Sunday, September 30, 2012

Living Your Company Mission Statement

Some companies pay thousands of dollars to retain marketing consulting firms to assist with development of a mission statement.   In our case, our mission statement had been in place for years; but had become more of a marketing slogan than our company's abiding ideology.   For that reason, a member of our Senior Team recommended that we revisit our mission statement during a recent all company management meeting.   The three hours we spent discussing our mission statement proved to be very valuable. 

Saturday, September 29, 2012

Managing During Good Times & Bad Times

Managing a company during Good Times is actually pretty easy.  Setting priorities and spending money when a company is Fat and Happy is easy to do.   During Good Times, Management should avoid the temptation to spend money on nice to have things, or new positions and or to increase employee compensation and benefits because during Bad Times those things are usually the first to go.  Reducing employee compensation and benefits, in particular, always causes morale problems, which is the best reason to maintain compensation and benefits at no more than the 50th percentile of what is common in an industry, even in Good Times.    In Bad Times, this level of employee total pay may actually be too high.

Management skills are actually built during Bad Times, rather than Good Times.   While managing growth has it challenges and can be hard work, it is a whole lot more fun than downsizing.   As a Senior Manager, who has managed through three Recessions, at least two Real Estate Downturns, mortgage interest rates at 18%, 9/11 and the Financial Collapse that began in 2008,  I can say that most of what I have learned about managing a global company has come during Bad Times. 

Dealing with the financial management of the company is hardest when business activity is shrinking during Bad Times.   The saying the tough get going when the times are tough is really true.  Since the President and CEO's first job is to insure the survival of the company, no matter what it takes, within legal and ethical bounds,  Bad Times often require tough and very painful decisions.   Downsizing, in particular, that involves laying off good people, that have worked for a company for years, is probably the most difficult decision any company President, or CEO must make.  Yet, the goal is always to live and fight another day, rather than allow a company to go out of business.  

Capitalism has produced more wealth for more people than any other system in human history; yet it involves boom and bust business cycles and creative destruction along the road to innovation.   It may sound heartless; but Bad Times ultimately weed out weak companies and weak managers unable to make tough decisions.   It sounds cruel; but it is the basis for long term growth, both for individual companies and the national economy. 

During the course of a long career in business, managers will face various business cycles during Good and Bad Times.  Successful managers roll with the punches and get the job done.  In many cases, business management is about two steps backward and one step forward.  The key is always going forward during Good and Bad Times.   And, when bad things happen in business, a good manager will allow for a short time to grieve (not more than a day) and then should quickly move on to Plan B.  

People come and go in every company.   And, no matter how indispensable someone may seem, when turnover occurs, it is an opportunity to rethink the organization's structure and talent management within the company.   Some degree of turn over, as long as it is not excessive, is a good thing.  Bringing new blood into a company is healthy.   This may sound like people don't matter.  Quite the contrary; people really do matter and are critical to the success of any company, especially during Bad Times.

Friday, September 28, 2012

Dealing With Change

All organizations and people are naturally resistant to change.  Yet, there is no way to foster innovation without change and continuous improvement.  More often than not, change is forced on organizations by bad economic times, or other external factors that dictate change just to stay in business.  When that happens, it is usually more painful than would otherwise be the case, if change is managed during good times. 

The President and CEO of a company should be the firm's Chief Change Officer, or CCO pushing for improvements to all products, services, and practices, especially during good times when there is time to act after considerable due diligence.   Even so, change is no less threatening to employees that would much prefer business as usual.   The problem is that companies that fail to change, usually don't survive.   So change is in fact critical to a company's survival no matter how uncomfortable it may make some employees feel. 

Change can be incremental, or a great leap forward.   7 years ago, this CEO Blogger determined that we needed to move our Client Accounting back office to India.   When I announced this decision to our Management Group, I know they thought I was just plain crazy; though they would never actually say that to me directly.   But, I could read the body language loud and clear.   This particular change was a leap forward and so dramatic for our company, that I had to make it clear that once we went down this road, there would be no turning back.  We were crossing the Rubicon to end up in India.

Further, I made it very clear that I would hold impacted Managers directly responsible for the success of this initiative, which was the only end result I would accept.  Once I made it clear that failure was not an option, our Managers made it happen.   7 years later, particularly as we worked through the financial crisis in the last five years, this move to India proved to be the right decision because the cost savings derived from our Indian operations, with high quality services, has allowed our firm to maintain profitability.

Just recently, I determined that we needed to reboot one of our core services to get better results.   To do so, I elevated this discussion to include our entire Senior Team along with others in Management and our Suppliers to bring together all the players in one room to implement the change I want to see happen.   In this case, there was good receptivity to this process because all acknowledged that change was necessary. 

Companies that are not always moving forward are moving backward.   Though change can be destabilizing for an organization, it is an essential element to success.   Company management should be rewarded for suggesting change to improve the firm, rather than chastised for being a "trouble maker".   Change is a good thing.   Dealing with change should be ingrained into a company's culture.   The status quo and business as usual is a road to mediocrity.   It does not work for me. 

Thursday, September 27, 2012

Stop The Bleeding - A Bad Situation Rarely Gets Better

A bad situation rarely gets better over time.   So as a Manager, whether you are facing substantial losses, poor sales results, a problem employee, or any other negative factors impacting your business, it is better to make the tough decisions to Stop The Bleeding, sooner than later.   As President and CEO of our company, about 3 or 4 times a year, I have to raise my hand to Stop The Bleeding because often Managers charged with managing a particular function are too close to it to make the tough decisions needed to impose change.  

Hope is not a strategy.   Just hoping a bad situation will get better over time does not make it better.  Usually, action is required to get things back on track.  All companies have clients, divisions, or departments that may not be meeting profitability targets.   As old Al Einstein always said, doing the same thing over and over again and expecting a different result is the definition of insanity.  When doing business with a client, or if a profit center is causing substantial losses, at some point, it requires a change in leadership, practices, products, or other factors impacting profitability.    And, if nothing works, despite the emotional arguments to do otherwise, it may be time to exit the particular business. 

If a client's business is unprofitable, it may require contract termination, if pricing cannot be renegotiated to make the client's business profitable.  Most important, never, never take on a new client, knowing upfront that the business is unprofitable, no matter who the client may be, just to get their name on a client list.   That is just plain dumb. 

Sales is easier.   By definition, a salesman who does not close business is not a salesman.   We once had a sales guy that everyone loved.   In fact, I had a client prospect tell me what a great guy this particular sales person was; yet when the client went out to bid for services, our company was not invited to bid on their business.   When I saw this client contact later, I asked why if she liked our sales guy so much, we were not invited to bid. 
I never did get a plausible answer that made any sense.  This particular sales guy, like many others, was eventually terminated for failure to close business. 

