Flying Horse Farms, Fairmount Minerals and the late Paul Newman help kids be kids

Chuck Fowler, CEO, Fairmount Minerals

Chuck Fowler, CEO, Fairmount Minerals

Back in 1988, actor Paul Newman wanted to find a way to give back to children, and not just any kids but kids who were in serious need of a chance to act like kids. So Newman started the Paul Newman Association of Hole in the Wall Gang camps dedicated to serving children with serious illnesses.

Today, the association is called Serious Fun Children’s Network. It comprises 14 camps, one being Flying Horse Farms in Mt. Gilead, Ohio, that provide summer activities where kids can be kids and forget their illnesses for a week.

“We serve children with heart disease of all kinds, including heart transplants, children with all forms of pediatric cancer, kidney disease, severe asthma, children with autoimmune disease, and children with gastrointestinal disease and blood disorders,” says Mimi Dane, Flying Horse Farms’ president and CEO. “We do traditional camp activities like archery, swimming, boating, fishing, arts and crafts, and a canine program.”

Flying Horse Farms was founded in 2009 and became a member of Paul Newman’s Association in 2011. The group serves children ages 7 to 15. This year will be Flying Horse’s third summer season of camp.

Mimi Dane, President and CEO, Flying Horse Farms

Mimi Dane, President and CEO, Flying Horse Farms

These camps hit home for Chuck Fowler when he was first introduced to the Serious Fun Children’s Network by Cleveland Clinic’s head of pediatric cardiology, Dr. Gerard Boyle. Fowler, who is CEO of Fairmount Minerals, a producer of industrial sand, lost his 14-year-old daughter, Angie, to melanoma.

“One of her great desires was to be able to get outside and play rather than be sitting in the hospital room the whole time, and she wasn’t able to do that,” Fowler says.

Fowler has since been extremely active at Flying Horse Farms. He joined the board of directors, the finance committee, and the building and maintenance committee.

“We took this as an opportunity to honor our daughter Angie but also make it possible for other kids to experience camp and the outside and, as Paul Newman said, ‘Raise a little hell,’” Fowler says.

Flying Horse Farms hosts camps for families, a residential camp for the children with serious illnesses and a sibling camp for brothers and sisters who aren’t ill but would still enjoy having fun at camp. Flying Horse offers two things that make it different from most other camps around.

“One is we have a full-time medical staff here,” Dane says. “We have a full-time medical director and a full-time nursing director for each camp that we have.”

The other thing that makes Flying Horse different from most other camps is that because having a child with a serious illness is a big weight on the shoulders of those families, the camps are free of charge.

“As a consequence, we really rely on our corporate donors, our individual donors and fundraising,” she says. “It costs about $2,500 a camper for a person to come to camp.”

Organizations such as Fairmount Minerals and individuals like Chuck Fowler are critical to the work that Flying Horse has done.

“The corporate support that we’ve had, both at the CEO level from Chuck and from Fairmount Minerals, has been invaluable to us,” Dane says. “Chuck has been very supportive with his time, talent and treasure.”

In addition to serving on the board, Fowler and his wife helped put up the capital to get Flying Horse Farms started.

Much of that success depends on the support of Flying Horse Farms’ donors and fundraising efforts. Flying Horse and Fairmount host an area event called Campfire. This year, the event will be held at Severance Hall on April 19.

“It is a celebration of the legacy of Paul Newman and of Flying Horse Farms,” Dane says. “A reception will begin the evening followed by a performance within Severance Hall and then a dinner and dessert reception will be afterward. We will be joined by Clea Newman, Paul’s daughter. ”

The first Campfire event was held in 2011, of which Fairmount Minerals was a presenting sponsor. It will have that role again for the 2013 event. ●

Deborah Sweeney – Are you ready to take the plunge with your great idea?

Deborah Sweeney, CEO, MyCorporation Business Services Inc.

Deborah Sweeney, CEO, MyCorporation Business Services Inc.

One of the biggest differences between running a business on the side and quitting your job to run it full time is that you lose the security of a steady paycheck. That loss of income and the uncertainty as to whether it will ever come back is enough to make anyone pause and reconsider quitting their day job.

But what if your part-time venture is beginning to pick up steam, and you earnestly believe that it needs your full, undivided attention? While it can be scary, there are steps you can take to make such a leap less daunting.

Get organized

When you begin your business in earnest, take time to reduce your clutter. Working out of a messy office will eat much more time than it takes to get everything organized.

Speaking of time, making the transition to full-time business owner means also becoming much more self-motivated and coordinated. There is no one to remind you to clock in or to hound you about being late.

It’s great to go about the day without being micromanaged, but be careful. It’s just as easy to slip into a state of complacency. Organize your space, set a schedule and stay disciplined.

Protect yourself

There is always going to be some element of risk involved in whatever you decide to do next. But there are also actions that a new full-time business owner can take to reduce some of that risk.

As a part-time owner, chances are high that your business is a sole proprietorship — sort of the default business structure. Unfortunately, that means that you are responsible for your business’s debts, and if things go south, debt collectors may start trying to take your personal assets to pay for those business debts.

When you jump to full-time, consider forming an LLC or S corporation. There are different advantages and disadvantages to these structures, but they will help protect your personal property by separating you and your business’s debts.

Make saving a priority

Take full advantage of that steady paycheck for as long as you have it and save. Anyone looking to branch out and start a business has to use every cost-cutting measure out there so they have breathing room when trying to get their new business to turn a profit. Advisers typically recommend having enough saved up to pay for four to six months of living expenses. Luckily, if a business is being run part-time, it may be pulling in money already.

There is no magic number for saving — it just needs to be enough so that you don’t have to dig for change to pay your electric bill. Meet with an accountant, crunch the numbers and make sure you’re comfortable with the recommendations they give on budgeting and working with your financial situation.

Part-time owners know their company can draw customers, sell a product or service and bring in money since it has already been doing just that. This insight makes it very tempting to throw caution to the wind and jump into full-time ownership without making the necessary preparations.

But don’t take a huge leap without ensuring your fall is cushioned. Take your time, get everything in order, protect your assets and meet with an accountant to solidify a plan. Next, take a deep breath and put in your two weeks’ notice — you’re now a full-time business owner.

Deborah Sweeney is the CEO of MyCorporation. Find her online at mycorporation.com and on Twitter @deborahsweeney and @mycorporation.

From the Ohio Chamber of Commerce: Fostering economic freedom

Keith Lake,

Keith Lake, Vice President of Government Affairs, Ohio Chamber of Commerce

What is economic freedom? It’s the ability to decide how to produce, sell and consume without unnecessary government interference. Economic freedom powers prosperity and is the key to greater opportunity, more jobs and a better quality of life for all Ohioans.

