Stephan Liozu: Managing this, that and the other thing

Stephan Liozu, Founder, Value Innoruption Advisors LLC

Stephan Liozu, Founder, Value Innoruption Advisors LLC

A 2010 global survey of more than 1,500 CEOs conducted by IBM revealed that 60 percent of top executives face an increased amount of complexity in their business. Seventy-nine percent of them expect an even greater level of complexity over the next five years and only 49 percent of them estimate that they will be ready for it.

The questions then become: Are you ready to face more complexity? How good are you at managing complexity? Can you leverage this complexity to create differentiation and competitive advantage?

Complexity can be good and bad at the same time. There are four types of complexity in business and it is important to break them down to be able to understand them and eventually address them:

Imposed complexity is coming from regulations and mandatory compliance guidelines both at industry and governmental levels. It is typically not controllable and manageable so it is best to prepare for it and find a way to minimize its impact on the business.

Inherent complexity is structural complexity, which is inherited and well rooted in the business. It can be addressed by making deep structural changes that might be painful but beneficial to the future of the business.

Designed complexity is based on purposefully designed strategies and programs to support the long-term vision for the firm. This complexity is based on managerial choices aimed at creating competitive advantage.

Unnecessary complexity is the result of legacy management design and structure that might not have been updated, eliminated or refreshed. It is unnecessary because it brings no value to the business and it solely exists because no one is paying attention to it.

As a leader of your organization and in the face of resource constraints, I highly recommend you start paying attention to these four types of complexity. Assemble a process and team to review complexity and engage in the design of strategies that will leverage complexity to bring differentiation to the market. Here are some quick tips on how to do this:

Design positive complexity to create differentiation.

This should be the main focus of your critical actions and priorities. Can you create complexity that differentiates your supply chain processes, your customer service experience levels and your digital marketing strategies without overwhelming your customers? Can you create unique value selling propositions based on unique internal designs and systems?

Quickly kill unnecessary complexity while reassigning resources and skills.

Unnecessary complexity might be inherited from legacy management designs or decisions. They might bring zero business value and need eradication. Be decisive and free up resources for something else.

Transform internal complexity into simple value propositions.

Remember that internal complexity has to be transformed into simple offerings for customers. If you propose something to your customers, do it by absorbing complexity and acting as a consultant for your customers.

Focus on pockets of value-creating complexity for customers.

It is all about value. Complex designs have to bring value to customers. If not, they should not be implemented. As a leader, make sure value is real and can be monetized through pricing. You might have the best supply chain management process, but will customers see the value in it and be willing to pay for some of the services?

Assign your best talent to manage complex problems and initiatives.

Complex problems need mindful problem-solving. The business world is changing in front of our eyes. What are you doing to change with it while remaining nimble, easy to do business with and focused on value? Are you leveraging complexity to create sustainable competitive advantage?

 

Stephan Liozu is the founder of Value Innoruption Advisors and specializes in disruptive approaches in innovation, pricing and value management.  He earned a doctorate in management at Case Western Reserve University and can be reached at
[email protected] For more information, visit www.stephanliozu.com.

Bill Byham and Development Dimensions International have no lack of good ideas for the R&D process

Bill Byham, chairman and CEO, Development Dimensions International Inc.

Bill Byham, chairman and CEO, Development Dimensions International Inc.

Bill Byham holds a doctorate in industrial/organizational psychology — but that’s not the only way to define him. While he is not only considered an expert in the scientific study of employees, workplaces and organizations, he was one of the first in the world to use a groundbreaking hiring technique called assessment centers.

Some 35 years ago, Byham worked for J.C. Penney Co. when he began using simulated on-the-job techniques to find the most qualified potential employees.

“Assessment centers are a way of evaluating people by putting them through simulations where the people can show what they can do rather than just conducting an interview,” Byham says. “It’s like picking a basketball player — you wouldn’t interview them, you would put them out on the basketball court to see what they could do.”

Byham had great success with these assessment centers at J.C. Penney and wrote an article in the Harvard Business Review that made him famous, gaining the interest of many big companies looking to use this technique.

It wasn’t long until an entrepreneurial opportunity was born. He partnered with Doug Bray of AT&T and started Development Dimensions International Inc., which today is a leader in talent management, leadership development, hiring and talent acquisition.

“We help companies make the most of their employees,” says Byham, chairman and CEO. “We help organizations be more successful in hiring people by teaching interviewing skills. We are very big in the training business, particularly at the supervisory level, where we train more than 500,000 people a year.

“We also have a big business to help companies determine who will be their fast trackers and how to develop them for higher-level jobs.”

Since Byham started DDI, a 1,100-employee, $200 million organization, the company has trained upwards of 20 million people. Today, his focus is on the continued R&D of products in training and development techniques.

Here’s how Byham goes about R&D to keep DDI in front of its customers and on the cutting edge of its industry.

Generate ideas

DDI places a great deal of energy into its R&D process. As a global company, DDI offers its products in as many as 20 languages. Rolling out changes to an existing product or developing a completely new one is a big cost. Costs and language aside, however, to remain an industry leader, you need to have plenty of ideas, and good ones.

“We do so much R&D here,” Byham says. “A problem that we do not have is a lack of good ideas. We have more good ideas than we know what to do with.

“So the first problem is trying to slim down the list of projects because all the projects are in the multimillion dollar range.”

In order to develop all these good ideas that DDI brings to the table, the company fosters a sense of empowerment among its employees.

“The whole company is built on empowerment — that is to empower people to own their job and feel responsible to make decisions,” Byham says. “If you treat your employees so that they feel empowered and they treat their job like they own it, then people will always want to improve and come up with ideas.”

In addition to a sense of empowerment, DDI prides itself on having a management team that is very open to new ideas and has a willingness to make changes.

“That’s one of our big problems — we make so many changes all the time because people come up with new ideas,” he says.

The management team works to narrow down the options.

“We have a series of meetings to cut them out and usually it’s not hard to get it down to eight,” he says. “But then to get it down to two or three new projects is tougher. R&D to us is brand new, game-changing products, or a big change in what we’re doing.”

DDI’s biggest product is called Interaction Management, which is a supervisory training program that is among the best-selling of its kind in the world.