Usually, when hiring a salesman, even in businesses that involve a long sale cycle, it becomes very obvious within the first year, if the salesman is a closer, or not by virtue of the sales pipeline.  This Blogger believes sales people are born, not made and my proof is that many sales people just don't make it.   I think I have heard every excuse possible for failure to achieve sales results; but always remember that Card Talk and Number Don't Lie.  Sales people are the easiest in the company to evaluate in terms of performance.  No matter how much we may like the sales guy, if the numbers are not there, they are not there. 

And, sales people who go from company to company in an industry is usually a very bad sign.   We generally will not hire a retread.  Unless there is a merger or acquisition, or some major reorganization, or an economic downturn, Companies rarely fire good sales people, unless their exuberance leads to unethical, or dishonest behavior.   Sales people who are terminated are usually fired for failing to achieve required results.   It really is pretty simple.  Waiting to do it, doesn't solve the problem. 

Problem employees, that show no improvement after counseling, should either be repositioned to better use their talent and skill set in another capacity, if possible, or if really serious, terminated and quickly because they will expose a company to financial liability from lawsuits.  Employees that are poor performers, abusive, erratic, suffering from substance abuse, impossible to manage, or otherwise destructive of a positive work environment have to go.   These situations rarely get better, so failure to take action just delays the inevitable termination and could even be dangerous.

Finally, there are a million other factors that can negatively impact a thriving business.   Some we can control, while others are out of our control.  As someone in Senior Management for more than 25 years, my survival instincts kick in.   A good Senior Manager must see the train coming before being run over by it.   Plan for the worst, and if the best happens, your company will just be further ahead.  Most important, Stop The Bleeding sooner than later to insure the success of your company. 

Wednesday, September 26, 2012

The Secret Of Success In Business

Many books have been written describing the secret of success in business.   Most of them speak of hard work, dedication, paying ones dues etc. etc.   And, there is truth in all of these notions; but don't waste your money.   After 33 years in business, this Blogger will provide you the secret of success in business for free.   Just make your boss look good, particularly if he or she hired you.   It really is that simple.  

If you do this, you will be promoted, which will lead to more money and success in business.  In fact, other managers in your company will seek you out when promotional opportunities come up because they too will want you in their department, or division to make them look good too.   Naturally, to make your boss look good, you have to do a great job exceeding performance expectations.  Good or great is not good enough.  You have to achieve extraordinary results.  

And, that is easy to do.   Look at the people in your company that are really successful and do what they do.   Notice not only their hard work and achievements; but their image and demeanor.   Remember, not all work is fun or challenging; yet there is something to learn in every job.  Do your job to the best of your ability, even if you don't like the work you are being asked to do.   Dress for success even in a business casual environment.   Dress for the job you want, not for the job you have. 

Learn to speak and understand "Corporate Speak.   I am often amazed at how clueless many employees are when it comes to Corporate Speak.   If someone in your company begins a sentence with,  "I am very concerned about X, Y or Z."   That is the equivalent of a Manager screaming at you; yet many employees just assume that this is a normal discussion.   It is not a normal discussion, at all.   If a Manager has to confront you head on with a cease and desist order, you are in big trouble because you failed to understand more delicate "Corporate Speak". 

Further, learn to manage up and sideways without being obvious.   This does involve really good communications skills and finesse. There are many times that Managers in our company have prevented me, as the President and CEO of our company, from making a really bad decision, by managing up.   In essence, these skilled Managers, who often report to me, or are even two levels below me, have managed me to achieve the best result for our company.   To them, I say, Thank You, Thank You, Thank You for helping me see the light to make the right decisions. 

The relationship you have with your boss will determine your success.   You need to understand his or her personality style and alter your style to foster communications.   During the course of your career, you will have great bosses and lousy bosses.   Learn what you can from all of them and never, never use your boss as an excuse to fail.  Enjoy a great boss and rise above a bad one. 

Don't attempt to deal with critical issues passing in the hall, or worse in a rest room.   Set up an appointment to get quality time with your boss.   Use a meal together to build relationships; but not to solve big problems.  Big problems should be dealt with in an office conference room.  I can't tell you how many times, I will be on the phone, have someone sitting in front of me waiting for a meeting and have another employee pop his or her head in the door and ask if I am busy.   Obviously, I am busy whenever I am in the office.   Anyone who wants my full attention has to schedule time with me to get quality time. 

The secret of success in business is making your boss look good.  It may appear to you that he or she is taking credit for your work; but don't worry,  Senior Management is usually well aware of reporting relationships.   Your name will come up in Succession Planning discussions because the saying "that good help are hard to find" is absolutely true.   Make sure you are an "A" Player in fact and not a legend in your own mind.   If you do that, you will be successful in business and in life. 


Tuesday, September 25, 2012

Management - There Is Always Another Guy

Many years ago, when I was a very young manager and grew into more Senior roles when I was at Merrill Lynch, I reported to 8 different Senior Managers in 6 years.   I was averaging a new boss about every 8 months.  Sometimes this occurred because of promotions; mine or theirs.   Other times, these management changes occurred because of terminations; theirs.   And sometimes, the firm just reorganized, which is very common in most companies. 

One of the times I was told I would be reporting to another Senior Manager, I along with a colleague of mine was told to go to a different room at the Conference Center we were at, where I would find my new boss.   Behind the door was someone who had the nick name, Ayatollah added to his last name because he was viewed a crazy man.  Fortunately, this particular boss was fired about 4 months after I was assigned to him.  When all was said and done, I ended up reporting to every Senior Manager in the company during my six years at Merrill Lynch, except the President and CEO.   Some were good, while others were bad; but I learned from all of them.   

I could have allowed all these management changes to impact my success; but instead, I took each management change in stride, stayed focused on my job and succeeded in spite of it all.   What was particularly funny was that each boss had no clue what I did for the company because I worked in Consulting, a division that I was working with others to build and develop.  So, every time I got a new boss, we always started with the same questions.   My new boss would always ask me what the heck I did for the company.  

If he or she lasted that long, I would spend about six months explaining my job function.  About then, my new boss would tell me that I really needed to move from California to our office in New York, since I was doing a lot of work on the East Coast and even in Europe.   I really did not want to move back East, so I always avoided the discussion, knowing that I would end up reporting to someone else shortly and we would begin the whole process all over again.  That is exactly what happened. 

What I learned from all of this is that there is always another guy that I could end up reporting to in a major company.   My rule was be nice and respectful to everyone in the company because I never knew who I would end up reporting to in just a few short months.   This proved to be a pretty smart strategy, since I had so many bosses in so few years and I not only survived all of them, through hard work, my career advanced nicely. 

Then the day came in 1991, when I founded our company as President and CEO.   As the majority owner, theoretically, I no longer had to report to anyone, except maybe God above and my wife.   I did not even have to report to a Board of Directors, which would be common in a publicly traded company.  This was just great; but then I realized that there is always another guy.  

As a business owner and President and CEO of our company, I report directly to our clients and customers and that will never change.  While they don't have the authority to fire me, they can fire our company, which is just as bad, if not worse.   And in many ways, I also report to federal and state tax authorities in various countries, our bankers, our accountants, our attorneys, our suppliers and of course, our employees in an inverse relationship.