Since 1893, the Ohio Chamber of Commerce has been aggressively championing free enterprise, economic competitiveness and growth for the benefit of all Ohioans. Our united voice in the state’s legislative matters speaks for the thousands of individual businesses that we represent, thus strengthening the business climate in Ohio.

At the beginning of each new General Assembly, the Ohio Chamber crafts a legislative agenda. These are the goals that our governmental affairs team will strive to achieve in the next two years. These goals help us to fulfill our mission of improving our state for the benefit of all Ohioans.

With an unwavering focus on improving Ohio’s economy and a thorough understanding of the need for public policy supporting business growth and job creation, policymakers tackled many long-ignored problems in state government during 2011-12. And the result has been an improving business climate, a healthier economy and fewer unemployed Ohioans.

Now, we must build upon this positive momentum to further boost Ohio’s economic recovery. More still needs to be done to enhance the ability of Ohio businesses to compete, and we must not allow the state government to return to the old ways of doing business.

The Ohio Chamber of Commerce’s 2013-14 public policy priorities reflect an emphasis on these goals, and all our priorities serve to advance the important objective of fostering economic freedom. We are committed to working with lawmakers and Gov. John Kasich’s administration during the 130th Ohio General Assembly to achieve an enduring economic renewal through the following:

 

Affordable energy

Maximize the economic potential of Ohio’s domestic energy resources and cultivate a diverse portfolio of energy sources and technologies.

 

Business costs

Unleash the job-creating potential of Ohio employers by reducing the cost and complexity of doing business in the state.

 

Government mandates

Provide businesses with the freedom and flexibility to operate and innovate without intrusive government mandates.

 

Government red tape

Maximize regulatory benefits in the most cost-effective manner.

 

Legal environment

Enhance and protect a fair and predictable civil justice system with common-sense reforms that control litigation costs and eliminate lawsuit abuse.

 

State constitutional reform

Modernize Ohio’s system of government and safeguard the Ohio Constitution from abuse by special interests.

Tax climate

Foster a more competitive tax system that encourages business investment, expansion and location.

 

Transforming government

Improve government efficiency, effectiveness and accountability to achieve better results at a lower cost to taxpayers.

 

Workforce excellence

Strengthen the link between education and workforce development programs and the skills needed by employers in today’s competitive, mobile and high-tech economy.

As the voice for business in Ohio and the state’s most diverse business advocacy group, the Ohio Chamber has several information outlets. Follow the Ohio Chamber of Commerce on Facebook (search Ohio Chamber), Twitter @OhioChamber and on the Web at www.ohiochamber.com. The Chamber’s blog “Talking Policy” reports on legislative and regulatory issues that impact Ohio’s business community. The “Ohio Pro-Biz Politics” blog follows Ohio’s political happenings. ●

 

Keith Lake is the vice president of government affairs for the Ohio Chamber of Commerce. He oversees the day-to-day operations of the Ohio Chamber’s legislative advocacy program, directs the activities of the lobbying team, follows health care legislation and oversees the political and grassroots programs. Lake is also the principal contact for members of the Ohio House and Senate. He can be reached at [email protected] or (614) 228-4201.

How Jaime Vigil led Republic Steel through the recession to come out a stronger company

It looked to be another great year for Republic Steel.

Coming off its 2005 acquisition by Industrias CH, S.A de C.V. (ICH) — a fast-growing steel producer and processor based in Mexico City — the company had cleared up all its previous debt, the steel industry was flush with opportunity, and as the new

 Jaime Vigil, president and CEO,Republic Steel

Jaime Vigil, president and CEO, Republic Steel

was laser-focused on building a strong team and investing in best-in-class facilities to position the 125-year-old steelmaker for growth.

And that, of course, is when everything went south.

“After October 2008, the whole world changed for the industry,” says Vigil, who joined the Canton, Ohio-based steel company in 2005. “The recession threw us a curveball that we were not planning. I don’t think we were looking ahead. We had really relied on intelligence based just on market view.”

As the largest maker and supplier of special bar quality (SBQ) steel in North America, Republic produces steel for applications such as automotive and energy. It has been developing its steelmaking practices for more than a century. But even a company with annual sales of more than $1 billion wasn’t immune to the shock of the 2008 financial downturn.

Declining demand and struggling customers, who were urgently looking for ways to cut costs and scale back, hit the company hard. Almost overnight, Republic Steel saw its volume of business nosedive.

Streamline your structure

Not yet knowing the full scope of the downturn, Vigil knew that Republic Steel — like its customers — needed to cut costs to minimize the financial fallout. So the first step was to look for ways the company could streamline plant operations.

“At that point, the volume with the plants that we had had a lot of fixed costs,” Vigil says. “We were forced to shrink our footprint to be able to manage our costs and have a profitable business.”

Increasing efficiency without sacrificing quality can be tricky. You need to examine the profitability of every segment of operations thoroughly. First, identify the areas that have the most efficient costs, and second, identify where costs overlap. This process allows you to consolidate the most efficient operations and shut down equipment and functions that no longer make sense.

By making these changes, Republic Steel was able to shrink its footprint to that of a much smaller company in a short time period.

“That was a very different situation for us from 2005, but it was also a very good experience for us to try to model our business for the future,” Vigil says. “It allowed us to look at things in more detail and understand our business and our cost and the opportunities that we had to be more efficient.”

Taking cost out of operations not only allowed the company to produce SBQ steel more efficiently, but it also freed up resources, which Vigil reallocated to enhance the company’s quality, delivery and range of products in its SBQ steel business to provide more value to customers.

“We have to be right there with them making a product that suits their needs,” Vigil says. “Our No. 1 qualification or differentiation in the market is our ability to work with technicians of our customers to develop the products that fit their needs and then produce them consistently with a low cost and high quality and delivering them on time.”

When you’re not making a commodity, you need to be more focused on quality and continuously improving your products to stay competitive, Vigil says. The key to staying relevant was investing in the company’s strengths, such as its years of experience in the steel industry. The fact that the company’s Canton plant was the first-ever producer of SBQ steel provides it with a strong competitive advantage.

“Our brand has good recognition, and we continue to build on that by making our customers really comfortable in the long run that they have a true partner with Republic Steel, a company that knows what it wants and that can adapt to the changing market as needed,” Vigil says.

“With more than 125 years of know-how, you get a very good result. You can continuously provide the same quality that your customers are used to with more efficiency. It allows you first to be more competitive in the marketplace and maintain and improve your quality in the product.”

Since 2005, Republic Steel has reinvested close to $130 million in new equipment and new processes into its core Northeast Ohio facilities, which include plants in Canton, Lorain and Massillon, Ohio. In 2012, the company also announced that it would invest more than $87 million in a new electric arc furnace and equipment at the company’s Lorain, Ohio, steelmaking facility — a move that is adding approximately 450 employees.

The company chose the Lorain plant for the investment because of its close proximity to the existing customer base and to other Republic Steel facilities. Having a smaller physical footprint allows you to allocate resources to growing areas more easily to develop strong teams, while delivering a consistent experience for customers.

