It just takes a vision — if you can see it, you have it

While working on this month’s Uniquely Cleveland feature on three well-known venues that helped establish Cleveland as a must-visit spot for artists on the popular music highway — and indeed as the home of the Rock and Roll Hall of Fame and Museum — it struck me how having a vision made it happen.

Author Claude M. Bristol in his book “The Magic of Believing,” put it  this way: “The person with a clear goal, a clear picture of his desire, or an ideal always before him, causes it, through repetition, to be buried deeply in his subconscious mind and is thus enabled, thanks to its generative and sustaining power, to realize his goal in a minimum of time and with a minimum of physical effort.”

In other words, people like Leo Frank of Leo’s Casino, Henry (Hank) LoConti Sr. of The Agora and Jim Swingos of Swingos Celebrity Inn were able to visualize their goals and bring them into existence. Swingos, in fact, was advised not to buy the former Downtowner Inn at East 18th Street and Euclid. He didn’t listen to the naysayers. Frank and LoConti both saw their venues destroyed by fire, yet they rebuilt.

Visioning is not a new discovery. People have been using it throughout history. One of my favorite inspirational stories comes from the 1950s when the late Norman Vincent Peale, a clergyman and author of “The Power of Positive Thinking,” told of how he learned the power of “positive imaging.”

Peale and his wife Ruth had started an inspirational magazine called Guideposts, which is still published today. While it was started on a shoestring, it grew in popularity. Then in 1947, a fire destroyed some office records, including the circulation list. Thanks to radio commentator Lowell Thomas and an article in Reader’s Digest about the incident, the magazine was able to re-establish itself.

The publication grew to about 40,000 subscribers before money ran out. The Peales called a meeting of the board of directors. They had also invited a patron who had once donated $3,000 to the magazine’s effort. Her name was Tessie Durlack.

She attended the gathering, but warned the group that she would not donate again — but she would give them something more valuable than money.

“The situation,” Peale remembered her as saying, “is that you lack everything — subscribers, equipment, capital. And why do you lack? Because you have been thinking in terms of lack. You have been imaging lack and therefore, you have accordingly created a condition of lack. What you must do now, at once, is to firmly tell these lack thoughts or images to get out of your minds. You must start imaging prosperity instead.”

By using Plato’s admonition to “take charge of your thoughts. You can do what you will with them,” the board visualized 100,000 subscribers. Soon, enthusiasm returned, and this brought renewed confidence and creativity. Bills began to shrink and the subscription list grew.

“Now that we see them,” Durlack had told the group, “we have them.”

Try it. Maybe it will work for your challenge.

Deborah Sweeney – Three things to keep in mind before you try to raise business capital

Deborah Sweeney, CEO, MyCorporation Business Services Inc.

Deborah Sweeney, CEO, MyCorporation Business Services Inc.

Your ability to attract investments can make or break your business. Extra capital allows companies to expand their operations and find new customers. Most business owners do eventually reach the point where they need some sort of outside investment — whether it’s from family, a bank or an actual investor — to help them make major purchases and grow.

One of the most common ways for a business to get extra money is by incorporating and then selling stocks. Unlike a loan, issuing stock allows you to raise money without taking on additional debt.

But there are a few things you need to know before you look at raising capital for your business:

You will have to give up some control of your business.

Incorporating a business turns it into its own, separate legal entity. Your ownership of that entity is dependent on how much corporate stock you own. As you sell off that stock, you dilute the ownership of the company. Furthermore, when you incorporate, you have a fiduciary duty to act in the best interest of the stockholders and the corporation.

The interests and desires of the stockholders likely coincide with your own — both parties want to see the business succeed and make money. Just remember that when you do begin to sell stock, you are empowering the holders of that stock to influence major business decisions. Before you begin selling stock, make sure you’re ready to take the opinions of your investors into serious consideration when you are running the company.

You will need actual data to back up your pitches to investors.