“We try to update it every six or seven years,” Byham says. “That essentially becomes a new product.”

DDI recently finished a new middle management training program. The concept rethinks how middle managers get trained, including what they get trained on and how their skills are developed and what happens after that in the company to make sure they really learn it and apply those new skills.

“It’s not just coming up with a new idea,” he says. “It’s coming up with the whole pathway to learning and change, which starts out with a better understanding of their needs.”

Focus your R&D efforts

Part of having a strong R&D process is being able to not only take suggestions from your customers for products and develop those, but also being able to develop products out in front of what your clients want before they know they want it.

“You have to look at R&D in that sense as a 50/50 balance,” Byham says. “We do a lot of customer surveys. We’re out with our customers a lot and they’ll say, ‘We want a training program on this.’ However, I think it was Steve Jobs who said, ‘If you only give your customers what they ask for, you’ll always be behind.’

“What I’ve always noticed is you have to be out in front of the customer because sometimes it takes us several years to develop these things. If you just try to keep up with that hot topic, we won’t get it out until it is no longer a hot topic. So we have to anticipate needs and then be ahead of that.”

DDI has had instances where it was ahead of customers on products. Just a few years ago DDI developed a product to help companies prepare for retirements and how to handle an older workforce.

“We’ve been way ahead of our contemporaries and competitors on that,” he says. “The bad side is the whole thing is built on the assumption there is going to be a huge amount of retirements. With the economy being what it was until recently, a whole lot of people who were going to retire decided not to. We’re still ahead of the tide there a little bit.”

The R&D process isn’t just about finding the next new product, but also devoting some effort to keeping well-performing, existing products up-to-date.

“The more products you have, the more it costs you to keep the old products good,” he says. “The ratio for us is around 60 to 70 percent old products and 40 to 30 percent new. You have to look at the sales of the old product. If you’re still going up with the old product, you will want to keep investing in it.”

Byham likens it to Tide for Procter & Gamble. There have been 20 new versions of Tide and they’re still making money on it. They’re going to keep that product and put it in front of customers.

“If you really have an excellent old product, like we have with Interaction Management, you would not want to let that go, but you still want to be out looking for new things,” Byham says.

Plan for the future

Byham’s biggest focus may be on R&D, but another forward-thinking area he is keeping in mind is succession planning. Byham is 76, and very aware of his age. He knows that anything could happen at any time requiring someone else to lead the company.

“There’s never been a company more ready for retirements because the whole company is so dedicated to growing our own leaders,” Byham says. “We practice what we preach.”

One of the keys to succession planning that DDI lives by is that you can’t develop everyone for high-level jobs.

“If you try to spread your money out evenly across people, you don’t have any effect by it,” he says. “The first big thing is to define who are the people who have the most raw talent to be developed. Then you have to look at how you accelerate their development.

“You keep on developing everybody and you keep on promoting people, but there are certain people you promote faster who are being accelerated up the ladder.”

DDI also believes that you don’t aim people at high-level jobs. You aim people at a level of jobs, like the C-level, but you don’t name the job specifically because companies today are too dynamic.

“We preach that companies should do away with the old succession plan, which was to take an organizational chart and move people up who are next in line,” Byham says. “We have done all kinds of research that proved that did not work.

“Instead you should get a pool of people who are the most talented and get them to aim at a level within the organization rather than a particular job. Then when the job is open, you choose from that pool.”

How to reach: Development Dimensions International Inc., (412) 257-0600 or www.ddiworld.com

 

Takeaways

Foster an environment that breeds idea generation.

Focus R&D on a mix of customer demands and brand new ideas.

Think about the future of your company and who’s going to lead it.

 

The Byham File

Bill Byham

Chairman and CEO

Development Dimensions International Inc.

Born: Parkersburg, W.Va.

Education: He received his bachelor’s and master’s degrees from Ohio University and a doctorate from Purdue University.

What was your first job and what did you learn from that experience?

My family was in the undertaking business. If you work in a funeral home, there’s a lot of work to do. My early job experiences taught me the importance of good interpersonal skills.

How would you describe your work habits?

I value creativity a lot, but at the same time, I have a strong scientific orientation of proving it and challenging and doing research. I’m pretty good about coming up with new ideas, but I’m also very good about punching holes in new ideas and doing research to make sure they really work.

Who is someone you look up to in business?

I looked up to my father. He was an entrepreneur and owned his own company.

What is your favorite DDI product?

It would have to be our supervisory training program called Interaction Management. We have trained millions and millions of supervisors.

The value of being the man or woman behind the curtain

MIchael Feuer

MIchael Feuer

One of my favorite business books, which also made it as a Broadway play and a big-screen movie, is “The Wonderful Wizard of Oz,” written by L. Frank Baum in 1900. My hero in this story is not the young orphaned Dorothy, nor the Cowardly Lion, the desperately in-need-of-some WD-40 Tin Man, nor even the Scarecrow in search of a brain.

Instead it is the Wizard. To understand why the dubious Wizard is my favorite character, one must get past the portrayal of him as scheming, phony and at times nasty.

To appreciate the man behind the curtain, recognize that he is a very effective presenter, though at times this ex-circus performer behaved a bit threatening. OK, he was a jerk, but the point of this column is to take you down the yellow brick road on the way to the enchanted Emerald City and corporate success.

From this tale there is a lesson that one can say all sorts of things, not be visible, and yet still have a meaningful impact.

Another takeaway is that playing this role provides plausible deniability. This absence of visual recognition is particularly beneficial in negotiating when you, as the boss, use a vicar, aka a mouthpiece, to speak on your behalf. This allows you to have things said to others that you as the head honcho could never utter without backing yourself into a corner.

Another plus is you can always throw your mouthpiece under the bus if necessary, of course, with his or her upfront understanding that sometimes there must be a sacrificial lamb. This is not only character-building for your stand-in, but also many times presents an unprecedented opportunity for him or her to learn in real time.

Perhaps the Wizard was the first behind-the-curtain decision-maker, but today this role is used frequently in business and government. In a similar vein, the “voice” of Charlie from the well-known 1970s TV series “Charlie’s Angels” was always heard, but he was never seen.