“We see a strengthening automotive industry as well as a lot of growth in the energy sector side through the gas horizontal drilling process,” Vigil says. “We see ourselves in a very good position to serve those markets in the long term.

“It gives us an opportunity to serve our customers with more product and a very solid footprint in the long run. Our customers have a supplier that has no debt and that is investing in its business. So we feel that our customers see us as a long-term partner, and they can stick with us for years to come.”

Look to your core

When your company is facing market volatility, past plans and strategies may get tossed out the window rather quickly. To ensure that Republic Steel didn’t lose sight of its identity in the chaos, Vigil used the company’s core values to guide the strategy — specifically two values passed down from its parent company, ICH.

The first was carrying a debt-free balance sheet.

“When we acquired the company in 2005, we inherited some debt from the previous administration,” Vigil says. “We worked very hard to pay it off with our own resources and some support from the parent company.”

Even when the company was losing volume during the recession, Vigil wasn’t willing to take on debt in favor of gaining more financial flexibility. In fact, he says borrowing money often results in the opposite outcome for companies by stifling their spending. Carrying zero debt allows you to make decisions without dealing with banks or lenders.

“Some companies have different opinions about debt, and in certain cases, it allows companies to be flexible and grow faster when an opportunity comes, but we still have that flexibility because having no debt makes us attractive to banks,” Vigil says.

“The recession has been the best proof of the strategy. We tested it through this downturn, and we were able to manage through the recession a lot better than some other companies who have big debt or a lot of interest to pay.”

As a result, the company has been debt-free since March 2006, operating as a true cash-flow company.

“It makes us a stronger company, and it allows us to keep reinvesting even in the downturn because the money that we generate is really for us and not to cover any debt obligations that we have,” Vigil says.

The second core value that helped guide the company through the recession was having a diversified mix of sales. Carrying a wide range of products makes the company a one-stop shop for many customers. So even in the downturn, Vigil continued to make investments to expand Republic Steel’s capabilities in emerging markets, such as natural gas and energy.

“The volatility in our customers’ industries continues to be something that we’re monitoring very closely,” Vigil says. “The economic situation worldwide, starting with Europe being so volatile, continues to have a big effect on our customers’ ability to project their levels of operations.

“Having a more diversified mix of sales allows us to not have all of our eggs in one basket and participate in different industries, and we’re able to better ride the cycles. We, as a company, believe that if we stick with those two values — remaining debt-free and continuing to have a diverse mix of sales — we can deal with the volatility in different markets.

“We’ve prepared our company to be better geared to react now than we were in 2008. Through these changing circumstances, we’ve created a more flexible company with the investments that we’re making, allowing us to grow our strength faster.” ●

How to reach: Republic Steel, (800) 232-7157 or www.republicsteel.com

Takeaways

1. Find ways to cut cost by shrinking your footprint.

2. Allocate resources to growth areas.

3. Guide your strategies with core values.

The Vigil file

Jaime Vigil
President and CEO
Republic Steel

Born: Mexico City

Education: Universidad Anahuac in Mexico City

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

I like running every morning before going to work; it really makes a difference helping me start every day with great energy and a clear head ready for business.

Best piece of business advice:

I’ve benefited a lot from the experience that my team brings to my decision-making process. That saying that more heads are better than one — that does apply in practice. It’s particularly important in soft science to surround yourself with good members willing to openly give their take on problems so that together you come up with the best solutions.

What do you do for fun?

There is no better way for me to spend my time when I’m not at work than with my wife and kids. From training for a marathon with my wife, to being attacked with toy swords by my three and four year old boys … it’s the best time of my day!

 

Paul Davis doubled Coinstar Inc.’s revenue in five years by divesting 17 of its businesses and focusing on its core two

Paul Davis, CEO, Coinstar Inc.

Paul Davis, CEO, Coinstar Inc.

When Paul Davis joined Coinstar Inc. in 2008, the leading provider of automated retail solutions had recently acquired 18 different businesses and was at an inflection point, capable of moving in several directions. The Bellevue, Wash.-based company had gone from a single line of business — coin counting — to five lines — money transfer, electronic payment services, Redbox DVD rental, entertainment and coin counting.

Davis had the task of reining in these different businesses that the company had acquired and deciding where to go next.

“One of the first things I did when I joined the company was a deep dive to understand and get alignment throughout the organization about what our core was,” says Davis, CEO of Coinstar Inc.

As a result of that deep dive, Davis landed on the automated resale platform as the company’s core, which two of Coinstar’s businesses — Redbox and coin counting — were focused on. Davis and his team then did an analysis of the remaining 17 businesses, which revealed that they weren’t the right fit.

“Of those 18 companies that were acquired, we sold off 17 in the first two years, so it was a major reshift,” Davis says. “We ended up with our two core businesses today, which are our coin-counting business and Redbox.”

With a much clearer focus on the company’s future direction, Davis was able to play to the strengths of Coinstar. His execution on the strategy to grow the coin-counting business and Redbox earned Davis a No. 4 ranking on the Fortune 500 list for technology visionaries in 2012.

Here’s how Davis evaluated the company and placed Coinstar on a path that would leverage its strengths.

 

Find your direction

Coinstar, a more than $2 billion, 2,700-employee company had primarily been growing through acquisitions before Davis became the CEO in 2008. By divesting the majority of those acquisitions, Davis shifted the focus of the company and its growth strategy to a more organic one.

The company was a clear leader in the DVD rental space, not No. 1 at the time, but it had the clear potential to get there, and in coin counting, it had more than an 80 percent share of the market.

“In these other businesses, they really didn’t leverage what we knew,” Davis says. “Money transfer had very little to nothing to do with kiosks. E-pay had very little to do with kiosks. In the business that they called entertainment, it was a fairly antiquated business that was capital-intensive and we weren’t seeing any growth.”

When Coinstar focused on Redbox and its coin-counting business, it found that all of its money and all of its growth were coming from those two businesses. The other businesses were drains on the bottom line.

“They were prohibiting us from doubling down on those growth sectors and realizing our potential,” he says. “It meant that we had to get rid of these other businesses that had not been integrated.”

Davis’ biggest key to finding Coinstar’s next direction was asking what the “core” of Coinstar was and how the company could leverage that.

“I see a lot of companies, and we were the same way, doing a lot of things that were outside of the core,” he says. “If you think in concentric circles, once you’ve identified the core, we were two, three and four jumps out in terms of concentric circles.

“What ends up happening is it creates a culture where you’re not winning, you’re not in the leadership position, and you start to potentially lose some credibility with your retail partners because you’re not coming to the table as the true leader.”

In Coinstar’s two core businesses, the company was the clear leader and Davis saw great opportunities if the company could leverage that, take advantage and grow that circle.

