recession, you played not to lose. The victories your company gets on the rebound can change that mentality. You want to play to win.

“I think people saw our progress mainly through our performance,” Barry says. “We’re a public company, so they saw right away that we went from losing money to breaking even and that we did it in the span of a quarter.

“Then after breaking even, we started making money, and in each subsequent quarter, we started making more money. That was the biggest encouragement we could have given them, because it gave everyone in the company evidence that we were doing the right things and taking the right steps. People started to feel more secure in their positions.”

As you begin to see daylight, you can use opportunity to take stock of where your company is and what your growth strategy should be as you move forward. Throughout 2010, as Quaker Chemical began to add momentum to its rebound, Barry and his team continually analyzed the company’s strategic position and where it needed to be in order to continue to prosper in the future.

“We used it as a period of time to step back and look at our whole business strategically,” Barry says. “We did a very large strategic planning exercise. We evaluated the markets we are in, as well as adjacent markets we should think about entering, all with an eye toward taking our business to a different level.

“It was a process that involved a number of our associates, certainly on our senior management team but also a good number of people from our middle management. It allowed them to have an impact on how we were going to move the company forward.”

It comes back to the atmosphere of collaboration that Barry tries to perpetuate. Collaboration is a major component of engagement, which is a major component in companywide momentum and long-term success. It’s also an effective way to spread best practices throughout your company’s footprint.

“That is a key aspect of our company that we used to help us as we moved forward,” Barry says. “We have people all over the world, in every industrialized country, and we are working very collaboratively to help each other out. That is critical for your success.

“If we have a person in China who is having an issue with one of our steel customers, that person can rely on others within the company. They can tell another person through various company avenues that they’ve been having an issue with a customer.

“You want to develop a nonpolitical culture, where you are focused on doing the right thing and doing the ethical thing, where you’re not consumed with who gets the credit and who gets the blame.”

How to reach: Quaker Chemical Corp.,
(610) 832-4000 or www.quakerchem.com

 

The Barry File

Name: Michael Barry

Title: Chairman, president and CEO

Company: Quaker Chemical Corp.

Education: B.S. in chemical engineering, Drexel University; M.B.A., Wharton School of the University of Pennsylvania

What is the best business lesson you’ve learned?

You need to get buy-in whenever you are making a significant change in a company — whether in strategy, direction or anything else. You need to get buy-in from senior management and any other key people who are influential in the organization. There are two reasons for that. One, you need to get your best thinkers involved in any major change. Two, you need to get buy-in from the people who will make the change happen and instill the change in the organization.

What traits or skills are essential for a leader?

You need to be able to listen. You need to be able to make a decision and stick with it. You need to create a vision and a strategic direction for the organization. Part of that is establishing appropriate goals and holding people accountable to that, and creating the right culture for what you’re trying to achieve. You also need to be able to get the right people in the right places, and let them do their jobs, because it’s not about you, it’s about the people in the organization.

What is your definition of success?

It’s achieving your goals, be they business or life goals. Establishing a goal, and then achieving it, is success to me.

 

Takeaways

Communicate during a crisis.

Create a dialogue with employees.

Use your wins to generate momentum.

Swanson leads Cartridge World to growth despite upheaval of both business and culture

Bill Swanson, CEO, North America, Cartridge World Inc.

Bill Swanson, CEO, North America, Cartridge World Inc.

It wasn’t your typical corporate relocation when Cartridge World Inc. moved its North American headquarters from California to Illinois in 2011.

For starters, most of the employees who had worked at the Emeryville, Calif., headquarters were not making the trip to the new offices in Spring Grove, Ill.

“Institutional knowledge disappeared if it wasn’t retained in the system,” says William D. Swanson, CFO of the global ink and toner printer cartridge retailer and CEO of North American operations.

“Even then, it might be in the system, but it’s not in the minds, hearts and thoughts of the people coming on board. So that was interesting. It was one of the most difficult challenges to overcome when we came here.”

It was difficult, but it was a challenge that Swanson and the leadership team at Cartridge World felt needed to be tackled. The company had slumped during the recession and found itself struggling to get back on its game.

“We ended up in a situation where as a company, we had significantly more expenses than were sustainable based upon our revenue stream,” Swanson says. “So it was really taking a company that was stuck and creating negative cash flow and then creating positive cash flow and, more importantly, value for its constituents.”