Frequently there is much to be said for using anonymity to float a trial balloon just to get a reaction. Think about a son having his mom test the waters by talking to dad before the son tells him he wants to drop out of junior high school to join the circus. Maybe that’s even how our former circus-drifter-turned-Wizard-of-Oz got his start.

In the negotiating process it is important to have a fallback when the talks hit a rough patch by instructing your vicar to backpedal, saying that he or she has just talked to the chief and the benevolent boss said, “I was overreaching with my request.”

This also serves to build a persona for the boss-behind-the-curtain as someone who is fair-minded and flexible. All the while, of course, it’s the boss who is calling the shots and maneuvering through the process without getting his or her hands dirty.

The value of using this clean-hands technique is that it enables the real decision-maker to come in as the closer who projects the voice of reason, instead of the overeager hard charger who at times seems to have gone rogue.

It actually takes a bigger person to play a secondary role behind the curtain rather than always be in the limelight. It also takes a hands-on coach and counselor to maneuver a protégé through the minefields to achieve the objective.

However, accomplishing the difficult tasks through others is true management and the No. 1 job of a leader who must be a master teacher.

After you have guided a handful of up-and-comers a few times through thorny negotiations, you will gain much more satisfaction than if you had done it yourself, while engendering the respect and gratitude of your pupils. They in turn will have learned by doing, even though they were not really steering the ship alone.

The final step is to let the subordinate take credit for getting the big job done. This will also elevate you to rock star status, at least in his or her eyes. Soon those who you’ve taught will emerge as teachers too, and the big benefit is that you will populate your organization with a stellar team of doers, not just watchers.

So, forget about the Wicked Witch of the West and move backstage for the greater good of the organization.

Rick Bennet and CCA Global Partners have strength in numbers

Rick Bennet, co-CEO, CCA Global Partners Inc.

Rick Bennet, co-CEO, CCA Global Partners Inc.

With more than 2,700 locations and 800 independent retailers, Rick Bennet oversees a cooperative that has significant strength in numbers. In fact, CCA Global Partners Inc. has more purchasing power in its floor covering business than Home Depot.

Founded by two independent retailers in the floor covering business in 1984, Howard Brodsky and Alan Greenberg, CCA Global Partners’ primary business is Carpet One Flooring & Home. CCA is a cooperative of 14 independent brands in the home improvement industry with more than $10 billion in aggregate gross sales and more than 100 consecutive quarters of profitability. Its retail floor covering stores and its non-floor covering businesses each see annual revenue of about $5 billion.

“These people have come together with our management and our infrastructure and are able to bring scale to their business and compete with big box and other large retailers by banding all of their purchases and resources together,” says Bennet, co-CEO at CCA.

Despite that ability to band together, the downturn in the housing market had an impact on CCA and its independent retailers.

“We entered the downturn early and I would suggest that we’re coming back out of it later,” says Bennet, who was formerly president and CEO of Kauffman’s and vice chairman at May Department Stores. “These guys are small independents and so they have been really rocked. The biggest challenge we continue to face is just keeping people up and moving ahead.”

Bennet has had the task of helping his retailers cope with the downturn, push through it and now move forward.

“We are not exclusively floor covering, but it is at the core of our business,” Bennet says. “Many of the things that we have opened up are things like cabinets or lighting, but they are all home improvement, so we are closely tied to the housing business and the economy has been tough out there and housing has been the worst of it.”

Here’s how Bennet and CCA Global Partners Inc. have helped independent retailers through a tough time and as a result, repositioned them for the future.

Face the facts

In a tough economy it is very hard to have to start rationalizing business and look at cutting costs. When times get tough it comes down to basic math, and you can’t spend what you don’t have.

“You do what you’ve got to do,” Bennet says. “The tougher challenge has really been the emotional one. When you go through five or six years of downturn and you’re waiting for things to bounce back, the drag on people’s patience and emotions is really tough and much more problematic than just the cost cutting that had to happen a couple years ago.”

During those years Bennet often found himself on the phone with owners of their business facing such challenges as having to fire a friend or relative.

“I get calls from guys saying, ‘I need your advice. We’re under a cash flow press and I’ve shed all the workers that I can and I’m now down to family and I’m facing firing my brother-in-law. What do I do?’” he says.

At that point, tough business decisions have to be made.

“You have to save the business first, because if the business is saved and things get better then you can re-employ,” he says. “If the business dies, then you’ve got no chance.”

One of the biggest problems CCA deals with is assuring its independent retailers that it’s OK to ask for help.

“If you’re in trouble as a small business, the best thing you can do is ask for help earlier, because then there’s time to do some of the tough decisions and save the business,” he says. “If you wait until your balance sheet is totally upside down and you’re facing bankruptcy there’s very little that can be done.”

The other challenge CCA faced was market attrition. About a third of the independent retailers in CCA’s space have shut down over the last eight years.

“Our store count is down only fractionally,” Bennet says. “Now that the pendulum is starting to swing, people actually get under more cash flow pressure because they’ve got to invest in buying product as the business starts to turn up.”

Today, business is starting to turn around for CCA and its retailers. Some of them, however, are hesitant to invest in the business, to rehire people and spend money on advertising and marketing.

“It’s tough to cross that line because you’re worried about the next customer that’s going to come in the door or when the next downturn is going to be,” he says, “and you’re nervous about launching a new ad or hiring a new person.”

But that’s where CCA’s decades of experience come in. CCA tries to provide incentives, coaching and a sounding board for people who need to make those tough decisions. The message — the time is now to switch to offense.

“Their brain tells them, yes I should, but their heart tells them, I’ve just been beaten up so badly I’m not sure I can make that investment,” he says. “The market has definitely shrunk, but it’s time to start investing in the business and get market share and it’s hard for an independent guy to step across that line.”

Reinvest and branch out

The first step in getting CCA’s independent retailers back on track following the downturn was to have them reinvest in their businesses to take advantage of new opportunities in the market.

“You first start with people whose basic business is in pretty good shape,” Bennet says. “If somebody still hasn’t made the tough decisions, then you’ve got to make the right business adjustments to your expense model before you go making investments.

“If you’re dealing with a small business that has operated with some discipline, made those cuts and their basic business is in good shape, then you have to start investing in people and advertising to move forward. If the business is growing, then it might be time to push them into the next step, which is to open an adjacent business. If they’re even stronger, then you may suggest that they open a branch.”