“The first thing we needed to do was gain alignment around the fact that we thought there was decades of growth in this (automated retail) space,” Davis says. “We did a lot of analysis and saw that there were all these macro-trends around consumers not having time available. Time-starved consumers are comfortable with technology and they love to control their own destiny.”

Coinstar also found that its retail partners could greatly benefit as well.

“We concluded that this was a great space for us to be in and there was a lot of growth potential,” Davis says. “We thought of the category as the intersection between brick and mortar and e-commerce.”

 

Grow and innovate

To build on the opportunity in that space, Davis and his team started their new strategy by focusing on Redbox, because it was a business with immense opportunity. Coinstar had a joint venture with McDonald’s on the Redbox business, so its first step was to buy out the rest of the company.

“We doubled down on Redbox,” Davis says. “At the same time, we said, ‘We’ve got to shift the focus of the company from all the growth through acquisition and instead focus more on organic growth.’”

Coinstar started a new ventures team and put leadership in place to start vetting ideas. The company got ideas from venture capital firms, private equity firms, idea contests, whiteboard contests and an inventor’s network.

“We started getting ideas from all sorts of different pockets and corners of the country,” he says. “Once we saw ideas and thought this had some real potential, this team that we put in place started vetting them.”

Today, Coinstar has eight new ventures on top of both its coin-counting and Redbox businesses. Six are organic and two are strategic investments.

“We looked around as we focused on this automated retail space and there really weren’t a lot of people doing things in there that would be companies we would acquire, so we needed to create the category on our own, and we’ve had quite a bit of success at doing that,” Davis says. “The seeds are at various stages — some are in their infancy with just a few kiosks and others we have multiples of hundreds.”

The company follows a very similar launching process for each of its new businesses.

“We go out and vet it and we look at the size of the category and see if we think that there’s ways or an opportunity for a new solution that’s more convenient and leverages what we know,” he says. “Then we go out and hire someone with deep domain expertise and give them a bucket of money that we tightly control and we put a clock on them to go out and prove the concept.”

The new ventures start with one kiosk and are compared to Redbox and Coinstar in their infancy before being allowed to grow.

“As they clear the hurdles, they get permission and more money to go from three kiosks to 30, 30 to 300 and 300 to 3,000,” Davis says.

The process Coinstar has made so successful is a result of having an innovative culture that breeds creativity.

“You have to be pretty disciplined about creating a culture of innovation,” Davis says. “We really encourage people to try stuff. The way we have managed innovation internally is we think really big. We start small, and once we land on an idea, we scale quickly. But if you fail, you fail cheaply. That’s what we have tried to do over and over again.”

Under Davis’ leadership, Coinstar has grown tremendously. The company has more than 42,000 Redbox kiosks and 20,000 Coinstar kiosks. Redbox recently celebrated its 10-year anniversary.

“Our market share now is 10 points over the next closest competitor in the physical space,” Davis says. “That business at the end of 2007 was about a $500 million business, and we are projected to be over $2 billion for 2012.”

The company’s success in its two main businesses and its new ventures stems from maintaining an innovative, hardworking environment.

“There’s a certain paranoia we have inside the company and a need to constantly innovate and stay focused to deliver,” Davis says. “That’s the mindset that we’ve adopted across the company.” ●

How to reach: Coinstar Inc., (425) 943-8000 or www.coinstar.com

How Phil Libin is building a 100-year start-up at Evernote Corp.

Having employees who tolerate stupidity is literally Phil Libin’s worst nightmare.

“I’ll wake up from a dream in which somewhere, someone at Evernote is working on something right now and they don’t understand why they are doing it — they think it’s stupid. ‘It doesn’t make any sense. It’s dumb. I’m just doing it because somebody told me,’” says Libin, CEO of Evernote Corp., the company responsible for popular Evernote and Skitch applications.

“As soon as you have someone who is doing some work and they don’t understand why they are doing it, then you’re not a start-up anymore. You’re something worse.”

Considering the noteworthy changes that Evernote has gone through over the last two years, it’s no surprise that culture is ingrained in Libin’s mind. Since launching the Evernote product public in 2008, Evernote’s apps have gained fast traction with users who rely on them to organize personal data and information on mobile devices and platforms.

Since 2010, the company has tripled revenue annually while increasing head count from 30 to 250 employees. It also plans to reach a level of 500 employees by the end of 2013.

Taking notes yet?

While Evernote’s success is undeniable, Libin’s permanent challenge is creating what he calls a “100-year start-up” — i.e., maintaining the entrepreneurial culture that makes Evernote great while continuing to grow.

“I want everyone at Evernote, no matter how big we get, to understand why it is that they’re doing something and to see the impact of their work,” Libin says. “If we can maintain that, then we have a good shot of scaling the company in the future.”

Here’s how Libin keeps the entrepreneurial spirit alive at Evernote.

Eliminate obstacles

Like many Silicon Valley companies, Evernote offers employees a number of unique perks, including unlimited vacation time and catered lunches. Yet Libin knows enhancing employee productivity isn’t just about add-ons; it’s about removing the obstacles that inhibit people’s success.

“All of our benefits and our office life are structured around this idea that people who are here want to do excellent work, and it’s our job to eliminate any obstacles that get in the way of that,” Libin says. “Whenever we find things that impede people’s natural desire to be productive, we ask if we can eliminate that.”

Libin and his leadership team actively look for ways to make people’s jobs easier on a day-to-day basis, especially when it involves enhancing productivity. It’s why Libin played an active role in designing the company’s new 90,000-square-foot Redwood City, Calif. headquarters, which employees moved into last summer to incorporate features that improve workflow, such as an open work plan to facilitate open communication.

“It’s the first time that we’ve been in a space that we’ve actually designed,” Libin says. “Our previous two offices have been little start-up things — whatever we could afford at the time. This is the first time we’ve had a chance to think about our surroundings a little bit.

“There are a lot of small things. A lot of times you need something from IT. You need a power cord or an adapter or a keyboard or a mouse or a network cable … so you have to track down an IT person and ask them for it, and then they go into the supply closet and get it. Now you’ve tied up two people: the person who wants it and the IT person. It’s a small waste of time, but it’s a waste of time.”

Evernote solved this problem by stocking a vending machine in the cafeteria full of equipment such as headsets, power cords, mics and keyboards, which employees can freely access by swiping a card.

“You decide when you want something, you can go down and get it, but now it takes one person two minutes to do what two people took 20 minutes to do,” Libin says. “So there’s a lot of stuff like that, where it’s something that’s not a huge thing in itself, but it adds up.”

Ideas to improve a culture don’t need to be radical to make an impact on productivity. Removing a small obstacle can actually have huge benefits, especially if it affects a lot of people.

For example, Evernote’s open work plan makes talking on the phone the biggest source of noise for employees throughout the office. So instead of having everyone work around that, Libin and his team decided to do away with desk phones entirely. If someone needs to make a call, they are encouraged to use one of the company’s numerous conference rooms or meeting spaces.