Making the situation even more interesting for Swanson was the fact that he, too, was new to Cartridge World, which is owned by Wolseley Private Equity in Australia. He joined the company in May 2011 as global CFO and didn’t become North American CEO until July 2012.

So the task was rather daunting.

Swanson needed to get himself up to speed with what the company was all about while at the same time, he worked to integrate new employees into a new culture in its new home that would enable the company to generate better financial results. He also had to engage franchisees at the company’s 650 stores across North America. The company has about 2,275 store employees in North America and 50 corporate employees.

Fortunately, Swanson brought a lot of confidence to this seemingly difficult mission.

“If you have good, compelling arguments and a good, solid vision that people can buy in to and understand, you get people to move forward in that direction,” Swanson says.

Build your team

The move to Illinois wasn’t just about rejuvenating the business. It would put Cartridge World in a more central location with which to work with its franchisees since two-thirds of its U.S. locations were east of the Mississippi River. It would also provide closer proximity to the company’s technology partner.

But those are physical details. The act of building a new culture from the ground up that would help the company start growing again wasn’t going to be as easy.

“You don’t know what you don’t know,” Swanson says. “That can be a very difficult place if you’re going down fat, drunk and stupid and you don’t know where you’re going. Any road will take you there. You better get clarity and you better help the new team understand that clarity.”

Swanson looks for three things to help determine if someone can be a strong member of his team.

“First of all, I make sure everybody has a consistent view of what success looks like,” he says. “Where are we trying to go? What does success look like both tangibly and intangibly? Paint that picture. Create specific numbers and reinforce that. Ask them to repeat it so that I can gauge their understanding.”

The next is one-on-one time with the person talking about his or her place in the company.

“I have a formal one-on-one session with my direct reports on a weekly basis, but informally, we meet and chat in the morning or sometimes we’ll be here late,” Swanson says. “It really is making sure I can gauge how they view their responsibilities, the tasks they are working on and the judgment they are exercising as they make decisions and take action.”

Finally, Swanson wants to know what kind of initiative they have to get things done and make things happen.

“Some people might see opportunities and others wait for those opportunities to be pointed out to them,” Swanson says. “Some take action and some wait for action to be assigned. When we have a company where staff has been reduced by 50 percent, I need people who can take an initiative and exercise good judgment moving in the direction that we need to move in.”

The goal is exactly the opposite of creating drones who will follow his every word. He wants people who see success the way he does and have the desire and energy to achieve it. But he has no problem if they have a different way of making it happen.

“They are more likely to achieve success when they get to choose the path that they are going to go down, as long as it’s consistent with the vision, and I know they can exercise good judgment,” Swanson says. “If they try to go down my path, they are not going to completely understand it, and they’re probably never going to do it exactly like me, so I’m not going to be thrilled by it.”

Show respect

As important as it was to get his leadership team on board with his plan, Swanson very much needed to have a good relationship with his franchisees if Cartridge World was to succeed.

The key to a good relationship with any group of people is to be respected.

“When you’re dealing with franchisees, what you have to know is a lot of them put up their life savings to be in this, and they’ve committed their financial resources to the success of the business,” Swanson says. “That has to be understood. They have to know that you respect them and what they’re doing and how they are going about it.”

You owe it to them to listen to what they have to say when they have opinions about how the business should be run.

“It doesn’t mean I’m going to agree with them,” Swanson says. “I may, I may not. If I disagree, I’ll present it in a way that maintains their esteem and doesn’t put them down but rather presents another issue. I like to think of it as though we’re all businesspeople around the table. The issue is on the table; it’s not with any of us around the table.”

When you establish that foundation of respect, you can then move more easily into addressing some of the things that may be holding your business back.

“If you see things that are happening in the business that aren’t consistent with what it is you as a business are trying to accomplish, then you have to say, ‘Why are we doing these things?’” Swanson says. “What might seem like a good idea in the short term because maybe you had some high-priced consultants or you had something that convinced you as a company that this is the direction you want to go in, maybe it just wasn’t a well-thought-out idea. Those things happen. They happen everywhere.”

When you jump right into a decision without gaining the understanding of what your people are seeing and experiencing and any other pertinent variables, you run the risk of making a big mistake.

“Stephen Covey said it in one of his seven habits,” Swanson says. “‘Seek first to understand before being understood.’ I’m not sure all leaders do that. It can be a struggle to not jump in and say, ‘No, do it this way.’ Now certainly, if you’re going off a cliff, you’re going to stop that from happening.”