CCA itself made similar moves to advance its brands over the years. CCA was originally Carpet Co-op of America. The first strategic change for the company was to move from a carpet co-operative to a floor covering business. What was originally the Carpet One business became Carpet One Floor & Home.

Today, CCA is making the next strategic shift, which is to spread out beyond floor covering into all aspects of the home improvement field, as opposed to filling only one part of it.

“We’ve moved into the kitchen and bath business with cabinets,” Bennet says. “We have a lighting business, and we continue to contemplate other additions to that. We’ll try to engage in anything that involves home improvement so we provide synergies and leads to our dealers, as well as synergies with the customer.”

When looking to break into new markets you have to ask yourself, what’s the value that you’re providing? As you answer that question you determine where you can add on.

“For us it’s a service equation,” Bennet says. “We’re in the customer’s home and we’re providing the service. What other products can you add to that? It’s the question of what do you do well and how do you do more of it rather than trying to add stuff that’s irrelevant to your business.”

Even CCA had to learn the hard way that going too far outside your core area is a difficult undertaking. A number of years ago it tried its hand at tuxedo rentals.

“It was out of our space,” he says. “You get out of your sweet spot and you’re operating a little bit more in the blind, and you bring less expertise and value. It taught us to stay close to home.”

It comes back to that core question of, where do you add value and what are you good at. You have to make sure you get honest answers to that question.

“When you go into a new business, make sure you’re leveraging things that might work for you,” he says. “Whenever it came to standing something up that was brand new because you thought it might fit, you have to second guess it. You can dream up things that you might add to any of those business structures, but if it’s outside of the core of what you do, you have to be careful.”

CCA keeps asking the question, ‘What do we do well and how do we add to that?’

“If it’s small business, it has to do with the home and we can provide scale, then it’s an open place for us to work and we’re always looking for those places,” Bennet says.

“The world of housing has gone through a lot of attrition, so as that bounces back we’re in a terrific position to pick up a lot of share, and being able to bolt on these different extensions of what we do is a lot of fun to work on. We feel better today than we have in five or six years.”

How to reach: CCA Global Partners Inc., (800) 466-6984 or www.ccaglobalpartners.com

 

Takeaways

Don’t be afraid to ask for help in a tough situation.

Make the necessary efforts to save the business.

When good times return, be ready to invest for the future.

 

The Bennet File

Rick Bennet

Co-CEO

CCA Global Partners Inc.

Born: St. Louis

Education: He has a degree in business from University of Central Missouri and a MBA from Washington University.

What was your first job and what did you take away from it?

I was a short-order cook for a little drive-in restaurant called Carl’s in St. Louis. I started working for Carl himself at 90 cents an hour. It was all about good relations with the customers.

What is the best business advice that you’ve ever received?

I had a mentor once say to me, ‘If it is to be, it is up to me.’ That stuck in my head very strongly, and I really believe in the power of self-determination. I try to impress that in our company. If you’re going to spend time trying to figure out how somebody else screwed it up, you’re not going to get anything done.

The second one is Peter Drucker’s advice, which was managing your strengths. So many people spend all of their time trying to correct their weaknesses. You have to know what you’re good at and what you love to do and leverage that. I try to live by that.

If you could speak with someone from the past or present, with whom would you want to speak with?

Abraham Lincoln.

If you were going to redo some flooring in your house, what product would you use?

This new product line of New Zealand wool is exceptional. It’s beautiful. I got out ahead of the launch and put some of it into my home, which we just remodeled. The brand name of it is Just Shorn, as in shearing a sheep. I love the distinctiveness of wool and the softness and warmth under your foot. It’s an exciting addition to what we do, and it’s a terrific product.

Taking measure: Establish benchmarks to guide your company to success

Fred Koury, CEO, Smart Business Network

Fred Koury, CEO, Smart Business Network

As businesspeople, we have a fiduciary responsibility to ourselves and to our companies to measure the investments we make.

Investments include acquisitions, funding new expansion initiatives, inventory, office space, equipment, even employees. Too often, we don’t have benchmarks in place to really measure the return on these investments.

Jack Welch, the former CEO of General Electric, loved measurements, and is well-known for culling the bottom 10 percent of performers and emphasizing that businesses need to measure key areas to get things done. He had an excellent track record as a result. Not every company is GE, but the principle applies to any business, particularly when it comes to investments that require a lot of cash.

By not measuring the success or failure of the ideas we implement, we put ourselves in a vulnerable position. If too many investments are made at once, cash flow can quickly dry up if they don’t pay off. With no tangible measurements, it becomes easy to spread our resources, especially capital, too thin while working on too many projects at once.

Here are several suggestions to help you avoid this mistake.

1. Set goals and establish a timeline for a return on each investment. Be realistic, because some things take time to mature. Make sure the company is financially sound and can handle the downside of any investment you make. In other words, don’t bet the farm on a deal.

Be prepared for the worst-case scenario. One deal shouldn’t put your company at risk.

2. Put it in writing and share it with the right people. Give employees the information they need to do their jobs, and let them know how you want them to measure progress.

Employees need to understand your goals. If they are not clear about the goals, you risk them pushing the idea in the wrong direction.

3. Make yourself and your employees accountable through key performance measures reported on a periodic basis to assess your progress. This helps keep key people informed on how the company is progressing toward achieving its goals. Keep regular tabs on why projects are or are not working as predicted, and make the necessary adjustments.

4. If you are not receiving a return on an investment, weigh your options. If the return is there, continue funding. If it is not, don’t delay in making the difficult decisions. There are many reasons something looked good to start with, then soured. Economic conditions change, key employees leave, new competitors enter the field.

5. Make decisions that are in the best interest of the company’s well-being. Leadership falls on you. Reassess why things aren’t working and pull the plug, if necessary, then refocus that capital on more promising projects.

As your company grows, the need to establish benchmarks to measure progress grows with it. Benchmarks provide vital information on which to base your business decisions and give you quantifiable data as to which projects are worth pursuing.

If push comes to shove, you’ll know exactly what needs pushing and what needs shoving. ●

Marc Hill used his brand launching knowledge to take the best-known playing cards into new markets

Marc Hill, Jarden Corp.