If you are at the stage where you are ready to start looking for investors to help you expand, chances are that your business has done pretty well. It’s not enough to point and say, ‘Look, we survived and made money!’ You need hard numbers and data — how much revenue is your business generating? What is your current revenue-to-debt ratio? How will this investment impact your future earnings?

Buying stock in a company is already a gamble because if the company doesn’t do well, the investment could be lost. So be ready to show potential investors that your company is in a position where it can create a good return on their investment.

You will have to pitch yourself, in addition to your company.

Everyone is “passionate” and “committed” about what they do when they run a business — investors have heard those buzzwords plenty of times already. Investors want to know who you are, what your credentials are, and why they should trust you with their money. Sell them on your experience, and the experience of anyone else helping to run the company.

If they are confident in you, they will be confident in your business and be much more willing to invest. Issuing stock and finding investors can be a jarring experience. Once you start selling that stock, you lose some control of your business, and suddenly the needs and demands of your investors must be taken into account when you make major business decisions.

You also have to be ready to prove the worth of both your company, and of yourself as one of the company’s directors. If you are ready to let go, and are prepared to pitch the heck out of your business, your employees and your own career history, you will find investors willing to roll the dice and put some of their own money into your business.

Deborah Sweeney is the CEO of MyCorporation.com. MyCorporation is a leader in online legal filing services for entrepreneurs and businesses, providing start-up bundles that include corporation and LLC formation, registered agent, DBA, and trademark & copyright filing services. Follow her on Google+ and on Twitter @deborahsweeney and @mycorporation.

Dare to dream big

Fred Koury, CEO, Smart Business Network

Fred Koury, CEO, Smart Business Network

When Ted Turner launched CNN, there were plenty of people who said a 24-hour news network would never fly.

But Turner saw a problem: He enjoyed watching the news, but his busy schedule typically had him missing the standard news broadcast time. That’s when he got the idea: What if the news was on all the time? He couldn’t be the only one who was unable to fit a regular broadcast into his schedule, so he knew the demand was there.

The next step was to dream big. What if the news was on all the time, not just locally, not just regionally, but nationally and even internationally? The result was the first 24-hour cable news network. It took a lot of effort to get CNN to where it is today, but Turner’s dream was realized. His big dream yielded a big result.

People need to dream big. If you never take the time to dream big, great things probably aren’t going to happen for you.

We have the power to visualize our future. A professional athlete visualizes hitting the game-winning shot so that when the time comes, he or she expects to succeed. As CEOs, we must also visualize ourselves and our organizations achieving great things. We must see where we want to be and then convince those around us to help us get there. When you can articulate the vision in a way that makes it as clear to them as it is to you, your goals will be easier to accomplish.

Here are four steps to achieving great things:

  • Have you dreamt big enough? If you aren’t visualizing your business achieving all its goals and growing the way you want it to, it might be holding you back.
  • Take time to reflect on the dream. Let it simmer as you consider the obstacles that will have to be overcome to achieve your dream.
  • When you are comfortable that you have thought it through, share the dream with people you trust. They can point out challenges you may have overlooked or offer encouragement to keep you moving.
  • Get started. Big dreams don’t happen without hard work. Lay out the steps that will get you from where you are today to where you want to be and start working toward your goal. You won’t get there overnight, so focus on taking small steps toward your vision each day. Sell others on your dream so they can help you get there.

Don’t be satisfied with small achievements. Visualize your potential and the potential of your organization. With hard work, you can turn it into a reality. Dare to dream big.

Fred Koury is president and CEO of Smart Business Network Inc. Reach him with your comments at (800)988-4726 or [email protected]

Jean-Paul Ebanga finds compromise and collaboration fuels success at CFM International

Jean-Paul Ebanga, President and CEO, CFM International

Jean-Paul Ebanga, President and CEO, CFM International

When Jean-Paul Ebanga looks up at the sky, he thinks about the more than 3 million people who fly every day on airplanes powered by CFM International engines. In fact, every 2.4 seconds an airplane departs under the power of a CFM engine.