The lesson in this story is that reporting relationships come and go and sometimes frequently, but in the end we are each responsible for our own success.  As such, don't use management changes as an excuse for stifling your success.   Learn to work well with all personality styles to grow your career in business.   Enjoy collaborating with others to get things done, no matter how difficult they may be and learn from the experience.   Remember, there is always another guy. 

Monday, September 24, 2012

Frivolous Lawsuits - Cost Billions Of Dollars

Every year, companies face Frivolous Lawsuits that cost global businesses billions of dollars.   Many come from employees terminated for legitimate cause, that then seek protection under various laws.   Others tie to claims of hiring discrimination that often have no basis in fact.  There are aggressive attorneys that live on these cases that rarely go to trial; but instead are settled out of court as nuisance lawsuits for relatively small amounts of money just to make them go away. 

Nevertheless, a tremendous amount of time and resources are wasted on these cases that must be taken seriously.   In order to avoid employee practice legal claims, a company's Human Resources department must document all employee actions involved with Recruitment, Selection, Hiring, Performance Evaluation and Termination.   Obviously, all laws must be complied with related to employees, no matter how onerous, or ridiculous.   This adds to the cost of doing business and ultimately impacts monies available to pay compensation and benefits for employees on the payroll. 

Occasionally, companies face lawsuits related to their business practices.   Again any company perceived to have deep pockets is a target.   Again, most of these cases rarely make it to court.   Attorney Ambulance Chasers are always looking for a quick and easy settlement that they can accomplish in a few months to a year, rather than deal with a court case that could take years to achieve.   This is the case because these attorney's usually work on contingency where they earn 30 - 50% of the settlement, rather than an hourly fee. 

Frivolous Lawsuits are an unfortunate cost of doing business.   Business always pushes for Tort Reform to prevent cases that have no merit, or basis in fact.  Some American states and some countries are better than others related to limiting Frivolous Lawsuits.   Frivolous Lawsuits cost business billions of dollars every year that are then not available for other investments in business development to create jobs.   This is a serious problem that has only gotten worse over the years.  Government should act to limit Frivolous Lawsuits to encourage economic growth and job creation. 

Sunday, September 23, 2012

Supply Chain Management

All companies have suppliers in place in order to provide services, or goods for their clients and customers.   This does not just happen by accident; but rather by careful assessment of supplier capabilities.   In our case, we maintain a Business Alliance group in place to manage suppliers.  This involves interview and selection, contractual relationships, establishing service metrics, problem resolution and semi annual, or annual review to make certain our suppliers meet the requirements of our clients and customers.  

This is a never ending process, particularly for a global company with hundreds of suppliers around the world.  Our clients expect our firm to pass through competitive pricing; but not at the expense of quality services.  So, we face a balancing act as we negotiate pricing with our suppliers that is competitive; but that does not compromise quality.  

Every so often, we have to reboot our supplier relationships, either individually with a particular supplier, or in reference to an entire industry segment because Metrics tell us that we are not achieving the results we need.    This could involve redesigning certain aspects of our services, as well, to make sure that we have the right processes in place to insure success. 

Supply Chain Management is really about establishing partnerships around the world based on trust and mutual respect.  This is not an Us versus Them relationship; but rather one that recognizes that only by working together do we succeed in meeting the needs of our clients and customers.   Sometimes, this involves tough, or even intense discussions related to performance; but always in a positive spirit of cooperation.   And, specific additional training may be necessary to best explain our service requirements. 

There are times when service failure makes it impossible to continue doing business.   When that occurs, if performance does not improve after considerable discussion, we must change suppliers.   The good news is that this happens infrequently because we work so hard at partnership.  

Supply Chain Management is a critical aspect of managing any business.  To do so, it is necessary to track a number of service variables.  Those Metrics are used for regular evaluation to make sure service promises made are services promises kept.   Clearly, we cannot succeed without our global affiliates in more than 150 countries around the world.   Supply Chain Management is the key to our mutual success. 

Saturday, September 22, 2012

Quality & Technology

Companies often try to justify higher pricing by saying that their product or service provides higher Quality.  Unless there is a quantitative way of proving this claim, it will immediately be discounted in the market place.   Higher Quality Services or Goods are an expectation in the market place today.   It is the ticket for entry, not really much of a differentiator.   I was actually told that by a Procurement Manager years ago when she said to me that we would not be at the table at all if the end users in her company did not feel that we could deliver a Quality Service.  

Once all understand that providing high Quality Services or Goods are a requirement for Sales and Business Development and not a differentiator, then other factors must be used to sign new business.   In addition, Technology too is an expectation in the market place that once again cannot be used as a critical differentiator.   All major suppliers in an industry probably have comparable technology to support clients and customers.   So if Quality and Technology are not really key selling points, then what is?

Let's start with People.  In a service business especially, we are selling people.  That is why I insist that we hire the best, most educated and experienced people we can recruit for new jobs.   Resumes matter.   And, employees who go from job to job every few years, never make the interview cut in our company.  I am interested in people that have demonstrated stability and a track record of success.  We also implement drug and credit checks to make sure we are not dealing with anyone with a substance abuse problem, or credit issues that could ultimately impact job performance. 

Next, Flexibility is a key buying factor.   While we may have what we believe is a best in class business model, it may not be exactly what a client wants or needs.   As such, we need to implement our services from the client back, not from our operations out.   This sometimes creates problems internally because there will always be employees and managers in particular, who will say, we just don't do it that way; but the way we do it does not matter if the client sees it another way.   However, hopefully, if we have been responsive to the market place in general, our business model will work for 90% of clients; but it is that 10% that is looking for Flexibility, as their key buying factor, that adds volume to any business.  

Supply Chain Management capabilities is a key buy factor today especially among Procurement Managers.  In our case, we have hundreds of affiliates around the world that we manage on behalf of our clients and customers.   Clients must clearly see that we have the Metrics, staff and mechanisms in place to do this efficiently. 

Clients expect both Quality and Technology; but at a competitive price.   A competitive price is not necessarily the lowest price; but it would be hard to be higher than 5 or 10% above the lowest price without some real differentiators in place.   This is particularly true when a service or good has been commoditized.  In other words, if the client thinks they can buy about the same service from 5 or 6 high quality companies, which is often the case, price becomes a critical buying factor. 

Quality and Technology are often used for internal purposes to make emotional arguments for new expenditures.  As the President and CEO of our company, that never works with me unless I see quantitative support for any new expenditures, particularly related to new headcount, our most expensive investment.  I am always looking for return on investment in terms of client retention, higher service results, wider and deeper selling, higher productivity etc.   Unless I can see numbers that prove the case, the new expenditures will not be approved.  Quality and Technology or critical to any business; but they are an expectation in the market place today; not a differentiator. 