Marc Hill, Jarden Corp.

Marc Hill has held numerous sales and marketing roles responsible for launching brands and products in new markets around the world for power tool companies such as Black & Decker and DeWalt. Two years ago, he left the power tool industry to take a role working at Jarden Corp. and the U.S. Playing Card Co., more specifically.

So why did he leave a career in power tools to come to the world of playing cards? It was an opportunity to be the boss. Hill became president and CEO of U.S. Playing Card Co. in April 2011.

Just as Hill had worked with well-known brands like Black & Decker and DeWalt, he would now be working to boost legendary brands such as Bicycle, Bee and Hoyle playing cards.

“It’s about developing great products and working with great people,” Hill says. “That is what drives it. Having a strong brand is also supportive. Those are the drivers that make me go in a new direction.”

Hill had the opportunity to take the knowledge gained over his career and lead a company.

“I have a chance to put my thumbprint onto an organization to lead strategy, lead people, and lead the culture,” Hill says. “I wanted to take that opportunity.”

U.S. Playing Card Co. has been around since 1867 and with 500 employees, it produces some of the best-known playing cards in the world. Hill was now responsible for growing the company’s many brands, as well as furthering its strategic goals.

Evaluate the business

As a first-time president and CEO and as a leader entering a new business and industry, Hill had to make sure he took the time to understand what U.S. Playing Card Co. was all about.

“First, you want to get to know the people,” Hill says. “At the end of the day, you can have great strategies, but you have to have great people to execute. So I spent time meeting the people and meeting the team. Then I spent time understanding the company’s current strategy and understanding where we have been and where we want to go.”

That is how Hill spent his first couple of weeks in the business. He wanted to understand who was doing what in the company, what talent U.S. Playing Card had, and what made this company great.

“This company has a long, long history of having great products and great people, so I wanted to make sure I understood what their DNA was,” he says.

The next step for Hill was really evaluating what strategies were in place and how they could be improved.

“I said, ‘Let’s formulate a strategy that puts us into meeting the objectives of our corporation,’” Hill says. “How do we continue to have a sustainable business? Where do we need to grow? Where do we need to peel back a bit?”

Hill spent his first 30 days in his new role learning where the company was, what it had and what it did in terms of products, people and processes. His next 60 days were spent developing a strategy with his team to say where the company could go over the next two to five years.

“We have not deviated from that strategy, and we will continue to push that forward,” he says. “We will tweak it here and there if we have some challenges on one side or another, but the overarching strategy that we set forth we have not deviated off.”

Implement your strategy

With such well-known products, Hill wanted to see where he could expand the reach of U.S. Playing Card’s brands as part of his new strategy.

“With the history that we have in North America and the customer base we have today, we felt that the U.S. just had to be tweaked, but we really had to invest in our international business — South America and Asia,” Hill says.

The current Macau market for gaming in Asia is growing by leaps and bounds.

“It almost dwarfs what Vegas is doing as far as the amount of revenue that’s being poured into Macau and also Singapore and the Philippines,” he says.

With his focus set on new markets for the company’s products, Hill says that keeping an open mind about strategy was helpful as an incoming CEO.

“You have to come in with open eyes and look at what you have,” he says. “Don’t come in with preconceived notions because sometimes you might just need to tweak something versus making wholesale changes.”

As the leader of the organization, people are looking to you to lead them. If you’re not clear in what you’re trying to do, they’ll have a hard time following you.

“You have to be very clear on what you’re trying to do and make sure that you rely upon the great talent that you have,” Hill says. “Don’t live on an island and stay in your office and come out and say, ‘Here’s what we’re going to do,’ because you’re not as smart as eight people in a room that challenge and trust each other.”

U.S. Playing Card Co.’s strategy to penetrate new markets revolved around having resources in those geographies.

“Our strategy was about resources, so we opened an office in Macau,” Hill says. “We hired a sales organization in Macau to go and develop our sales opportunities, not just in Macau, but also throughout the Asian region, which includes Singapore, Korea, the Philippines and other markets.

“You want to skate where the puck is going to be and that’s what we have done,” he says.

Hill made investments in order to further U.S. Playing Card Co. as the No. 1 name in casino playing cards in the U.S., Latin America, Europe and Africa. The new strategy continues to drive that momentum into the Asian market.

“You have to trust that everybody is trying to do the right thing and build a strategy that is not rigid where you can’t make tweaks to it, but you have to have a good strategy that people buy in to,” he says. “That’s what will make the company better.”

A key to making the company’s new markets successful is being on the ground in those areas so that you are face-to-face with customers.

“You have to see your customers,” he says. “You have to see what their issues are that you can resolve for them and you can only do that if you are on the ground. It’s hard for someone in the U.S. to fly to Singapore, fly to the Philippines, fly to Korea or Cambodia every six to 12 weeks and have a relationship. That’s why we have put those resources into those markets.”

Growth strategies give you a clear vision for what you’re trying to do. They help focus your energy, resources and spending in the right buckets.

“If you don’t have a strong strategy you’ll try a lot of different things,” Hill says. “For us, we know where we need to go and where we need to put our resources and we’re doing that. That’s why a clear, defined strategy is so important. Everybody understands where we’re trying to go.”

In April 2013, Hill left U.S. Playing Card Co. to head up another business within the Jarden Corp. portfolio. He now has another opportunity to put his thumbprint on an organization.

How to reach: U.S. Playing Card Co., (800) 543-2273 or www.usplayingcard.com

Philip Rielly and Eric Hill give BioRx a shot in the arm to keep the company on a strong growth trajectory

Philip Rielly, Co-Founder and President, BioRx LLC

Philip Rielly, Co-Founder and President, BioRx LLC

For Philip Rielly and Eric Hill, the past five years have been a very different experience compared to most others in the business world during that time. While many companies were hunkering down, cutting back and fighting to stay in business, Rielly and Hill were nurturing the healthy growth of a young company.

In fact, in just the past three years they have seen their company’s employment and revenue double. Rielly and Hill are co-founders of BioRx LLC, a more than 200-employee national provider and distributor of specialty pharmaceuticals they started in 2004.