Cartridge World was struggling, but it wasn’t going off any cliffs. So Swanson took the patient approach.

“It’s constantly learning and taking a look at what you did yesterday,” Swanson says. “What went well and what didn’t go well? What did we learn from it? How do we take yesterday’s or today’s experiences and use that to shape what we’re going to do tomorrow?”

One thing Swanson does not do as he is guiding the company is step on the toes of people who hold leadership positions at Cartridge World.

“I have an open door, and if anyone ever wants to talk to me, they’re always welcome to talk to me,” Swanson says. “But I’m not going to go around my leadership team if I don’t need to. I respect them and what they’re doing.”

The results of recent changes have begun to pay off. With a redefined sense of roles and responsibilities, the company is back on a growth trajectory. In 2012, it launched Cartridge World Express, a mobile business that offers more than 400 ink and toner products for every major brand of printer, copier, fax and postage machine. It also expands the company’s mission of recycling to keep printer cartridges out of landfills.

“You have to be firmly committed to the direction you’re going and why you’re going in this direction and you can’t be short on communicating the vision and direction and the reasons why decisions were made,” Swanson says. “That has served us well.” ●

How to reach: Cartridge World Inc., (815) 321-4400 or www.cartridgeworld.com

 

The Swanson File

Name: Bill Swanson,

Title: CEO, North America

Company: Cartridge World Inc.

Born: Chicago

Education: Bachelor’s degree, accounting and business administration; CPA, Augustana College, Rock Island, Ill. I’m also certified in cash management.

What was your very first job as a kid?

My first job was caddying. I went to the golf course and the caddy master said, ‘Well you’re a little too small. Why don’t you come back next year?’ I came back the next week. He said, ‘Weren’t you here before?’ I said, ‘Yeah, I was. You told me I was too short. But I think I can do it, and I’d like the opportunity to show you.’ So I did and I was able to caddy for a couple years before I turned 16 and could get a real job.

Who has been your biggest influence?

I was in public accounting and then I left and worked in private industry for three brothers for around 20 years. One of the brothers, Arnold Miller, was just fantastic. That’s where I developed the way I think about business, running a business and the values that I have that are very important to me.

Who would like to meet and why?

Warren Buffett or Sam Walton; both of them for their purity in running a business and saying, ‘What is it we’re trying to accomplish? Keep all the self-serving stuff out of the way.’ Both of them are very successful in understanding what it is they are trying to accomplish and then to be able to do it by focusing on the fundamentals that it takes to get done. Not on wishes, not chasing rainbows, but truly understanding the fundamentals of what it is you’re trying to do. Work utilizing those fundamentals. If you do that, good things will happen.

 

Takeaways:

Know what you’ve got.

Always show respect.

Never stop learning.

How Ajay Kumar evolved along with Monoprice Inc. to position the business for great success

Ajay Kumar, CEO, Monoprice Inc.

Ajay Kumar, CEO, Monoprice Inc.

Every company has its baby photos. Monoprice Inc. is no exception.

A decade ago, the Internet electronics retailer was a small start-up. The company’s owners wore many hats, dictating almost every aspect of the company’s culture, strategy, systems and processes.

That was then. The “now” for Monoprice is the company that CEO Ajay Kumar has fronted for the last two years. It’s a $121 million player in its space, growing at a rate of 25 to 30 percent every year. With rapid growth and a workforce of 250, Kumar can’t possibly dictate every angle and nuance of the company’s day-to-day operations.

“When you start a small company and grow it, you can manage every aspect of it,” Kumar says. “You can be hands-on, making every decision, involving yourself in every detail.

“But now, we have to have all the appropriate controls in place to manage the company. We have to have the right organization, accountability, reports, metrics, all that stuff, so that it’s not just the top person running the whole thing. You need the structure and controls in place to make it all work.”

By the time Kumar took over, the CEO’s role had evolved into a global-view position. Instead of laboring in the trenches, Monoprice needed its CEO to define a vision, work with his leadership team to put goals and processes in place to achieve the vision, create metrics to measure progress against the goals, and build a team that could achieve and exceed the goals.

“My leadership style is that I am hands-on but not a micromanager,” Kumar says. “I want people who are capable of executing what I need done in each functional area. In addition to the goals and metrics, we need the right people in the right places throughout the organization.”

At its heart, Kumar’s biggest challenge has been to harness the ability to look ahead and anticipate what his company will need in the coming years.