Friday, September 21, 2012

Providing Extraordinary Service

Our company mission is to provide an extraordinary customer experience, one family at a time.  This means that good service, or even great service is not good enough.   Once the word "extraordinary" is applied to all facets of our service, it changes everything and should change everyone working for a company.    To get there, continuous improvement is necessary.   All processes and practices should be subject to regular review and revision based on metrics to determine success.   This often makes employees feel uncomfortable because we are all creatures of habit.  Change is often also very painful, since people are naturally resistant to change. 

Employees must have well defined Performance Objectives to achieve extraordinary service.  Those objectives should be behavioral and for the most part quantitative.   In other words, the employee should be asked to achieve X as measured by Y.   Subjective, feel good objectives don't really achieve much in the work place and should be minimized both because they confuse people and because they serve little purpose.  Employees that don't measure up should be given an opportunity to improve and additional training to allow them to provide extraordinary service.   If at some point, it does not happen,  the particular employee is probably not right for the job. 

Management is critical to providing extraordinary service.   Weak managers cannot make it happen and should be invited to leave the company, one way or another.   "C" Players cannot provide extraordinary service.   It takes "A" Players to provide extraordinary service.   "B" Players are fine; but should be turned into "A" Players with more training.  Obviously, it is impossible to provide extraordinary service without extraordinary employees willing to go the extra mile. 

In addition, a company's supply chain must also be informed that extraordinary service is expected from them.   Clearly defined Metrics should be included in every supplier contract to describe the requirements necessary to achieve extraordinary service.   Regular meetings should take place to discuss performance and areas requiring improvement to achieve extraordinary service.  Never, never, settle for mediocre service from suppliers. 

Providing Extraordinary Service does not happen by accident.   It is very hard work and requires a never ending continuous improvement process related to all functions of a company.   The President/CEO of the company should be involved in this process by exhibiting a never satisfied attitude and always raising the bar.  Good or even great service is just not good enough. 

Thursday, September 20, 2012

Managing Information Technology & Applications

The very first six months we were in business in 1991, as President/CEO of our company,  I was asked to approve a purchase order for $250,000 for computer equipment.   I remember thinking that this was a lot of money; but at least we would not have to make additional purchases any time soon.  Back then, I really did not understand very much about Information Technology; that's for sure.   Within six more months, I was asked to approve another $250,000 and it has never stopped since then.  

Managing Information Technology, particularly for a global company, is a critical function since we need connectivity in multiple countries.   What I have learned, over the years, some times the hard way, is that Information Technology, from a cost standpoint, is a never ending black hole.   Further, the word "soon" is often associated with both Information Technology and Information Applications as in when will various hardware be installed, or software development projects be done.   The answer often provided is "soon".   The costs related to Information Technology and Applications are always more than was anticipated and it always take longer than was originally promised. 

In fact,  when I was working for another major company, various Chief Information Officers rarely lasted more than two years because they often over promised and under delivered, which is a very common mistake for those charged with managing Information Technology and Applications.   Further, the notion that buying new technology is often cost justified by higher productivity is questionable.   While there have been productivity gains over the last 10 years as a result of technology, those gains were never as much as promised. 

In our case, we finally outsourced our Information Technology Help Desk to a Canadian firm because we needed 24/7 support.   It was really the only cost effective way to achieve the level of global support that was required by our employees, customers and clients.  It works surprisingly well, or at least better than our previous internal solution, which was not a 24/7 operation.   Even so, employees are often frustrated when ever the system is down, however rarely. 

I have often said to our Director, Information Technology that I should never have to speak with him because I fully expect our IT systems and telephones to be operable at all times to support our business.   To accomplish this goal, we moved our primary data center to a co-location, hardened site and created a completely redundant secondary data center at one of our major offices just in case the primary site goes down.   In addition,  though our off shore application in India, also is supported by a completely redundant site, I even insisted on dealing with the nuclear option because of hostilities that exist between India and Pakistan, in the event of a horrible nuclear exchange.   If we had to bring that work back to the United States, we have fully functional work stations set up to accommodate temporary employees that could accomplish this back office work in case of an emergency. 

While Information Technology generally does not report to the President/CEO of a company, it must still be a topic of discussion during senior management meetings to make sure that this critical function is properly managed.  It is rare that we would not discuss both Information Technology and Information Applications issues every month.   No matter how much we spend on these functions, everyone always wants more investment.  Obviously, monies spent on Information Technology and Applications must be prioritized, however, it is a never ending process as companies seek to provide goods or services better, faster, cheaper.     

Wednesday, September 19, 2012

Cards Talk And Numbers Don't Lie

When I was growing up, my Mom always gave us clothing, underwear and pajamas for Christmas, never toys, or games.   My Dad's approach was much simpler; but just as practical.   Dad just got out his wallet and handed each family member and even guests visiting us, a crisp $20 bill and that was when $20 was actually worth something.  Of course, Dad had an ulterior motive.   About an hour after eating a sumptuous Italian dinner, it was time to play Poker.  So each of us took out our $20 to buy Poker chips to play the game.  Since some of us really did not know a winning hand from a losing hand, of the many sayings Dad had for every aspect of Poker and everything else in life, he would say, "Cards talk and numbers don't lie",  meaning it really did not matter what you thought you had in your hand, the cards would dictate whether had you won or lost.  

This saying, Cards Talk And Numbers Don't Lie, also applies in business.   After years in Senior Management, I have heard many emotional arguments from staff members to buy everything from purified water for our employees, to automatic flush toilets in our office buildings.  The most impassioned arguments often come related to buying new automation and additional headcount.  

Everyone wants the latest and greatest technology.   When asking for budget to buy new technology, the story is usually that we need the additional glitz to impress our clients and customers.  And, when I push back on that argument, saying that most of our clients and customers don't even use the technology we have now, I am then told that new technology will improve productivity and so we will need fewer people to do the job.   If that argument was true, we should have half as many employees today managing twice as much business given the money we have spent on technology in the last ten years.   What new technology has given us is global connectivity so that we can function as one company from offices all over the world and much better reporting capability.   These things are extremely valuable.   

Specific to new headcount, our most expensive budget item, when adding new people, we must be concerned with Return On Investment (ROI) as we add additional people.   To some degree, the Jerry McGuire comment, "Show Me The Money" is applicable.   The bottom line is where is the business, or the revenues to pay for additional people.   The weakest argument for more employees is that we need them to provide "quality service".    As a service company, it is true that quality service is an imperative; however, we need to see the numbers to justify our most costly investment, people.  

And, then there is the whole issue of results.  When all is said and done, numbers demonstrate sales, revenues, employee performance, profit or loss and a myriad of other things that are measurable.  Hope is not a strategy.   Just hoping that numbers are better does not make them better.  Numbers are the basis for management decisions and changes in either practice and procedures, headcount, or even organizational  structure.  Metrics tell us if we are succeeding and must be used as a management tool to implement continuous improvement. 