Hill, who is vice president, is located in North Carolina, while Rielly, who is president, is in Cincinnati where BioRx is headquartered. The company, now nine years old, has been exceeding expectations, and there are no signs of it slowing down anytime soon.

“Since 2010 we have continued our strong growth trajectory as we hoped that we would,” Rielly says. “We finished this past year north of $100 million in sales. We’ve been fortunate to launch a number of new semi-exclusive products with some of the different manufacturers.”

Eric Hill, Co-Founder and Vice President, BioRx LLC

Eric Hill, Co-Founder and Vice President, BioRx LLC

Since 2010, BioRx has become a prominent player in the Hereditary Angioedema space and a major player in the Alpha-1 antitrypsin deficiencies space.

“Some of the other changes since 2010 are we announced that we were going to be a semi-exclusive distribution partner for a firm out of New Jersey called NPS Pharmaceuticals and we opened three new regional pharmacy and distribution centers,” Hill says. “Those are in Boston, Scottsdale, Ariz., and San Diego, Calif. Those are three large investments for us.”

Needless to say BioRx has been doing the right things to remain on a growth track. Now Rielly and Hill have to keep it going.

Here’s how they have grown the company through strategic planning and developing the right partnerships.

Take advantage of growth drivers

When Rielly and Hill first started BioRx, they had a different idea behind specialty pharmaceuticals than most other national companies. While others were switching to a less personalized mail order model, Rielly and Hill saw an opportunity to offer a higher care model and focus on the patient.

Since seeing that opportunity they have been aggressively pushing the company forward.

“We’ve taken a bullish approach from day one when we set the company up, and we’ve been very aggressive with respect to adding new geographies and new regions,” Rielly says. “We’ve certainly added quite a few new account managers in the field, so we really focus our market on the four P’s in the pharmaceutical space with respect to customers.

“In the physician marketplace, we’ve expanded the number of representatives calling on the physicians across the country to open new geographies to where we’re now truly a national company.”

The biggest driver for BioRx at this point has been developing relationships with the different biotech companies and manufacturers.

“They’ve entrusted us with some of their new therapies,” he says. “In many cases we are just one of a handful of companies in the world who has access to selling these drugs. We’ve been very fortunate to be able to get those relationships.”

When a company is growing at the rate BioRx has, it is often easy to focus on one big area of growth and forget about other areas. That has not been the case with BioRx.

“This hasn’t been a one-trick growth pony,” Hill says. “We’ve purposefully and carefully invested in multiple strategies that have the opportunity to provide us growth. We’ve executed pretty well on all of them, but the key thing to take away is that we haven’t put all of our eggs in one basket in terms of our strategy to provide continued and sustainable growth for the company. It’s been a measured approach across many fronts.”

Over the course of the business as it has scaled, Rielly and Hill have continued to reinvest in it.

“We’ve taken every dime of free cash that we can find and judiciously invested that into both infrastructure to allow us to grow, but most importantly into infrastructure that provides that growth such as opening new markets, hiring sales people, adding new product lines and adding infrastructure,” Hill says.

“At the same time, we have to ensure that we’re not getting ahead of the company’s ability to finance it so we can maintain a robust and strong balance sheet, which is a business killer for a lot of small companies.”

While maintaining a strong balance sheet is one challenge of a growing company, there are many other obstacles that come along with growth. One challenge is hiring.

“Even with the unemployment rate at what it is, I would say that we still have a challenge finding and recruiting some of the very best people,” Rielly says. “We set a very high bar for the quality of folks that we hire. We’ve really had very little turnover, but with the continuous growth we’ve enjoyed, it is a challenge to continue to grab those folks.”

One strategy that BioRx has implemented is hiring people for an associate-level sales position and having them train with more senior employees to learn the ropes.

“It eliminates some of the risk down the road of having a bad hire,” he says. “We’re also working closely with some of the local universities. That way we have an in on recruiting down the road, and it’s a good way for us to give back.”

Another way the company stays on top of hiring challenges is to be on the lookout for great candidates all the time.

“It may not be today, but it may be three months or six months from now that we’ll need talent,” Hill says. “When the opportunity to hire somebody comes along, we need to already have a portfolio of folks we’ve been talking to. That dialogue helps gets those jobs filled quicker and with better talent.”

Develop strategies

Most of BioRx’s growth to this point has been organic growth. However, Rielly and Hill are always looking for the next partnership that will benefit the company and its patients. Last year the company made an acquisition to help it reach new customers.

“Coagulife Pharmacy is the only acquisition that we have done to date,” Rielly says. “Our strategy from day one has always been through internal growth and continuing to reinvest in new talent and organic growth. But Coagulife presented itself. That situation was a unique opportunity for us to add a different skill set.”

Coagulife deals specifically in the hemophilia space. Many hemophilia patients have target joint bleeds and what ends up happening is many of them require an orthopedic procedure down the road. Many of those can be avoided or helped with some type of aggressive physical therapy, which is what Coagulife offers.

“So we’re rolling out a national program that is very specific to physical therapy and exercise regimens,” he says.

A large part of BioRx’s ability to find strategic partners and develop those relationships is because the company makes it a priority to plan for those kinds of things.

“You have to have a plan, but also the wherewithal to follow through on a plan without respect to different challenges that come up,” Rielly says. “Whatever the long-term plan is you have to stick with it and keep going forward even when it doesn’t feel comfortable from time to time.”

BioRx thinks of strategic planning in the two-to-five-year range.

“The easiest thing for us to plan is organic, new market openings and sales infrastructure growth by prioritizing the markets we believe have opportunity in each of our business units,” Hill says. “Then it’s just budgeting out the velocity with which we can deploy capital and money to put those people in place to enter and burst into new markets for us.”

Rielly and Hill constantly talk about the next five markets the company is going to crack into with a new therapy or a sales rep to put an operating unit in place.

“We’ve done a good job of sticking to that,” he says. “We kind of know where our next five, six, seven, or eight investments are going to be and in which business units we want to be plunking those bets down.”

During the strategic planning process you have to be willing to think about some far-fetched goals while also being reasonable about what can be achieved in your plan’s window of time.