Create a vision

Vision equals direction. Without a well-defined vision, a company is operating without a compass or a rudder. That’s a recipe for turning growth into stagnation and eventually into mere survival.

That’s why Kumar’s first job upon taking the CEO’s role was to define a vision and ensure that the vision and the reasoning behind it could be adequately explained to the Monoprice team.

“I was able to have a vision for the company coming in, since I had a lot of experience in this industry,” Kumar says. “I had a lot of experience in terms of sourcing products from Asia, getting products made rapidly. The consumer electronics business is something I’ve been in for a long time, so I had a good idea of what the vision needed to be for the type of company we are.”

Kumar’s vision was to produce products equal to or better than big-name brands in terms of quality and compete on price.

“We didn’t want to get into selling any product line if we didn’t feel we could generate at least a 30 to 70 percent advantage over the retail selling price,” he says. “That creates a certain amount of discipline as far as launching products. We don’t want to be randomly launching products.

“We want to launch products where we have a price advantage. The way we do that is we don’t sell other brands. A lot of Internet retailers are selling other brands. We don’t do that, so we are eliminating a whole layer of markup.”

By not carrying outside brands, Kumar and his team also attempted to make a statement about their belief in the quality of their products — a move made, in part, to bolster consumer confidence in the product lines.

“If we sell other brands, we’re, in effect, saying their brands are as good as ours, but they are much pricier, so why are we selling them?” Kumar says. “It’s like saying their products are a step up from ours. That is a key part of our vision: The products we make need to be as good as the famous brands. If the quality is the same but the price is lower, people aren’t going to go anywhere else.”

Related to that, Kumar incorporated a sense of focus into the vision. Monoprice would compete on price and quality but would also compete by becoming an expert retailer in a focused space, as opposed to carrying a broad spectrum of seemingly unrelated offerings.

“A lot of Internet retailers carry tons and tons of products that all seem kind of random,” he says. “It doesn’t feel like a portfolio.

“Our goal is to pick product lines that we want to be in. If we want to be in the Apple accessory area, we need to come up with the right mix of products in the portfolio. Not too many, not too few, because our goal is to become a destination for each product line that we want to be in.”

With the vision focused on those three factors, Kumar then had to roll it out to the company at large — complete with a compelling set of processes and incentives aimed at motivating people throughout the company.

Make them follow

To drive the entire company toward realization of the vision, Kumar had to give all 250 people a reason to get on board. He had to show everyone in the company how their performance related to the company’s ability to achieve its overarching goals and turn the vision into something concrete.

Kumar and his leadership team started by rolling out the vision with a companywide presentation, with an opportunity for dialogue and feedback. That planted the seed, but Kumar says the seed sprouted thanks, in large part, to the company’s bonus plan.

With a bonus plan anchored in corporate-level metrics, Kumar steered every person in the organization, regardless of department, toward the goals that would help Monoprice realize his vision.

“I think a bonus program is always tricky,” Kumar says. “Do you measure people based on department results or overall company results? Some companies go down one path and some go down the other.

“Early on, I decided our path should be aligned along one set of metrics at the corporate level. We decided to focus everyone on three metrics that drive our bonus program: sales, profit and cash flow. Some people in some functions might not be able to directly impact all three of those, but we wanted everyone thinking about all three.

“The thing I like about having the metrics at the corporate level is that everyone in the company is focused on the same thing. It’s the same bonus program whether you are a warehouse worker, customer service person, IT or even myself. It keeps everyone working in the same direction.”

The disadvantage to developing a bonus plan driven by corporate-level metrics is that some people in certain areas of the company might not feel a high level of urgency to meet the company’s goals.

To avoid coasting, Kumar and his team have devised department-level metrics. Since those metrics don’t directly impact the bonus program, Kumar relies on a culture of accountability to enforce them.

“They’re producing against those department-level metrics, they’re showing plan versus actual against those metrics, so there is a little bit of accountability and professionalism at stake when you’re executing on that plan in front of your peers,” Kumar says. “That, in and of itself, will drive a certain level of motivation.”

Find the talent

You can have a well-defined vision, and you can develop metrics and incentives that ensure people are working toward realizing that vision. But your people provide the momentum that will really power your company toward the goals you have set. Without competent employees, nothing gets done.

Kumar believes in attracting top-notch talent but not without first understanding the roles that he needs to fill. He wants talent, but he doesn’t want to simply stockpile talent for talent’s sake, without a plan for utilizing it.