“That means our role today is far beyond delivering engines to the industry; it is also making sure people are traveling in a very safe way at a decent price,” says Ebanga, president and CEO of CFM International, a $15 billion aircraft engine manufacturer that is a joint venture between GE here in the U.S. and Snecma in France.

CFM — which gets its name from a combination of the two parent companies’ commercial engine designations, GE’s CF6 and Snecma’s M56 — combines the resources, engineering expertise and product support of these two engine manufacturers to build engines for narrow body aircrafts.

“Today, in the air transport industry, the narrow-body segment is the main segment of the industry,” Ebanga says. “Looking forward for the next 20 years, there will be a need for roughly 30,000 new airplanes; two-thirds of those will be narrow-body airplanes and CFM is currently leading this market segment.”

If being the industry leader in engine manufacturing wasn’t enough of a challenge, Ebanga also has the challenge of leading a joint venture company where compromise and collaboration is the key to success.

“If you are taking two parent companies with two different cultures and you try to blend them, this will generate some difficulties,” Ebanga says. “But the net result, because you have to find compromise, because you have to work between different cultures, will be more sound ideas and a much more efficient organization.”

Here’s how Ebanga utilizes both GE’s and Snecma’s resources to keep CFM the industry leader in narrow-body aircraft engine manufacturing.

Compromise and collaborate

While a majority of companies are focused on streamlining themselves, CFM has to take a different approach to its business. Its joint venture means CFM has to work to find compromise above all else in order to properly function at its best.

“The problem with the JV is because you have two different constituents, you have to make compromise,” Ebanga says. “There is no one voice saying this is the way and the rest of the team just follows without asking questions. In terms of leadership, it requires some things to be a little bit different than normal leadership.”

The existence of this additional challenge makes this kind of partnership too difficult for some leaders and companies. But Ebanga sees the glass as half-full.

“If you are able to find the sweet spot between the two company cultures and then work around these difficulties, you enable a new space of opportunities and strengths,” he says. “This is the essence of joint venture success.”

CFM has been known for a long time by its superb engine family, CFM56. Now the company is looking to release its next generation of engines called LEAP, for which compromise and collaboration will be key to its success.

“This new product will be designed based upon a very detailed and comprehensive market survey,” he says. “We spend more than three years asking the customer what they are looking for in the next 20 years and understanding in a granular way how the dynamics of the market can evolve, and then we define the product, which is the answer and the solution to that.”

When you have two companies, the reading of the market dynamics will be different because each company has a different way of operating and a different culture, so they will analyze all the signals in a different way.

“Maybe the solution has some things shared, but the two won’t be exactly the same,” Ebanga says. “The whole key is how you bridge the two approaches. How can GE or how Snecma can make the necessary compromise to accept that the other guys also have a great idea and how can you work together to bridge ideas that make a great product.”

The trick is being able to step back from what you believe is the ultimate answer and being able to compromise with other ideas from another company that also thinks they have an ultimate answer.

“By bridging the two, you find out that some of what’s behind the idea of the other company you didn’t think about at first and vice versa,” Ebanga says. “At the end, the product you are putting on the market is far better than the one you could have done alone.”

Both GE and Snecma own their own technology. Snecma works on the front and back of the engine, while GE works on the middle of the engine. For LEAP, they both have been developing technologies for their respective parts of the engine, but the companies don’t unilaterally say, ‘Here’s our part of the engine.’ The other company has to accept and agree with the technology based on analysis. There are checks and balances that go into the process.

“Based on the other company’s remarks, you can improve your own part,” he says. “Snecma might make some comments about the core, which is the responsibility of GE and taking into account these remarks GE will improve its own part of the engine and vice versa. It’s a mutual cross-pollination.”

The level of compromise and collaboration that CFM has developed has been built up during more than 30 years and is now a major part of the joint venture’s culture.

“In our case, the different GE and Snecma leaders, over time, understood that CFM’s success is more important than their own success,” Ebanga says. “That is to say that if I’m trying to optimize my own interests rather than CFM’s interests, at the end of the day, I would lose the game.”