Cards talk and numbers don't lie; but sometimes managers do exaggerate, or make emotional arguments to add expense to a company, or justify certain behaviors and or poor results.   Any President/CEO worth his salt will always push back demanding facts to support new expenditures, or arguments impacting management decisions.  Ideally, each year, companies should implement zero based budgeting making every manager fight for their priorities.   To do otherwise, is to end up with lots of unnecessary expenses that will drag down profits.   At the end of the day, a company that is not profitable will not be in business for long.

Tuesday, September 18, 2012

Dealing With Attorneys & Accountants

Since the very first day we were in business, we have had to deal with outside attorneys and accountants to support our company.    We don't employ an in-house attorney because we need various attorney specialists in so many areas around the world.   Our CFO is a Certified Public Accountant; but we must still must use Accounting firms in various countries to file our tax returns and advise us on numerous tax issues.   There is no one size fits all attorney.  Instead, we have our attorney's in various countries that specialize in Corporate Law, Real Estate and Mortgage Law, Employment Practice, Trade Marks and Patents, Franchise Law, Immigration Law, Litigation and to support our newest business, Health Care Law.  

On a monthly basis, issues arise that require some type of legal counsel in one of our country locations.   And, sometimes, the issues we face are country specific so we need to work with a law firm, in country, rather than the United States, where we are headquartered.   Our size company probably spends about 2% of gross revenues annually to buy legal and tax services, which is a fairly substantial amount of money.  In addition, I spend about 5% of my time, as company President and CEO, dealing with legal issues in particular.   Specific to accounting issues, I sign lots of tax returns every year for numerous countries.

Both Attorneys and Accountants always provide the most conservative advice possible, which is to be expected.  Sometimes we are given options as to course of action.   When all is said and done, in many cases, we must make business decisions as to course of action weighing risk to our company.   Our bottom line rule is that we never do anything that is not legal and ethical.   Even so, we have been audited by the IRS several times, since our founding in 1991, because of the complexity of our global business.   Even though we have never really had any substantial IRS judgement against us, every audit cost thousands of dollars that are not recoverable.  

I am asked to sign numerous tax returns every year, for several countries, that are incredibly complex.   There is no way I can possibly understand every line item in these tax returns; yet as the President and CEO of the company, I am held responsible for their veracity.   As such, I must trust both our CFO and our accountants to get it right.  Specific to legal issues, things are sometimes more gray, requiring business decisions to take one approach, or another.  

We would always exercise "prudent risk" in making those decisions, based on all factors and my 33 years of business experience.  A company President/CEO must be pretty good at seeing the train coming, so as not to get run over by it.  Since we have been in business for many years, it would appear that the decisions we have made have been right most of the time.   While other companies in our industry have come and gone in the last 20 years, we are still standing because we run a very tight ship, based on sound, professional legal and tax advice. 

Monday, September 17, 2012

The Company President/CEO Role

The President or CEO of a company has a critical role to play, which is enhanced if that same person is the Founder of the company.  Sometimes creative Founders are not able to make the transition from Founder to day to day business leader.  When that becomes apparent, the Founder should take a CEO role and hire a President to run the company; though many times that is very difficult to do because most Founders just can't let go.  Believe me, as the Founder, CEO and President of our holding company, it would be impossible for me to stay out of running our company.

However, that said, the President/CEO's role is to establish the Vision, or Mission for the company and to work with Management to both develop and implement the short and long term Strategic Plan to grow the company.  Companies not focused on growth are usually swallowed up by other companies, or just go out of business altogether.   From my perspective, I think in ten year periods.   As a company President, I can see out that far recognizing that there can be two steps forward and one step backwards related to a Strategic Plan because of factors beyond our control.  And, a good Strategic Plan is not the 10 Commandants, handed down by God and then etched in stone.   A Strategic Plan is an organic concept that is subject to change based on external events. 

The President/CEO of a company must put a solid management team in place in order to achieve the company's long term growth objectives.   For that reason, I approve all management new hires.  I am looking for the "package"; education, business and personal life experiences,  the right personality for the job, track record, great attitude, family stability, often ability to travel, and long term potential.  I am not only interested in whether the person can do the job in question, but also other jobs in the company down the road related to longer term career development.   I actually also review resumes prior to hire of our front line employees that touch our customers.  This would be impossible in larger companies and one day soon I will have to give up this practice as well, which is regretable. 

No doubt, most employees wonder what the heck the President/CEO of a company does all day.   In my case, dealing with about 300 emails a day consumes a lot of my time.   In addition, I change hats about every 15 minutes, going from topic, or issue to issue, literally around the world.  The typical President/CEO must be able to multi-task working on ten or more things at once.   Being the President/CEO of a company is a tough job; but also very rewarding. 

Sunday, September 16, 2012

Contracts - The Words Matter

Everyone in management should spend at least some time in sales as a critical aspect of career development.  This Blogger was very lucky because I was asked to assume a Sales job early in my business career.   Aside from making a lot more money as a result of the commission opportunity, the real benefit was the knowledge I gained about contracts.   The three years I officially spent in Sales, while at Merrill Lynch, provided me a law school education about complex contracts that I use to this day.   In fact, whenever we have been involved in complex contract  negotiations, I have often been asked if I was an attorney.   I guess I learned my lessons well. 

Complex contracts evolve over time as a result of issues, or problems that arise in the course of doing business that cause risk or loss to a company.   We often think we have heard, or seen it all and then something happens that results in a loss to a company.   When that occurs, company's quickly move to address the problem by contractual language so it does not happen again.   Sales people, often charged with negotiating contracts on the front line of a deal, never quite get the need for more onerous contract provisions, which they often see as deal killers.  

That is why ultimate approval for changes to a standard contract must remain with Senior Management.   When commission is involved, a good salesman will give away the store to get the deal done.   While flexibility may be necessary to make a deal happen, there is always a line in the sand that cannot be crossed that must be communicated to the client.  In many cases, a skilled salesman is negotiating both with the client's attorney and the company's Senior Management to close a deal.   This is normal.  And, it is never a good idea for the two attorney's to talk directly.  The Salesman should always be the intermediary, if possible.  Attorney's tend to be deal killers looking for reasons not to do business, rather than reasons to do business. 

Contracts are not just about establishing the business relationship.  In some ways, that is easy to accomplish.   The words governing termination of the contract, the divorce, are equally important and often more difficult to negotiate.   Just as some marriages don't work out, some business deals don't work out either.   Years ago, we were involved in a sizable joint venture with a very well known company.   The contract term was for ten years, carrying with it substantial penalties, if we pulled out of the deal sooner.  

Given my contract experience, I asked all the "what if" questions.   What if their service was poor?   What if their image suffered in the marketplace?   What if they were acquired by another company, or a competitor of ours?  What if they filed for bankruptcy?   This was a very large company and an industry leader.   As such, to all my questions, they said "ridiculous" and that these things could never happen. 