“One of the key things before you go recruit people is making sure you have an understanding of what, exactly, you want from a particular role,” Kumar says. “Some folks may go out there and hire a generic person for a generic role. What I try to do is figure out exactly what I want to get from a particular role.”

Then, when you bring a candidate to the office for an interview, make sure your line of questioning aims to ascertain whether the candidate is a match for the criteria you have established.

“One of the things I like to do is get into the details of what they did at their past job and how they did it,” Kumar says. “When you look at resumes, sometimes it will say a person saved 30 percent or grew sales by $50 million, but you start digging, and they didn’t do it all themselves. They didn’t drive it. I’m looking for people who generated benefits at their previous jobs, and I want to know if they can do the same thing at this company.”

How to reach: Monoprice Inc., (877) 271-2592 or www.monoprice.com

 

The Kumar file

Name: Ajay Kumar

Title: CEO

Company: Monoprice Inc.

What is the best business lesson you’ve learned?

I am a big believer that what you don’t work on is as important as what you do work on. It’s important to know when you should pass on an opportunity. In most companies, it is too easy to get bogged down on doing too many things. It is the nature of a high-performance person. You want to get things done, but you can’t do everything.

What traits or skills are essential for a business leader?

Having a vision that makes sense, creating a sense of buy-in, recruiting the right people, drive, performance, being a good two-way communicator, facilitating teamwork, and providing a coaching and mentoring approach to growth. One of the primary things people want to get out of a job is what they learn from their boss.

What is your definition of success?

For me, it is setting goals and then achieving them. That might seem very metrics-oriented, but if you don’t achieve goals, it won’t be a fun place to work. People won’t feel like the company is successful. If you set goals and don’t make them happen, you don’t get that sense of accomplishment. People start to feel like you’re wishy-washy.

Takeaways

Develop a strong vision.

Create buy-in on the vision.

Hire the right people.

It’s not just about growing lemons anymore at Limoneira Co. – Harold Edwards has bigger plans in mind

Harold Edwards, president and CEO, Limoneira Inc.

Harold Edwards, president and CEO, Limoneira Co.

It’s a fairly common approach when taking on a new job to talk to those people who have been there for a while to learn what the company is all about. Harold Edwards tried this approach at Limoneira Co., and he didn’t like what he was learning.

“To be pretty direct, a lot of complacency and apathy had crept their way into the organization,” says Edwards, president and CEO at the Santa Paula, Calif.-based grower and provider of lemons. “We literally had situations where the people who had worked for the company for the longest period of time were probably doing the least amount of work.”

As Edwards looked at the financial numbers, he could see that the company wasn’t really on the upswing. But it was the attitude of senior leaders at Limoneira that concerned him even more.

“Most evident when I showed up was just a lot of senior-level managers and people who had been with the organization for a long time were not only not aligned with the objectives of the organization but also were very clearly and very evidently complacent about their day-to-day duties and responsibilities,” Edwards says.

The work culture and environment had become a big problem. Edwards needed to act swiftly to get things turned around at the company, which employs 226 people and has been producing lemons since 1893.

“The area where a lot of companies go wrong is they don’t stay current with their dynamic environment and they don’t consistently go through and define those objectives and focus on the alignment or realignment of those objectives every year as the environment continues to change,” Edwards says. “That’s where many companies fall down.”

Edwards hoped his plan would keep that from happening at Limoneira.

Laying out a new course

The changes on the leadership team were first up for Edwards. They were not easy moves to make.

“There were some pretty strong and big power struggles that had bred themselves within the organization,” Edwards says.

“One of my first orders of business as I was building my senior management team was to attempt to eliminate those power struggles. I wanted to get everybody’s full commitment to the vision of the organization and the new, very decentralized structure that we were putting in place to foster better teamwork.”

Edwards made it clear that he wanted to identify new growth opportunities and assess what was working and what wasn’t working to help Limoneira function to its full potential.

“We never had the vision that maybe the way to manage the company in a better way would be to really focus in on the growth of the business,” Edwards says. “And by growth, I mean really make it our business to transition from our focus from just being a producer into becoming a supplier of lemons.

“Surround ourselves and our assets not only with our own fruit but eventually with the fruit of other growers that would allow us to take advantage of our strong brand reputation in the marketplace.”

Those who weren’t committed to pursuing this new path didn’t stick around long, which turned out to be a good thing.