“Dream big and shoot for the stars, but be realistic with respect to what it’s going to take to achieve those goals,” Rielly says. “Be realistic with how much capital it’s going to require to get from point A to point B. But don’t be afraid to dream big and swing for the fences.”

The key to achieving goals set forth in a strategic plan is having a great team around you.

“If we have done anything, we have hired a fantastic management team and our bench strength is pretty deep,” Hill says. “I think either one of us could get hit by a bus tomorrow and the company wouldn’t have a whole lot of issues. We have managers and operators that we turn loose to let them earn their stripes. Those guys know where our next bets need to be.”

How to reach: BioRx LLC, (866) 442-4679 or www.biorx.net

Takeaways

Determine your growth factors.

Develop strategic partnerships to help expand.

Have a planning process for the future.

 

The Rielly and Hill File

 

Philip Rielly

President and Co-founder

BioRx LLC

 

Eric Hill

Vice President and Co-founder

BioRx LLC

 

Rielly: Born in Cincinnati

Rielly: Education: Graduated from Spring Hill College in Mobile, Ala., with a BS in business communications.

Hill: Born in Bassett, Va.

Hill: Education: Graduated from Wake Forest University with a degree in psychology.

How did you first meet each other? And why did you start BioRx?

We both met working for another national company. We saw the trend of many national companies going to a mail order model with less personalized care, and we felt that we could create a market by going with a higher care model.

What has been your favorite thing about growing BioRx?

Rielly: The most rewarding part is building a team and watching the team grow. We’re making a very positive impact on the lives of each of the patients in which we touch and there’s not a week that goes by that we don’t get a patient testimonial about the ways our team members went above and beyond. I find that extraordinarily rewarding.

Hill: It is awfully refreshing to wake up every day knowing that we get to set the direction. It’s a lot of fun being in an entrepreneurial environment and getting to spread that spirit around the organization.

What excites you both about the future of BioRx?

Hill: I’m excited about the fact that sooner than later we are going to be a $200 million company. We also have a new drug launch happening and it has the opportunity to be a significant sea change in both the lives of the patients that we’re treating and the marketplace for one of our operating units in a way that’s transformative.

Rielly: In the last few months, we’ve aggressively hired and opened new geographical territories and I’m excited to see the initial successes. We have the best team in place that we’ve ever had and I’m excited for them to achieve their personal goals.

Paul Witkay: Building breakthroughs

Paul Witkay, founder and CEO, Alliance of Chief Executives

Paul Witkay, founder and CEO, Alliance of Chief Executives

When thinking about innovation, most people immediately think about new products like the next iPhone or electric vehicle. I, however, have always believed that business innovation comes in many different flavors. For example, Dell re-engineered the way we buy computers, Apple revolutionized the way we buy music and Zappos.com provided a service never before seen online.

I recently read “Ten Types of Innovation: The Discipline of Building Breakthroughs” by Larry Keeley and found it to be a great way to think about all the ways we might innovate within our own companies. All companies must continually improve or they will eventually die. According to Keeley, the most powerful strategies typically consist of several of the following types of innovation:

Profit Model — Gillette pioneered one of the classic business model innovations by creating the razor/razor blade system. The company taught consumers that razor blades could be discarded rather than sharpened for reuse.

Network — Network innovations enable companies to focus on their core strengths while leveraging the strengths of partners. Franchisors license their proprietary systems to franchisees to achieve much faster growth than they could do on their own capital.

Structure — Southwest Airlines was able to achieve faster turnarounds, lower maintenance costs and achieve more efficient operations by standardizing its fleet of Boeing 737s. The company’s unique structure resulted in much lower costs than its full-service competitors and increased profits.

Process — Toyota became the leading car company in the 1980s by creating the lean production system, which reduced waste, improved quality and lowered costs.

Product Performance — Before the launch of the iPhone, Corning Glass created Gorilla Glass at the request of Steve Jobs. This tough, scratch-resistant glass is now used in more than a billion devices worldwide.

Product System — Oscar Meyer wanted to do more than just sell cold cuts, so it created Lunchables — a lunch system that includes crackers, meats, cheese and dessert in a single fun package.

Service — Men’s Wearhouse promises free lifetime pressing of any purchased suit, sport coat or slacks at any of its stores, a service that is valued by business travelers who hate ironing.

Channel — Amazon created a closed wireless network that is free for Kindle customers so they can purchase and download e-books in less than 60 seconds.

Brand — Intel created the Intel Inside campaign to increase the perceived value of computers that use Intel processors.

Customer Engagement — Blizzard Entertainment created the most profitable online game in history, World of Warcraft, by designing the game to encourage and provide incentives to players to connect and collaborate, which increases their engagement and loyalty.

According to Keeley, the “heart of innovation is understanding when a broad shift is called for and driving it forward with courage and conviction.” Low-risk innovations improve existing products or systems by providing higher quality, improving speed or creating better service. The next level of innovation is to “change the boundaries” by bringing new products or services to an adjacent market.

The highest level of innovation is the rare occasion when you attempt to radically change an entire industry structure. Keeley says, “Transformational innovations erase the boundaries between once distinct markets and irrevocably change what is expected from competitors and consumers alike.”

So how can you decide which type of innovation will work for you? Opportunities are often discovered when observing how customers are either delighted or disappointed by current offerings. Keeley discusses how most innovation strategies focus on changes in three primary areas: 1) business models 2) platforms 3) customer experience.

The most radical and transformational strategies employ more than just one strategy at a time. It’s the CEO’s responsibility to determine when the opportunity for strategic innovation exists, and whether the organization is capable of making the necessary changes to succeed.

 

Paul Witkay is the founder and CEO of the Alliance of Chief Executives. The Alliance of CEOs is the most strategically valuable and innovative organization for leaders anywhere. The Alliance strives to provide the creative environments where breakthrough ideas happen. Paul can be reached at [email protected]

How talent, experience and family ties can combine in the investment search

Joe Kanfer

Joe Kanfer

Find a company. Buy a company. Grow a company. You can’t define that particular mission of an investment-minded entrepreneur any simpler.

And to get to that point, experience and talent are mandatory requirements. If you add a relationship such as family ties, it’s a bonus.

It’s a route that is being taken by KBZ Partners LLC of Akron, formed and funded by two families with deep roots in the Northeast Ohio business scene.