“We find an obstacle and we try to get rid of it,” Libin says. “You can find 100 things like this and it adds up to a culture where people feel like they are trusted and respected. We don’t have to explain to people that you’re only allowed to take one mouse every six months. We don’t have a policy. Take as many as you want.”

Bring on the best

Evernote isn’t Libin’s first time leading a start-up business. Before founding the company in 2007, his career as a successful engineer led him to serve as president and CEO of the software companies Corestreet Ltd. and Engine 5, respectively. In both cases, Libin found that his programming background played a direct role in his leadership style — and not in a good way.

“At my first company, I had this weird idea about people who work for me,” he says. “I thought, well, I can do their job better than they can, but I’m too important. I don’t have enough time.

“So I’d walk around and look at some programmer writing database code, and I would think to myself, I’m a programmer, too. I could write that better than he could, but I don’t have time so we can let him do it. And I’d look at a sales guy working and I’d think, well I could sell the product better, but I don’t have time so let him do it. I’d listen to the receptionist and I would think my phone voice is so much nicer than hers. But I don’t have time to answer the phone so let her do it.”

What Libin realized is that this superior mentality is self-fulfilling, breeding a culture where leaders are always second-guessing and micromanaging their people and where talented people don’t want to work. But if you’re trying to build a 100-year company, this kind of thinking just won’t fly.

“A lot of people instinctively are afraid of hiring people better than them,” Libin says. “So they tend to surround themselves with people who are mediocre. That’s the thing that kills a lot of companies.”

Finding and keeping the right is critical in fulfilling the vision of a 100-year start-up, which is why Libin encourages his direct reports and managers to follow the “hire better than you” philosophy for any position,

“I have to hire people who are so good that they can wind up running the company, and that’s true all the way down the ranks,” Libin says.

“Really embracing that philosophy is the only way I think you can scale and manage and really reduce stress, because anything I’m worried about, I know that there’s a person who’s much smarter than I am in that function, who’s also worried about it but actually in charge of dealing with it.”

Stay connected

Evernote may have a start-up culture, but the company has also come a long way from its start-up roots. In addition to its employees on five floors of its Redwood City office, Libin now leads an organization with offices in Austin, Texas, to Tokyo, Zurich, Moscow and Beijing.

“As we grow to be a bigger company, we’re not 10 nerds anymore,” Libin says. “We have designers. We have marketing people. We have people from all sorts of demographics. We are really broadened, and that broadens the products that we want to work on.”

It also broadens the scope of any given project, which can create a disconnect between a company’s departments, offices or teams.

“Very often in companies, and especially a big company, if you ask an average employee at the company, they kind of feel, ‘Well, I’m doing a job, the five or 10 people that I’m working with and I understand what they’re doing — they’re doing a good job,’” Libin says. “‘But those other guys two floors above me, I have no idea what they do. They’re probably just dumb.’”

One way that Evernote avoids communication and innovation breakdown is through cross-training. Taking a lesson from a friend who is a submarine officer, Libin implemented Evernote’s Officer Training Program, which mimics the idea of officers who must be trained in many different roles.

Each week, employees who sign up for the program are assigned to several random meetings outside of their department where they are encouraged to act as full participants. While the company is currently tweaking the program for simpler execution, the idea is that both the trainee and the group will benefit from the exchange.

“So if you are in IT and you sit in a marketing meeting, you see that the marketing guys do a lot of work, and they have difficult questions and problems,” he says. “It also works the other way, having a person in the room who hasn’t mastered the jargon. You wind up having to speak differently. You wind up having to think about things that you may not have thought about if you’ve been doing this job for 10 years.”

Other ways that Evernote promotes connectivity are using remote-controlled Anybots for telecommunication and video walls and “windows” to connect Evernote’s domestic and international offices. Set up near the coffee machines, the video walls are synced up to mirror Evernote’s different offices at the same time of day.

“When it’s 9 a.m. here and you’re getting coffee, you’re going to see 9 a.m. in Tokyo as somebody is getting coffee,” Libin says. “The point is you can connect with people. You can see who is there. You can see what they are wearing. You can have this ambient feeling because you know that you’re not the only person there. There are people all over the world working at Evernote that are also getting coffee.”

Experimenting with cultural perks, programs and policies should be an ongoing process, and leaders need to be willing to try and fail.

“The basic idea is we want people to be able to connect in as many different ways as possible,” he says. “When I’m traveling out of the office, and I connect to the Anybots, and I drive it around, and point the laser pointer at people, and yell at them to get back to work, everyone loves it.

“There’s no silver bullet. You say the core value is communication, and then you just find ways to make it a really magical experience.” ●

How to reach: Evernote Corp., www.evernote.com

 

The Libin file

Phil Libin
CEO
Evernote

Born: St. Petersburg, Russia
Education: Boston University

Why there’s never been a better time to be in business: I don’t think it’s ever been a better time to have a company, to be in business. This is the best time in the history of the world actually to be trying to build something because it’s much of a meritocracy than it’s ever been. If you build something great and you really focus on building something great then you get massive leverage in everything else because of app stores, smartphones and social media. If you make something great, then everyone is going to know about it. And everyone is going to be able to get it. … All I really want is to make great stuff. And that’s what all the people who work for me want, and it’s enough. It’s enough now to just make great stuff.

Why stress helps: As a CEO, it’s good to have a balanced diet of stress. You stress out about the product. You stress out about the finances. You stress out about improving about the office space. It’s good to have multiple completely different things to worry about and sort of balance those things.

Libin’s best business mantra: I think the most important phrase is ‘simple is hard.’ That says a lot of stuff. In all ways it’s better to be simple than complicated, in terms of your product, your benefits, everything you do. You’re much better off being simple; and it’s the hardest thing to do. Always strive for simplicity, but also realize that it’s far harder to make something simple than to make something complicated.

 

How Don Lowe has adapted to serve a changing market at Franchise Services Inc.

Don Lowe

Don Lowe, CEO, Franchise Services Inc.

Don Lowe used to run a simple business.

“We had a small offset machine, we printed black ink on white paper, and sometimes we would bind it for our customers,” he says. “It was that way for many years.”

Franchise Services Inc., which operates printing and marketing services franchises such as Sir Speedy, Signal Graphics and PIP, did one thing and did it well. For decades, it was enough to grow and remain profitable.

But as the 1990s advanced and gave way to the new century, technology started to evolve at an increasingly rapid pace, and Franchise Services quickly found itself at a crossroads: adapt or risk the long-term welfare of the business.

“The digital world changed our world completely,” says Lowe, the CEO of Franchise Services. “Our role is now to look at new technology and ask ourselves if it’s a threat or an opportunity. If it’s a threat, we decide what to do with it. If it’s an opportunity, we exploit it. It keeps us very busy, but it’s also very good for us.”