Of course, my response, after 6 months of contract negotiations, was simple.   If these things were so "ridiculous" and they could never happen, then they surely would not abject to having my divorce/termination provisions to cover these issues, without penalty, in the contract.   On that basis, they agreed to include my mandatory provisions.  Guess what?  Within 4 years of executing this contract, when the financial melt down occurred in 2008, all of these things happened and more.   When we terminated the contract, they reminded us of the penalty provision to which we said they needed to reread the contract.   In fact, because we saw the potential train coming, we were able to end our agreement without any penalty.  The lesson here is that a potential divorce is just as important as the original deal.

Specific to contracts, Words Matter.  Contracts exist so that when problems occur during the course of providing services or goods,  the words are there to cover the issues, hopefully without the need to cancel the contract.   The goal is to continue doing business on a mutually advantageous basis.   If and when that ceases to occur, it is time to end the business relationship, if possible, on friendly terms that are the  basis for contract termination. 

Saturday, September 15, 2012

Pricing In The Market Place

It would really be great if companies could just charge whatever they thought was fair for their products, or services to cover their cost of doing business and earn a little profit.   Unfortunately, in a free market economy, that is not exactly how it works.  In fact, the market determines pricing, even more than company management, as a result of the competitive bidding process that is so prevalent today.   Most major firms looking to buy goods and services go out to bid to select a supplier.   Generally, 6 - 8 credible suppliers are "invited to bid" on a company's business through a major bidder process designed not only to select a quality supplier; but usually at the lowest cost. 

There is a presumption that most suppliers, providing a similar service, will have the same pricing factors.  To some degree that is true; but not always.  Cost of labor, revenue sources, business locations, tax domicile, automation and other factors can be very different, all of which can have a dramatic impact on pricing.   Seven years ago, this Blogger determined that the competitive forces we faced in the marketplace made it impossible for us to continue doing certain back office accounting functions in the United States any longer.  To the shock of our management group, I announced that we would move those functions to India to secure cost savings, two shifts a day to accommodate global time zones, higher productivity and quality services. 

As such, as a global company, we moved those back office accounting functions off shore, which did result in some job loss in the US.    However, the savings derived allowed our firm to hire more people in higher level jobs in the US, Europe and Asia Pacific to further expand our company around the world.   And, our college educated, Indian employees actually did a better job than our employees in the US, that often were under educated and actually hated the tedious work. 

Most important, had we not moved these functions to India to secure cost savings, when the Recession hit in 2008, our company would have been in a serious loss position that would have resulted in even more lay off's than were necessary because of the Recession.   Thankfully, that did not happen.  The lesson learned here is that the President of a company must always see the train coming to avoid being run over by it.   Moving these back office accounting functions to India was the right thing to do at the right time. 

Companies that attempt to price from their Operations out, rather than from the client, or customer back usually don't stay in business for long.  We have certainly seen this in our industry.  That is why so many companies come and go through mergers, acquisitions, or even bankruptcy. Pricing is ultimately about what the market will bear, not necessarily what the seller wants to charge. 

To illustrate this fact of life in the simplest way I know, as someone who has traveled five million air miles on business, I compare the price of a shoe shine at major airports.   At McCarren International Airport in Las Vegas, the price of a shoe shine is now $10 and the seats are empty.   The optimum price of a shoe shine, when the seats are constantly full, is $3 to $4 tops.   That price will usually result in a tip of a dollar or two, which tells me that the market (the price a willing buyer is willing to pay most frequently) for a shoe shine in the United States at major airports is around $5 tops.   Whenever I see prices above these amounts, the chairs go empty.  By the way, this is my price point, as well.   I walk away if I see prices above this amount. 

This premise is relevant to the purchase of all goods and services unless the item is scarce; like diamonds.   The higher the price for a commodity, the lower the amount of sales or volume.   Like in the shoe shine example, there is a point that will cause the buyer to walk away because ultimately value is determined by the buyer in the marketplace, not the seller.  And, it may not even be possible to charge higher prices for premium service because all buyers today expect premium service as the norm.

As such, management must assume that inflation adjusted pricing for the same product, or services will continue to go down over time rather than up, while higher quality is always expected by the buyer.   This means that the only way to succeed in business is to continuously find better, faster, cheaper ways of doing business.  The company that fails to do so will not be in business long. 

Friday, September 14, 2012

Cash Is King

When I worked for very big companies in management, I never had to worry about making payroll, or paying monthly expenses because big companies have huge credit lines that they use to fund operating expenses.  We went from being owned by a Fortune 500 company on a Wednesday, to being Paragon on a Thursday and we made payroll on that Friday in May of 1991.   As a result, for the first time in my working life, I had to pay attention to our cash position.  We were very fortunate because we not only had money from our leveraged buy-out, we had client receivables (monies owed us) from existing clients.  In addition, we were awarded a sizable new account on that very same Friday, so our cash position has always been strong from our very first week in business.

Even so, cash management is a critical aspect of managing any business.  Wearing a crown on his head to make the point during numerous company management meetings, our former retired Chief Financial Officer, used to say "Cash Is King", which was particularly true when interest rates were higher and we were generating substantial returns, referred to as yield, on our money in the bank.  Today, with historically low interest rates, this is not a big part of our revenue stream; but the day will come again when interest rates rise, so the premise is still valid. 

During our first few years in business, when we were trying to preserve cash and we had no credit lines because we could not get bank approval, we used long term leases to buy furniture and equipment, at very high interest rates.   Thankfully, those days are long gone as today we have credit lines that we rarely use to fund operating expenses.  Fortunately, for the most part, we are able to fund our business from our own cash on hand in the bank.    As a mortgage banker, we do use credit lines, as a normal procedure, to fund our mortgage originations.  

Otherwise, we run a very tight ship where Cash Is King.  Most important, we have no sizable debt, which allowed us to work through the recent Recession in a solid financial position.   My thinking is always plan for the worst and if better things happen, the company will just be that much further ahead.   While many companies in our industry have come and gone in the last 20 years, we are still standing, so perhaps my management philosophy makes sense.   

As a lesson along the way, we have had a few clients that just didn't pay their bills on time.   One client with annual revenues of $2 Billion, years ago when confronted with this problem, explained that every one knew that companies that were part of the auto industry never pay their bills on time.  By the way, that is not true since today we have clients in the auto industry that do pay their bills on time.   Since we had very high receivables with this particular client, we had to go postal to get our money.   We then terminated our agreement encouraging the client to work with one of our competitors.   They ultimately chose to do business with a competitor that at the time was owned by none other than General Motors, so perhaps they understood each other's business practices better.    

The reality is that there are some clients in the marketplace that ignore contractual requirements and intentional delay payments to gain the "float" on their money at the expense of the supplier.   While this may be a legitimate strategy, I see it as dishonest and therefore, we walk away from these clients.  In business, you have to know when to hold them and when to fold them.   A client that intentionally does not pay their bills on time is not a client worth having. 

And, then there are the clients that are not profitable.  At some point, this too must be confronted as a serious problem.   If it is impossible to renegotiate a contract so that the business is profitable, it is time to walk away and we have.   In one particular case, with a big high tech client, we tried for over a year to renegotiate our expiring agreement because we were losing money on every transaction we took.   For that year, we operated with no contract in place.  Finally, we gave the client notice that we were done.  