CFM and GE have been very successful at carrying out this approach even though the leaders have changed.

“One way to do that is we manage young leaders in the challenges of working in this strategic partnership environment,” he says. “If you are growing leaders in this environment, eventually when they are in the top spot, they will have the framework to deal with what makes up the success of this JV.”

A joint venture takes an investment in both people and process in order to make it work.

“In a strategic partnership, it is like being a couple — you could fall in love day one and it’s great for a couple of weeks, but if you are not investing in the relationship … it won’t be a great love story,” he says.

Plan for the future

One of the main challenges CFM has is that in the ’70s it was just a start-up company. Now it has become the leader of the aircraft engine industry, and in order to remain in that position, Ebanga and the company must be forward-thinking.

CFM has several matters it needs to focus on for the future of the company. No. 1 is executing on current commitments.

“This is a big deal because we are currently developing a new engine family called LEAP, and the start of this new program has been very successful,” Ebanga says. “We are the sole power plant for the next generation of Boeing 737 MAX aircraft, one of the two engine makers of the Airbus A320 aircraft, and we are the sole power plant of the new Chinese COMAC C919 aircraft.”

Beyond making LEAP the next engine of preference, CFM also has to ensure that whatever changes the market goes through in a decade or two from now the company will be able to adapt and reinvent itself to stay in the leading position.

“When you are in this top-dog phase, it’s difficult,” he says. “It’s about working on a short-term basis and, at the same time, articulating a strategy to change the way we are running to make sure we will still have the appropriate fit 10 years from now.”

Planning for what the future has in store is not an easy task. You need to address the situation in a very humble way.

“You are already overwhelmed by the shop-time challenges and to find time and perspective to think about the long-term is rather difficult,” Ebanga says. “Being humble helps you to engage in this journey. Along the way, you will have a lot of reasons to give up for a while and stick with the short-term. I think this is a recipe for failure. You need to stay humble on one end but also stay engaged and not let things go away.”

You also need to understand your market but not in the way you understand your market for your short-term objective.

“When you are looking at the market on a short-term basis, it is to make sure you have the appropriate marketing and value proposition to get yourself up and make your numbers,” he says. “When you are looking at the long-term perspective, it’s really the ability to elaborate scenarios about the change in your industry.” ●

How to reach: CFM International, (513) 563-4180 or www.cfmaeroengines.com

Takeaways:

Drive compromise and collaboration for best results.

Be able to reinvent your business to adapt to your market.

Develop plans for how the future of your market may unfold.

The Ebanga File

Jean-Paul Ebanga

President and CEO

CFM International

Born: Paris, France

Education: Graduated from École Nationale Supérieure d’Électricité et de Mécanique (ENSEM), France with a degree in engineering

What was your very first job, and what did you take away from that experience?

I was the leader of the photo club in high school. A lesson I learned from that time is that you can have some great ideas and be very fast in your head, but you have to have the ability to bring people up to speed. This is a great example of how a real organization works.

What got you into aviation?

It was the beauty and the exceptional achievement that this industry is all about. When I was in high school, I had two dreams—the first one was to be an architect and the second was to be an engineer to design great things. To imagine that I could generate some great things to enable this kind of achievement was absolutely fascinating for me. So I chose the engineering path and it still gives me great satisfaction. An aircraft engine is an absolutely amazing piece of technology, but also a piece of art.

Who is someone that you admire in business?

My first thought was the leaders and initial creators of Intel. Not only was this company able to start from nothing as CFM did and became the leading company in the microchip/microprocessor business. Initially they were the leader in the memory business and then they reached a point where they had to reinvent themselves. The reason Intel is the great company they are today is because they were able to reinvent themselves in the absolutely right way. So I admire this generation of Intel leaders.

Jim Weddle is positioning Edward Jones to be the top of mind choice

Since January 2006, when Jim Weddle first took over the managing partner position at Edward Jones, he has kept a keen focus on growing the investment firm to new heights. In 2007 he and his team laid out a five-year plan that they updated in 2010, but that was a mere steppingstone to the vision the firm rolled out last year.