Lowe has needed to add new technology and new services to fill the expanding needs of his franchisees’ customer base — which comprises primarily companies with fewer than 50 employees. Facing their own battles for survival in an economic climate where nothing is a sure thing, the businesses in Lowe’s customer base need services beyond printing. They also need full-service marketing support with a heavy emphasis on creating and maintaining a strong Internet presence.

“That is why, over the recent years, we have moved from a print-centric model to one that focuses on both print and marketing services,” Lowe says. “We’ve needed to expand the products and services we offer to our customers. If you think about small business owners, they’re always pressed for time; they often can’t even spend time on building the business because they’re already wrapped up in managing what already exists. So they need help on multiple fronts, and our job is to provide that help.”

Providing that help has required Lowe and his team to listen to franchisees and their customers, and gain an accurate read on the best ways to serve customers in a challenging and ever-changing climate.

Know the game

The biggest game-changer for Franchise Services came in the proliferation of Internet-based communication throughout the ’90s. In the span of about a decade, the primary conveyance for the written word migrated from paper stock to computer screens. Items that were normally sent through the mail over the span of days could now arrive in your email inbox in a matter of seconds. Internally, filing cabinets gave way to servers as a means of storing data.

“A number of the products we were producing for customers moved to the Web,” Lowe says. “Customers could use the Internet to distribute price lists on a daily basis, and even some training manuals migrated to the Internet.

“If you think about it, even business cards, letterhead and envelopes, all that business declined from where it was in the ’80s and into the ’90s, because we don’t send letters anymore, we send emails. That was the first indicator that we needed to start finding some products and services to backfill some of the products and services that were losing traction.”

But to find new areas of growth, Lowe and his corporate leadership team had to get plugged in to what their customers needed in a print and marketing services company. For Lowe, that meant studying trends, and frequent conversations with franchise owners across Franchise Services’ spectrum of brands.

“You have to understand specifically what the customers’ needs and wants are,” Lowe says. “Everything starts with the customer. If you don’t understand the customer requirements, you won’t be able to fulfill them. So you need to listen twice as intently as you speak, so you can determine what those needs and wants are.”

You can look to macro-level observations in industry publications to get a read on the next big technology that could affect your industry. But to understand how your business is changing on a granular level, you have to make trips to the front lines. Sometimes, the change that satisfies the most customers in the shortest amount of time is decidedly low-tech and relatively inexpensive to implement.

When Lowe and his team speak with franchisees, they aim to find ways to better connect their services to customers, with an overall goal of improving the customer experience.

“For example, today we provide mailing services at most of our locations, and that is a direct result of understanding that 65 or 70 percent of what we print ultimately ends up in the mail,” Lowe says.

“So why don’t we go that last mile, provide mailing services to our customers, and even take the printed pieces in the envelopes and take them to the post office? That is an example of why you spend a lot of time figuring out what is happening in the market.”

In addition to frequent dialogue with franchisees, Lowe and his team also gather information from customer focus groups designed to provide feedback regarding whether Franchise Services is meeting their needs, and in turn, the needs of the market in general.

“The thing we always try to remember is we don’t produce anything at the corporate level,” Lowe says. “All of our services are delivered at the franchise-network level. So we have to maintain consistent contact with everyone involved in those relationships, both the franchisees and the customers. There cannot be an ivory tower anymore. If you’re not staying in touch with the customer, you’re not staying in touch with the business.”

Become a change agent

To change with the evolving needs of the market, you need to first construct an organization that is capable of visualizing change and realizing the need for change. At Franchise Services, Lowe developed a change-focused organization by hiring people who aren’t afraid of venturing into unknown territory while at the same time being creative enough to devise new solutions to meet ever-changing customer needs.

“It’s a big reason why you hire first for cultural fit, then worry about the skill set needed to complete the job,” Lowe says. “If the person you hired can’t fit the organization, or if the chemistry just isn’t right, it’s not going to work.

“You might be able to make it work for a short period of time, but you can’t build a company with that type of hiring policy. A lot of people know that Jim Collins wrote the book ‘Good to Great,’ where he talks about the need to have the right people in the right seats on the bus, and it’s true. It’s not necessarily just about having good people. It’s also about having the right mix of people, otherwise the organization is going to fail in the long run.”

If you can find employees who are open to and willing to facilitate change, it then falls on you as the leader of the company to provide an environment where they feel the freedom and flexibility to try new ideas and implement new innovations.

Lowe facilitates an environment that embraces change by developing a strong sense of trust throughout the corporate ranks and extending to the company’s more than 500 franchised locations. He develops and reinforces the trust factor by ensuring that communication remains transparent throughout the organization.

You and your people need high ethical and moral standards, which set the basis for the amount of trust that you can develop between management and employees,” Lowe says. “It’s also important that everyone understands what the goals are. We don’t have a large staff, so it is important that everyone is aligned with the goals, both on a corporate and franchise level.

“So we talk to our franchisees about their goals and aspirations for their business, and their results, and through that, we develop a team spirit. That helps to drive enthusiasm and gets people ready to show up for work and get busy doing what you get paid to do.”

Lowe’s willingness to change and adapt, and find people willing to do the same, has helped maintain Franchise Services as a strong presence in its industry. The company’s franchised locations generated $448 million in sales during 2011.

“There are certain skills that are required in this business, but beyond that, it quite frankly comes down to attitude,” he says. “The people that work well in our environment take instruction, but they certainly also understand the importance of dealing with and satisfying the customers. A lot of what we do comes down to how you adapt to customers and serve their needs, as is the case in just about every industry. A smiling face and a soft voice goes a long way in our business, every bit as much as the professional skills they need to have in order to get their job done at a high level.”

How to reach: Franchise Services Inc., (800) 854-3321 or www.franserv.com

 

The Lowe file

Don Lowe

CEO

Franchise Services Inc.

Born: Shelbyville, Tenn. I grew up in Hopkinsville, Ky.

History: I’ve been in business since I was 12 years old, when I was a paperboy. I’m 71 now, so I’ve been in business for almost 60 years. I’ve been a shareholder of this company for the last 40 years.

What is the best business lesson you’ve learned?

Hire good people, keep them informed and trust them. Beyond that, set the bar high for achievement, and make sure they understand your culture and promote it.

What traits or skills are essential for a business leader?

Vision would certainly be high on the list. You also need integrity, because people need to follow your lead, and it is very difficult to follow someone you don’t respect. And if your organization doesn’t agree with your vision, you won’t have a fair chance to be successful. Also, working hard is still a great trait in this country. If you work hard, it will put you in good places.

What is your definition of success?

It’s the opportunity to do what I want to do, when I want to do it and with the people who are important to me, and to get our franchise people to do important, meaningful things to help them sustain their businesses.