The Vice President of Human Resources called yelling and screaming at me for "abruptly" walking away from their business.   I told her that we tried everything possible to establish a constructive relationship for over a year to no avail and that we could not continue taking business at a loss.   This particular client has a reputation in the market place for abusing suppliers.  Since my Mama didn't raise no fool, I knew it was time to walk away and let a competitor have this client. 

Cash Is King.   The President and CEO of every company must be involved in managing cash on hand as a critical priority.  Sometimes it involves tough decisions related to client receivables and client profitability.   Business that does not generate profit is charity and while we give a lot of money to various charities, we are not a charity.   Profitablity is a key indicator of success and obviously is the basis for staying in business in a free market economy. 

Thursday, September 13, 2012

Managing People - The Key To Success

Many people working in business aspire to be promoted into Management to have direct report employees.   Having worked in business for 33 years and managing employees all of that time, this Blogger on the other hand has often said that if I could manage our company with just me, I would do it.  And, why not? I am hard-working, dependable, honest, detail oriented and I work 24/7.  I am the perfect employee and managing myself is a piece of cake.  Of course, my comment is both facetious and impossible; but the point is that as soon as the first employee is added to a company, the complexity in managing that company increases a hundred fold.

Global companies, in particular, must comply with all sorts of federal and state country laws governing employees.   Making payroll is not just about having the money to pay employees, it is about how to actually make payroll in multiple currencies; no easy task.  In addition, every year, companies often face frivolous lawsuits from employees, for one reason or another, usually when it becomes necessary to terminate an employee for cause.   Some of the cases are really funny and even ridiculous.  

We once had a 50 year old woman accuse our firm of discriminating against her because she was "fat and ugly", which is not a cause of action.   That case went away when I explained to her attorney that he was welcome to come to our company and walk the aisles because his client looked just like all the other 50 year old women we had working for us that were neither exceedingly fat, nor ugly; just 50.   Sound ridiculous.  I could give you a hundred more examples. 

As one of our Senior Vice President's often says, People Are Messy".  Yet, we expect great job performance even though employees often come to work with baggage and serious family issues haunting them.   In fact, I am often amazed that some people can do their jobs at all given the issues they may be facing at home.   We test for substance abuse and financial stability as a condition of employment because we can't afford those problems in our workplace; but there are also illnesses, divorce, issues with kids, or aging parents and any number of things that can be an understandable hindrance to great job performance.  Occasionally, there is also work place violence to deal with, which can be pretty frightening.  It is what it is and as Managers, we must deal with our complex workplace as we find it on a daily basis.   When I think I have seen, or heard it all, something else bizarre comes up.   

And then, there is personality style, which is a real determinant of success.   Years ago, we had an organizational psychologist do some training for our company.   She determined that there were really four personality styles in the Myers Briggs test and they boiled down to the I Love Lucy Characters.  Ricky is the authoritarian leadership style.  Lucy is the creative, zany, relationship oriented style.  Fred is the quantitative numbers guy.  And, Ethel is the people pleaser, the compromiser, the person who hates conflict.   There is a 14 question test that we often implement with new hires to determine personality style.  Most people are a mix; but usually there is a dominant style.   

As a Ricky, I can deal with all the styles, except dominant Ethel's because they tend to be procrastinators that cannot make decisions.  As you might imagine, that drives me crazy.   In any case, personality style, as much as intelligence, determine success in a particular job.   The best sales people, Marketing types and Account Managers are Ricky/Lucy's with some Fred for detail orientation.   That be me.  IT and Accounting staff members must be dominant Fred's.  And by the way, Fred's resent being pigeon-holed and told they are Fred's, not sure why.   Every company needs Fred's.   They are particularly lovable and can be very funny with their dry sense of humor. 

The point to all of this is that Managing People is about understanding and reacting to these personality styles.   Once you know that an employee is a particular style, as a Manager, you must be a chameleon to get the best job performance from an employee, regardless of your personal style.  Lucy's are all about relationship.  They are not sequential thinkers.   So work has to be "fun".  With Fred's, it is all about the numbers and sequential order.   Ethel's will run and hide if confronted, so they must be dealt with more gently.  And finally, Ricky's, people like me, need to be told the end of the story first because we have a short attention span and lose patience quickly.   Ricky's also do not suffer fools well.  Ricky's need to see black and white, fast.   We don't deal well with gray. 

Once a Manager figures out this concept, all of a sudden managing people, becomes are allot easier.  Most important, putting the wrong personality style in the wrong job can lead to disaster.  i.e. Lucy should never, never be the Company's Controller.  FYI, these designations also relate to marriage and all inter personal relationships.   Marry an incompatible personality style and divorce is probable, which may be the reason so many marriages end in divorce, further complicating the workplace.   i.e. Two married Ricky's will result in divorce, guaranteed.   

Managing people is the key to success in business.   Success cannot happen any other way.  It is both a Science and an Art.  Managing people is not always fun, particularly when someone must be terminated for cause, or during bad times, when lay-offs may be necessary.   However, as a Manager, it is very fulfilling to watch people succeed and grow in their jobs.  That is certainly the best part of my job as a Company President and CEO. 

Wednesday, September 12, 2012

Sales & Marketing - A Forever Process

Sales and Marketing are the two most critical functions in any company.  That is not to say that other functions are not important, however, you can have the best product or service to sell; but if no one knows about it, the company is going no where.   Sales and Marketing should be the first functions funded during the budgeting process and the last functions cut in bad times.  Even with great sales management in place, the President and CEO of every company should also be the CSO, the Chief Sales Officer of the company.  I take that responsibility very seriously. Who better knows the attributes of any company than its' President.   I have seen many companies fail in my 33 years in business, when Senior Management did not understand this basic premise.

Sales is about having the right sales people and enough of them to take the company's message to the street.  While Sales will always be about relationship building, with the advent of Procurement in the Sales process, that task has changed dramatically.   Old Fashioned Selling, that often used to be based on the salesman's personality and selling skills alone, is no longer the paradigm.  Today in an era of Social Networking and the Internet, Sales has become much more of a Science than an art.  It really is too bad because Old Fashioned Selling used to be a lot more fun.  I know, I know, I am just an old geezer longing for the "good old days" when I was on the front line selling; but I always loved the sales process from start to finish.  It was not just about winning; but rather making the sale happen through great selling skills. Young Guns in Sales today will never get to fully experience the thrill of the hunt and closing the deal, the way it used to take place when I was in direct sales many years ago.   Of course, you don't know what you don't know. 