“In a way, it was very emancipating and helpful for the overall organization because as some of those people who were hanging onto their turf exited, you could almost hear the overall organization breathe a big sigh of relief,” Edwards says. “It was viewed as very empowering for many of the other people who were in essence held down or oppressed by some of these former managers.”

To those who feared they might be ousted by this new leader, Edwards worked hard to get them to see that he wasn’t there to conquer Limoneira. He was there to give people the freedom to help the company grow.

“My style is not to micromanage anybody on my team,” Edwards says. “It’s really just to position myself as an enabler and a supporter and to try to see that each one of these individuals is able to have success with the objectives that they’ve laid down for themselves and their teams.”

Building communication channels

The next step for Edwards at Limoneira was not a painful one, but it was a big challenge. His goal was to have his managerial team identify the top five objectives for the entire organization.

“They weren’t financial goals,” Edwards says. “They were more specific strategic objectives. Once they were created, we methodically went through each person in the senior management team, down through the management team, down through every salaried employee and then down through the rank-and-file employees.

“When the exercise was complete, the goal was everybody in the company had their own top five objectives that if they were successful accomplishing, the organization would have the best chance of achieving its top five objectives.”

It’s obviously a lot more challenging in practice than it is on paper. You have to accept that while there may be some hiccups along the way in developing all these objectives, they will lead you to a better outcome if you stay disciplined with the process.

“It really takes a commitment,” Edwards says. “Not all organizations are able to embrace that. There is a downside to innovation. There’s a downside to being really entrepreneurial and, in this case, intrepreneurial. It can be very disruptive. But if you’re willing to embrace some choppiness and disruption to do things better, it will work.”

With everyone committed to pursuing new growth opportunities, Edwards says the past five years have provided a consistent flow of new ideas from employees who previously weren’t involved in such talks.

“We have laid down very specific and very measurable growth targets that have really helped us smooth out the cyclicality and volatility of our business,” Edwards says.

“It’s also gotten all the employees who are involved in this part of our business very specifically focused on what their role and responsibility is. We can determine if we were successful or not. That is a specific objective that really has helped us transition the company and helped us grow.”

Edwards says it’s a message he repeats over and over again that great ideas at Limoneira do not have to begin in his office.

“Encourage people to think outside the box and come up with ideas about how to streamline efficiencies and how to get things done in a more efficient way,” he says. “Don’t just assume or accept that there is only one way to do things.”

Stick to it

When you think you’ve finally driven home the idea that you want employees to feel empowered to share their ideas, you need to resist the urge to stop talking about it.

“Part of the performance management program has a quarterly evaluation process that makes each employee better connected with a greater sense of consistent purpose with his or her manager,” Edwards says. “That allows them to do a better job of determining when an employee is getting it done and when they aren’t.”

Most employees want to make their supervisors and managers proud and want to do their part to help the business. But you have to maintain the dialogue and keep talking about it to make it work.

“The skill of the manager is to make sure that the things that aren’t going to be good objectives and goals, that those aren’t implemented,” Edwards says. “The ones that will really drive the organization forward are used.”

The discipline is not just a means to keep employees on task. It’s to help keep you and your management team on task as well.

“It’s very easy to see if we didn’t stay vigilant and diligent on quarterly evaluation and the communication of those evaluations, that it could very easily become just another thing that the organization was doing and the whole purpose would really be lost,” Edwards says.

One of the final pieces of the transformation at Limoneira has been to make sure the board of directors and company leaders understand the difference between management and governance.

“Part of the board’s responsibility in good governance is to help define and lay out good strategy for the organization as it moves forward,” Edwards says. “What had happened was the board had begun to get involved in personnel decisions. It had actually started micromanaging certain managerial posts sort of at the expense of the authority of the CEO of the company.”

Edwards shared his thoughts that the board needed to focus on strategy and let leaders like himself deal with day-to-day operations.

“By getting the board back to being a part of the governance structure and the management team really focusing in on the management of the company and keeping those roles and responsibilities separate and distinct and very disciplined, we’ve allowed both to operate at excellent levels that have really pushed the company forward,” Edwards says.

The result is a business that has grown consistently, with revenue leaping from $52.5 million in 2011 to $65.8 million in 2012.

“It’s much clearer the level of collaboration and teamwork that is necessary in order for all the employees to be successful,” Edwards says. “It’s forced people to play their roles and responsibilities more in concert as a team rather than as individuals. It’s that new alignment and fostering of teamwork that really set the company in motion.”