How Dan Roitman keeps the wheels of innovation and entrepreneurship turning at Stroll LLC

Dan Roitman

Dan Roitman, founder and CEO, Stroll LLC

For Dan Roitman, much of business is science.

Since founding specialty Internet retailer Stroll LLC in his University of Maryland dorm room 13 years ago, Roitman’s career has consisted of an ongoing series of hypotheses, experiments, data analysis, adjusting of hypotheses and formulation of theories.

Roitman’s scientific approach to business-building has developed a highly entrepreneurial culture at Stroll, in which team members are encouraged to share ideas, innovate and test their assumptions. It’s a mentality that has helped the company sustain a period of rapid growth — 80 percent in 2008 and 50 percent in 2009, followed by a year-over-year 100 percent growth margin from 2010 to 2011. In 2012, the company surpassed $80 million in annual revenue for the first time.

But maintaining a forward-thinking mindset throughout the entire organization isn’t something that just happens. It requires CEO Roitman to hire, train and empower his people to achieve the desired results. It’s something that was driven home to Roitman during the recession, when he had to suspend the growth of the company for a year due to a lack of additional financing from Stroll’s bank.

“That was my biggest concern, because we had always been a growth company,” Roitman says. “Then, due to circumstances beyond our control, we had to put a specific order volume cap on the business.

“It really became more about communicating that this is the challenge, everybody knew what was going on in that environment, you had a lot of economic hardship, you heard a lot about layoffs that were going on elsewhere. I have to imagine everyone was happy that we were doing well, but frustrated that we couldn’t do better.”

Through it all, Roitman has had to focus on motivating his employees, maintaining a sense of transparency, while still encouraging open thought, experimentation and the scientific mentality that had made Stroll a success in the first place.

Embrace best practices

It’s easy to say you embrace best practices as an organization. Actually discovering, selecting and implementing best practices from another entity are another ballgame. Even if you are able to discover and select an outside idea that you think will help your business, there is a good chance you wouldn’t implement it — at least, not in the form in which you discovered it.

“I once heard a speaker talk about the idea of cloning best practices and how most people don’t have a so-called cloning gene,” Roitman says. “If I told you, right now, the secret to making a million dollars in 90 days and if you followed my instructions exactly, you’d make a million dollars; most people wouldn’t be able to follow it exactly. They’d start to think about how to improve upon what you’re telling them.

“Sam Walton would go into any competitor’s store, and even if it was a really shoddy store, he’d find something they were doing better than he was doing. Through that process, through a million little optimizations, he became a formidable competitor and then an industry leader.

“So if someone is doing something better than you are, you should at least recognize that they are and be willing to try it in your business as well.”

But it is a double-edged sword when it comes to adding new policies and processes to your organization. You don’t want to corrupt the external idea, because it was successful elsewhere for a reason, and that is why you want to on-board it at your company. But you also want to give your people an opportunity to think of ways they can improve upon the idea or alter it so it better fits your company’s specific situation.

For Roitman, that is where the need for a culture that utilizes a testing-based, scientific approach becomes critical. His team members at Stroll can propose new ideas and changes to existing ideas, but they have to back the proposals up with supporting data.

“If you have a constant, iterative testing philosophy, the barrier to testing is very low,” Roitman says. “So if somebody is doing something on, say, the marketing side, you ask yourself about the probability of something similar working in your business. What is the probability of this one idea being more successful than another?

“Ultimately, you have finite resources for your various departments, so you do have to have a mechanism for prioritizing — some kind of filter for what you believe the contribution or change will be.”

Roitman ran into a best-practices testing scenario when he and his leadership team noticed marketers in his company’s space were having success with video marketing initiatives. Through testing and quantification of the results that Roitman’s team believed Stroll could expect, the company was able to implement its own video marketing initiatives.

“Since then, we have won two major awards for our video marketing,” Roitman says. “That is an example of us taking a best practice from outside and utilizing it in a way that betters an area of our company.

“In another area, we’ve also brought in an industry expert to advise us on our shipping costs. It led to us having a 30 percent reduction in our shipping costs (in 2011), and we should have another 30 percent reduction (in 2012).

“We didn’t directly adopt a best practice from somewhere else in that case, but the insight from the industry expert that we brought in allowed us to take things to the next level in that area, and it’s information we wouldn’t have gotten any other way.”

Learn from mistakes

Another aspect of having a culture that is focused on experimentation and learning by doing is a willingness to accept mistakes and failure as part of the process. That is, as long as the failure is part of the process and not a part of employee underperformance.

With entrepreneurship as a key building block of Roitman’s culture at Stroll, often he is willing to take new products to market, and let the market determine whether the idea was good or not.

“Obviously, it depends on what level you’re talking about making mistakes,” Roitman says. “But if you inherently have a testing culture, you know you’re going to have failures, and it’s simply going to be a part of the experimentation process.

“But there are failures of concepts or improvements, and there is failure of performance, which is an entirely different category. The performance category isn’t just a matter of experimentation. It’s a matter of setting up support structures so that people don’t set themselves up for failure. You have to work with them to define goals up front that are realistic and all the general management concepts around that.

“Once you’ve defined the goals, you need to check in with your people to make sure they are on track and setting up workable project plans.”

If you’re working with your people to set achievable goals and realistic project plans, it becomes much easier for you and your leadership team to separate a bad idea from a bad performance.

“It’s all in the mechanics around your execution, which you need to have in your processes,” Roitman says. “If someone just isn’t performing, there is an issue there. But if it’s an idea itself that is failing, but everyone thought it was worthwhile to pursue and a reasonable move to make at the outset, there is no problem in that case. And you have to cultivate that mentality within all layers of management.”

To help guard against large-scale mistakes that could have wide-ranging implications for your company, Roitman says you should put platforms in place that allow you to test new ideas on a smaller level, then scale the successful ideas to larger projects involving more people.

It is a tactic that allows you to commit fewer resources to a project initially, while still getting a sense for whether the idea will work — which is a critical factor as many companies are still struggling with resource management in the wake of the recession.

“That can definitely be something you’re doing; we’ve done that ourselves,” Roitman says. “For instance, in our call center, we’ve rolled out a small-scale test in one area, see how that does, then roll it out on a larger scale.

“In some other areas, we’ve broken down into teams across different areas of the company and tried different things in each area. That allows us to gain some insight into how we can work with different needs and different management methodologies.”

As you go through these processes, you have to keep in mind that your role as the leader is to serve as the traffic cop who ensures that the right type and right amount of resources find their way to the right areas of the organization, into the hands that can best use the resources to produce the ideas and product that turn the highest profit.

“Everything is interrelated,” Roitman says. “Departmental activities roll up to the company at large. So my job is to make sure the plan we have communicated is clearly on track, everybody knows the most important things we have to focus on, and there are no other distractions. We have a lot of ideas flying around, which is a good thing, but we still have to maintain focus. As far as the direction you are going, you have to define what is in and what is out — you have to define both.”