The partnership includes Joe Kanfer, Marcella Kanfer Rolnick, Todd Bendis and Don Zigdon. Three have roles or have had roles at GOJO Industries Inc., known best as the inventors of Purell Hand Sanitizer.

Kanfer is CEO and chairman of GOJO Industries and his daughter Marcella is vice chair. Zigdon, Kanfer’s son-in-law, has worked in the operational excellence department of the company, and Bendis has worked for General Electric in the GE Capital Division and at Greif, an industrial packaging manufacturer.

Marcella Kanfer

Marcella Kanfer

Smart Business discussed with KBZ Partners what goes into becoming a team of investment-minded entrepreneurs.

Q: What was the impetus behind KBZ Partners?

Kanfer: We’ve always been interested and active in Northeast Ohio. Our core business, GOJO, has been here since my uncle founded it in 1946. When Don, Todd and Marcella were talking about their interests, the idea clicked that this was a good opportunity for us to expand our interests here at home with talented folks who want to take an entrepreneurial approach in Northeast Ohio.

Q. Did the timing feel right for this type of initiative here?

Kanfer: Northeast Ohio has a lot of good things going for it. We know it and we like it. You can never predict when times are going to get better or worse, so the larger economy has not played a role in our decision. This is really a people-based choice — we have confidence in Don, Todd and in Northeast Ohio.

akr_cle_ftr_DonZigdon_0813Q: Where does KBZ see the best opportunities?

Bendis: In the industrial B2B space. It’s a good fit with the strengths of the region, as well as the strengths of our expertise. The ideal situation would be to find a manufacturing company that has a differentiated product serving a niche valuable to its customer supply chain. Our goal is threefold: Find a company. Buy a company. And then grow the company. We feel we can take a business that has been successful and get it to the next level of growth.

Kanfer: We’ve talked about family-owned businesses, but we are not limiting our search to them. We have a lot of respect for family-owned businesses because you often have a very solid culture and very solid relationships with people. Think about it, when you walk into a new business, you are really not acquiring the product line for the business line — you are really joining with people. That’s what this is about: Can you bring a freshness of perspective, perhaps some new capital, perhaps relational or strategic assets?

Todd Bendis

Todd Bendis

But that has to build upon the people. What we have seen is that privately owned businesses have strong relationships with talented and committed people, and they tend to make investments with a longer perspective in mind than publicly held businesses. It’s a good base to build from.

Q: How do you intend to apply the lessons you have learned at GOJO to this new partnership?

Kanfer: Marcella and I will act as sounding boards while the business will be run and operated by Todd and Don, and potentially the folks whose business we acquire. But clarity is the real critical element. Clarity provides a focus to everyone — people want to know what they are responsible for.

Q: How important will a company’s culture be in this venture?

Bendis: It will be a blending of cultures. The key is taking the best of both and moving forward. Hopefully, that results in a company that puts itself on a new trajectory to growth by leveraging a superior culture.

How to reach: KBZ Partners, (630) 423-6347 or www.kbzpartners.com.

Andy Kanefield: Lou Gerstner was right — vision isn’t the answer

Andy Kanefield, founder, Dialect Inc.

Andy Kanefield, Founder, Dialect Inc.

“There’s been a lot of speculation as to when I’m going to deliver a vision of IBM, and what I’d like to say to all of you is that the last thing IBM needs right now is a vision.” 

— Lou Gerstner, CEO of IBM from 1993 to 2002

My experience has led me to believe that many leaders think that just having a new mission statement, vision statement or articulation of their values is sufficient to engage their people. And after they have restated these organizational imperatives, many of these same leaders wonder why people don’t respond in ways they hope.

Gerstner’s experience at IBM gives us a clue to one of the reasons. He believed he had good reasons to avoid a new vision statement. The first reason was his observation that IBM had “file drawers full of vision statements.” The second reason was that the problem was paralysis — IBM wasn’t executing.

Gerstner knew that while IBM hadn’t created a new vision, it had already made strategic decisions about the future of IBM — which included being focused externally on the customer rather than an “internally focused, process-driven” organization.

So what was Gerstner right about? In order to be successful in the short term and sustainable for the long term, businesses have to be clear on a key set of questions, and vision is just one of those questions.

Whatever model for building a corporate strategy you choose to use, ensure that it addresses the following questions as a starting point:

What business are you in?

First, you need to know whom you’re competing against. Think about being in the restaurant business. That could mean anything from a place that serves pizza slices to the finest sit-down restaurant in Manhattan. Secondly, consumers like categories such as fast casual or fast food. It helps us set our expectations for our experience with you.

Who are your customers? 

If your primary customers don’t perceive value in what you offer, you won’t have a business. What do these customers care about? What difference do you make for those customers? This question is often expressed as a mission or purpose. It helps express the value that you deliver.

How are you different from your peers?

One layer is, “How are you unique or better than your peers?” The answer to this question must be something that engenders customer loyalty over the long-term.

A second layer is, “What quality, that is central to the DNA of your organization, enables you to be unique or the best within your category?” If you are the fastest of the fast food category, what trait have you built within your company that drives that speed? Is it uniformity or an unrelenting focus on continuous improvement?

What are your core capabilities that deliver your strength? 

These end up being your strategic priorities. If you’re the least expensive fast food restaurant, your core capabilities may include expert ability to manage your capital, superior logistics, consumer insights and aggressive vendor negotiation.

What behaviors are important  for success? 

Often called values, these are the beliefs that you and your organization have that manifest themselves into organizational and individual behavior.

What future do you want to create? 

Finally, we get to the vision. It is important that you have a direction that people, especially employees, can clearly see. If they don’t know where you’re going, they won’t know how to help you get there.

Building the answers to the questions above is not a discrete process — the answers are linked. This is the primary reason that just having an expression of your mission, vision and values isn’t enough. Without answers to all these questions, you won’t be able to outrun the competition over the long-term.

 

Andy Kanefield is the founder of Dialect Inc. and co-author of “Uncommon Sense: One CEO’s Tale of Getting in Sync.” Dialect helps organizations improve alignment and translation of organizational identity. To explore how to align your mission, vision, values and other aspects of your strategy, reach him at (314) 863-4400 or [email protected]