How to reach: Limoneira Co., (805) 525-5541 or www.limoneira.com

 

The Edwards File

Name: Harold Edwards

Title: President and CEO

Company: Limoneira Co.

Born: San Francisco

Education: Undergraduate degree in international affairs, Lewis and Clark College, Portland, Ore.; MBA in global management, Thunderbird School of Global Management, Glendale, Ariz.

What was your very first job?

Working on a ranch in Santa Paula. It was physical labor. I was hewing weeds, chopping suckers off trees or laying down mulch and fertilizer. I’m five generations deep in one of six families that represent the largest shareholders of this company. I grew up on one of the ranches that is one of different 15 ranches that the company manages.

What do you enjoy about the work?

I’ve sort of committed myself to making the world my canvas and taking opportunities to be living in a global world that produces and distributes product all over the world. The part of my job that gives me the greatest level of satisfaction is to, in a very small way, play a part in feeding the hungry world.

Why do Europeans consume so many more lemons than the United States?

You correlate it with obesity and the quality of our diets here versus the diets in other parts of the world. Then you look at life expectancy and health and you start to see some trends that are very compelling. If we were just to reach parity with Europe in terms of their lemon consumption, we don’t grow enough lemons here in the United States to accomplish that today. So we spend a lot of time trying to convince people to use lemons in their everyday lives here in the United States. So far we’re starting to see the results of a lot of these efforts take place.

 

Takeaways:

Be clear about your intentions.

Build channels to communicate.

Stay disciplined with your plan.

Joseph James Slawek – Four tips for planning a better leadership transition strategy

Joseph James Slawek, Founder, Chairman and CEO, FONA International

Joseph James Slawek, Founder, Chairman and CEO, FONA International

A healthy and growing organization proactively plans for succession and transition. It’s simply the nature of business. As my company recently celebrated 25 years, we turned our focus to purposeful succession. I wanted to share with you the key steps involved, the importance of planning and a few things I’ve learned along the way.

1) Get the next generation involved.

As your company grows and develops, it will become increasingly important to begin transitioning leadership to the next wave of leaders. This process will look different for each individual company. For me, it means moving away from our entrepreneurial leaders (generation one) to our professional, internationally focused leaders (generation two).

Be sure to constructively build on the strengths of each generation and tap into the energy, passion and vision of your current leaders to fuel the transition and create an even better future for your business.

2) Shift your board’s focus to policy.

When your board members focus on operations, they are participating in the day-to-day management of the organization. As you prepare for purposeful succession, the focus should shift to policy where they enact and enforce policies, which broadly govern the business. This move helps your organizational governance become more formal through the creation of an entity that protects your company’s health and well-being.

3) Select the next president and

his or her successor.

Your policy board has one critical succession responsibility: to choose the next president and his or her successor. It’s important to remember that the board’s succession responsibilities end with choosing the president. It is the new president, not the board, who has succession responsibility for the executive team.

4) If it’s a family business,

address the family estate plan.

This plan is critical to any successful generational transition but admittedly can be uncomfortable and awkward to deal with. Questions that need answers are akin to personal estate planning when the attorneys ask, “Who gets custody of your kids?” In family businesses, the first difficult question is, “Do we have a competent family member successor, and, if not, who gets custody of the business?”

Purposeful succession plans set the groundwork for the unplanned successions, which is important because once you have carefully laid out your plans, you may think, “What could go wrong?” But, the reality is whether due to illness, disability, death or any number of other scenarios, unplanned succession is a part of life.

When these challenging events happen, they create an extremely high level of emotion, distraction and added workload, in addition to leadership style changes. They also tend to cause anxiety in the organization’s employees, vendors and partners. As a result, in this “unplanned” scenario, these anxieties must be addressed directly and immediately by an already overburdened executive team.

With that in mind, let me leave you with this: The only difference between planned succession and unplanned succession is the amount of time you have to deal with the situation.

In the case of an emergency succession, communication with employees, vendors and partners begins immediately and must be completed within a couple of weeks. In a planned succession, the communication time is only slightly extended to a couple of months. The exact same emotions and distractions are present in both scenarios — the only difference is the level of intensity.

Joseph James Slawek is the founder, chairman and CEO of FONA International, a full-service flavor company serving some of the largest food, beverage, nutraceutical and pharmaceutical companies in the world. For more information, visit www.fona.com.