How to reach: Stroll LLC, (215) 701-3300 or www.stroll.com

 

The Roitman file

Dan Roitman

founder and CEO

Stroll LLC

Born: Germany

Education: International business and German degrees, University of Maryland

First job: Unofficially, I mowed lawns and shoveled snow. Officially, I had an internship with the Department of Defense after my first year of college.

What is the best business lesson you’ve learned?

The earlier you can establish the elements of a strong culture, the higher the probability of success of the organization. It starts out with just getting revenue and having a business in the first place, but after that, you need to have a vision and clear goals around that vision, and the right people on board with the proper motivation. Having the right operating conditions helps that immensely.

What traits or skills are essential for a business leader?

One thing that we really focus on in our organization is transparency. After that, you need to be able to develop a really strong vision that influences the organization years into the future. People have to know what they’re doing and why they’re doing it.

What is your definition of success?

Success comes at a couple of different levels. On a micro level, it’s accomplishing something meaningful within the organization. On a macro level, one of the greatest forms is giving back to the community and creating jobs. As we all know, our economy needs sustainable, productive jobs today.

Terry Lundgren’s strategy and execution behind Macy’s transition from Chapter 11 to a retail powerhouse

When Terry Lundgren was first approached by Macy’s in 1993, the retail company was bankrupt. Lundgren, who was chairman and CEO of Neiman Marcus at the time, was asked to come to New York to help turn around the company.

However, Lundgren had little interest in joining an insolvent company, especially since he had a good thing going at Neiman Marcus in Dallas.

With Lundgren’s ties to Neiman Marcus and his previous ties to Federated Department Stores as a former president and CEO of Bullocks Wilshire, executives at Federated persuaded Lundgren to come back with the idea of buying Macy’s.

“I thought that sounded pretty interesting, because I saw the synergy and the idea of the Macy’s brand being spread through the Federated stores,” Lundgren says. “It took six months to convince me, and then six months after that, we bought Macy’s.”

Today, Lundgren has built Macy’s Inc. into one of the biggest and strongest department stores in the country. The retail giant accounts for a third or more of the business for the brands that Macy’s is associated with. However, if you rewind just seven years, Macy’s wasn’t even big enough to advertise during its own Thanksgiving Day Parade.

“The No. 3 most-watched television program in America is the Macy’s Thanksgiving Day Parade after the Super Bowl and the Academy Awards,” says Lundgren, Macy’s chairman, president and CEO. “Fifty-eight million people watch the Macy’s Thanksgiving Day Parade every year. It was a spectacular event, and I couldn’t advertise on it, because we weren’t national.”

Lundgren watched the telecast as advertisements from Target Brands Inc. and JCPenney Co. Inc. aired on the parade, but none from Macy’s.

“I said, ‘We’ve got to fix this. We’ve got to think about how we get that Macy’s brand out there,’” Lundgren says.

Through well-planned and well-timed acquisitions and a strategy that brought Macy’s closer to its customers, Lundgren began to turn Macy’s into a force to be reckoned with, and the goal of advertising on the company’s own parade was beginning to look like reality.

“We had a lot of interesting turns in our industry and our company that really represent a lot of what happened in the industry over the last several years,” he says.

In October 2012, Lundgren spoke at an ACG Cincinnati luncheon event about the journey he and Macy’s has been on and what it took to build Macy’s into the powerhouse it has become.

From the Ohio Chamber of Commerce: Beyond the status quo

Linda Woggon, executive vice president, Ohio Chamber of Commerce

Often overlooked in discussions about improving Ohio’s economy is the fact that actions taken by state and local governments are primary drivers of the cost of doing business. Their ability to levy taxes and impose costly regulations directly impact a company’s bottom line. When governments are inefficient, they need more revenue. When they take a command and control approach to regulations, they often become an obstacle to growth.

To ensure a strong, competitive economy, we need efficient governments that tax less and provide greater value. That’s why the Ohio Chamber of Commerce and our state’s eight metropolitan chambers undertook an important study issued in December 2010, called Redesigning Ohio. It offers a road map for transforming Ohio’s state and local governments into 21st century institutions.

Burdened with an unprecedented fiscal crisis and a projected $8 billion deficit, state government leaders were at an important crossroads. They could continue to accept the status quo or they could embrace reforms aimed at improving services and heightening productivity through greater flexibility and innovation.

The ideas advanced in Redesigning Ohio provided a framework for thinking boldly about ways Ohioans can receive more value for their state and local tax dollars.

Redesigning Ohio offers 10 specific areas for reform. The first proposes changes to the budgeting process itself by employing a unique approach called Budgeting for Outcomes. Two other innovations, Charter Agencies and Entrepreneurial Management, incentivize greater efficiency by providing more freedom to manage in exchange for less funding and by bringing market-based competition to government services.

Redesigning Ohio also proposes pension and civil service reforms that harmonize the public and private sectors and regulatory reforms that use incentives to boost voluntary compliance. In the health care arena, the report urges the government to leverage its buying power to foster greater competition, lower costs and better results. Redesigning Ohio also offers ways to reduce the cost of the criminal justice system and urges a more thorough and regular review of tax credits, exemptions and deductions.

Finally, Ohio has a costly and outdated system of 3,700 local governmental units that must be brought into the 21st century by enhancing productivity and promoting greater collaboration.

Now, two years after the release of Redesigning Ohio, the same nine Chambers of Commerce have issued a Redesigning Ohio Update. The new report details the progress that has been made and sets out the next steps in this critical transformational process.

As a result of bold actions taken by Gov. John Kasich and Ohio lawmakers, clear progress has been made in reforming our criminal justice system and Medicaid program. Most importantly, the reforms are not just reducing costs; they are also improving results.

One of Gov. Kasich’s first actions established the Common Sense Initiative, which focuses on creating a more jobs-friendly regulatory climate in Ohio. CSI has achieved a number of successes that are making Ohio’s regulatory process more transparent, efficient and less costly for businesses.

Also in 2012, the Ohio Legislature enacted public employee pension reforms that are an important first step in ensuring the long-term solvency of those funds and reducing the cost for taxpayers.

During the past two years, many local governments and school districts embraced greater innovation and collaboration, but additional work remains. The successes highlighted in the Redesigning Ohio Update can serve as excellent models for the additional work ahead.

Today, our economy is improving. Unemployment is at 6.9 percent and tax revenues are increasing. But, we cannot allow these improvements to justify a return to the status quo. With Redesigning Ohio as a guide, we must continue the work necessary to transform our state and local governments into 21st century institutions. ●

 

Linda Woggon is executive vice president of the Ohio Chamber of Commerce. As Ohio’s largest and most diverse statewide business advocacy group, the Ohio Chamber has been an effective voice for business since 1893. To contact the Ohio Chamber, call (614) 228-4201 or visit the website at www.ohiochamber.com.