In January 2012, Weddle unleashed what Edward Jones is calling its Vision for 2020. Focusing on growing the firm in three key areas — financial advisers, assets under care and households deeply served — Weddle’s vision won’t just have Edward Jones reaching new heights, it might just be soaring.

“Today, in a lot of markets, we are not the top-of-mind choice,” Weddle says. “We don’t have the presence that we need. It’s going to take us several years to get there, but we think we’ve got the way to do so.”

Edward Jones is a leader in the financial services industry that serves nearly 7 million clients with the help of 12,500 financial advisers and more than 34,000 total employees. The firm reported 2012 revenue of $4.96 billion, a mere fraction of what is planned for the years ahead.

“There is a huge demographic opportunity, and we need to better position ourselves,” Weddle says. “We’ve put a lot of tools in place. We’ve put additional products and services in place to enhance the client’s experience and to enable us and position us to do an even better job for them.”

Here is how Weddle formulated Edward Jones’ long-term vision and is beginning to make it a reality.

Natasha Ashton – Time to stop what you’re doing…and think about where your business is going

Natasha Ashton

Natasha Ashton, co-CEO, Petplan

When you’re a powerhouse player in your industry, the key to success is often the ability to step back and take stock of who you are, where you are and where you’re going. Sometimes, an existential approach is intuitive; it’s easier to self-reflect when you’re beginning a new venture or making a monumental change.

But what about when you’re experiencing success? Taking stock when you’re on top is far from redundant; in fact, figuring out where your accomplishments have come from makes you more likely to duplicate them. Here are some suggestions for seizing the moment and sizing up your business.

Don’t agonize — organize

Rather than rely on the year’s end to inspire a big-picture appraisal, set quarterly dates to dissect core activities, finances, human resources and sales/marketing strategy.

Not only will it save you from feeling overwhelmed by the immensity of an annual assessment, but it will help you reassess and realign continuously, which can help make transitions more seamless — especially when they are unexpected.

Turn projects into projections

A few years after launch, Petplan transitioned to being an entirely paperless organization. Initially the transition was a success, and operationally, the project had already paid dividends.

But as time went by, it became apparent that we needed to create a tangible product for our clients. We decided to publish a glossy pet health publication for policyholders to help communicate our company’s core values and add a “touchable” touchpoint to our customer communications.

To our delight, Fetch! magazine was an overnight success and has grown its readership from 50,000 to more than 250,000 in just a few short years. The magazine project led to some new projections about ad revenue, and we eventually began selling space in its pages.

Because of big-picture thinking in small, regular doses, we were able to take an internal project, build off it to create something new, and then leverage that to add to the company’s overall profitability.

Find a fresh set of eyes

When trends need to be changed, getting back on the right track is essential, but sometimes the people closest to the “problem” are the least likely to be able to solve it. One of the best ways to chart a new course is to bring new talent to the table. This could mean finding a mentor, hiring a new executive or perhaps finding a visionary investor.

When we launched Petplan, we focused almost exclusively on sales, and all of our customer communications reflected that. Soon, it became clear that we needed to rework strategy to include not just sales but customer service.

To help us course-correct, we turned to Vernon W. Hill, the founder of Commerce Bank. Vernon joined our board as chairman and brought extraordinary experience around customer satisfaction to the company.

This year, in an effort to evolve partner veterinarian relationships, we’ve placed a heavyweight at the helm of our veterinary channel: Steve Shell. A fresh set of eyes can invigorate vision — whether it comes from the people above you or the employees you entrust with managing the daily activities of your business.

When you commit to unplugging from the daily drudgery to assess the scope of your operations a few times throughout the year, you’ll soon find that the only place to go is up.

Natasha Ashton is the co-CEO and co-founder of Petplan pet insurance and its quarterly glossy pet health magazine, Fetch! — both headquartered in Philadelphia. She holds an MBA from the University of Pennsylvania Wharton School of Business. She can be reached at [email protected]

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.”

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

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 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.