Outstanding Sales People are born not made.  While technical training can be provided to make a great salesman even better, if sales skills are not genetic and innate, there is no way to turn someone into a SALESMAN.  My staff members often hear me say (and hate it) that I have 90 year old Morabito Aunts that are better sales people than many of the salesmen I see on the street today because they got the Sales Gene from my Italian Grandfather, as did I.  We were very lucky in getting that Sales Gene because it did not transfer to many others in our family.  Sales is like breathing.  If you have to think about it, you are not a SALEMAN.  This is why really great SALESMEN make lots of money. 

Personally, I was a salesman in training my entire life, though I often did not know it.  From the time I sold programs and peanuts at the Ontario Speedway as a kid,  to when I had souvenir stands at Dodger Stadium, to when I sold ladies shoes in Beverly Hills to work my way through university and even related to the six years that I spent in teaching in the inner city in Los Angeles, I was always selling.   When I finally joined Merrill Lynch at 29 years old, as the youngest manager they had ever hired, to help found a Consulting Services division, I found myself selling services that did not even exist in response to client requests.  So much so that I was involved in selling a major Group Move that utilized many of Merrill Lynch's services in keeping with Don Regan, the CEO's concept, of a financial super market.   Don Regan later went on to become Ronald Reagan's Secretary of the Treasury. 

In any case, the Director of Business Development at the time, who technically had responsibility for sales in the region kept asking me if I had the authority to sell these new services.   Coming out of teaching where no one ever got fired, I really had no clue; but I was just responding to the multi-million dollar opportunity I saw in front of me.  Though he got the commission, eventually since it worked out just fine and I did not get fired, which I learned later would have been the end result if my deal had failed, I got the credit as I was featured in the 1985 Merrill Lynch Annual Report, which was a pretty big deal at the time for a 35 year old Director.  I also eventually got his job as I was asked to take over Sales in his region by Senior Management.  At first, I fought taking that job because I did not see myself as a Saleman; but as it turns out, it worked out very well as I went on to sign 35 clients in just three years.   I discovered that I had the Morabito Sales Gene and all that training I got before joining Merrill Lynch really paid off.   By the way, it was Mrs. Morabito that convinced me that I should  take that sales job by saying that "I would make it whatever I wanted it to be anyway", so why not?   She was right.   

And, then there is the Marketing function to support Sales, which is also critical.  Aside from the staff needed to support Marketing, every year we have a budget discussion about discretionary Marketing Spend.  Every year, my Director, Global Marketing and Communications comes in and asks for the Sun, the Moon and the Stars to advance our brand.  She usually gets the Sun and the Moon, since we often can't afford the Stars.  That being said, today given the way sales transpires, Marketing Spend is probably responsible for 50% of our Sales opportunities, which makes this a vital company function.  It is Marketing Spend that often creates the visibility in the Market Place needed to win new business.   In our case, we have spent millions of dollars, since founding our company in 1991, to establish and advance our Brand.   Salesmen may come and go; but the brand goes on forever.    

Tuesday, September 11, 2012

Branding - Choosing A Name & Logo

When I was a young manager at Merrill Lynch, more than 30 years ago in Consulting and Sales, I designed stationary that I used for projects and proposals.  It had a thin, two line black border and over in the left hand bottom corner, I placed the Merrill Lynch Bull, the company's famous logo.  It looked really great and very professional.   One day about a year later, I got a call from the Merrill Lynch Bull Police in New York City.  The woman who called told me that they knew that I was using the Bull in an "unauthorized way" and that if I did not cease and desist, I would be fired.  To this day, I am not sure how they learned of my transgression.  There was probably a snitch in our ranks trying to do me in, which is not uncommon in big companies; but then that is another story.  In any case, since I had come from education a few years earlier where it is almost impossible to be fired, I was stunned by the call. 

But I learned an important lesson that I preach to this day and that is never, never mess with the logo, or the image of the company and don't allow anyone else to do it either.   This is the reason why today, our Marketing function reports directly to me because I am keen on controlling the image of our company, first hand.  When we became a stand alone company, I knew that before we had clients, Operations, a sophisticated back office and all the functions needed to run a global company, we had to create an image for the company that we could sell.  We were competing with big companies so we had to look big before we were big. 

In the beginning it was a little like a Jerry Seinfeld episode, it was a show about nothing; but we had to make it look like something substantial and that we did right out of the gate as a stand alone company.  First we had to choose a name.  Since we could not use our  money to retain an expensive consulting firm, I basically got out the dictionary and started turning pages until I found the name that would convey quality and permanence.  I chose the name Paragon because it tied to excellence as a virtue.   I was also keenly aware that one day, we might be an international company so it had to be a name that would work on a global basis.  After getting legal clearance, we were set to go. 

But, we needed a logo, our version of the Merrill Lynch Bull, that could come in front of our name and be an ever lasting part of our brand.  So, I just got out my yellow pad and starting drawing all sorts of shapes.  Before I knew it our Double Diamond logo emerged and remains so to this day.   In my mind, this connection of the two diamonds was to signify the connection among our clients, customers and employees.  And, the diamond itself was to display tenacity, character, integrity, stability and strength. 

What I did not know at the time was that Paragon was also the name of a hundred carat diamond shape in Greek terminology.  That was sheer coincidence.  I chose our Paragon Blue and Silver as a good combination of colors to portray value.   Remember, we could not use our money to hire outside Consultants to do all of this so as an entrepreneur, wearing many hats, I was the Marketing Department among many other functions. 

There were even bigger issues to tackle before we could develop our first marketing brochures.   We had been the Consulting Division of a relocation management company.  I knew early on that if we were ever going to grow beyond my personal skill set in Consulting that we had to offer relocation management services to implement thousands of moves each year to grow well beyond anything I could do personally.  That meant changing the entire mind set of our small company to position our firm for far greater growth than we could ever accomplish as a Consulting company.  We did just that in our first year in business. 

In fact, though we had a few clients to start with, within the very first week of being in business, we signed a very large client, that we had bid as a Weyerhaeuser company, to implement a major group move for 1,200 employees, from 9 cities to 2 cities.   We were off and running.  We had our new name, our new logo, our new colors, our new Marketing materials and a major client.  It was a really sweet beginning and it has been non stop ever since.   

Monday, September 10, 2012

Starting A Company - Lessons Learned

Having worked for very big companies, this Blogger never really thought about starting a company.   The opportunity came when our parent company announced in early 1991, that they would sell our subsidiary, one way or another.   I was 40 years old at the time and a Senior Vice President.   I had worked in senior management for several years; but I was soon to learn that this was very different from founding and running what would one day become a global company.  

Could I do it was the real question.   I had my doubts; that's for sure.  The answer came on an airplane trip from California to New York City.   I was able to upgrade so I was in First Class for the 6 hour trip.  Sitting next to me was a gruff, New York business owner and entrepreneur.   We struck up a conversation that lasted the entire trip.   I described my predicament, which included the opportunity to buy the division of the company that I had founded from our parent company.

While I had worked in business in the US and Europe for more than 10 years and in doing so gained great experience both selling to and providing Consulting Services for some of the largest firms in the world, I had never managed an entire company.  And, before working in business, I was a teacher with a degree in both History and Political Science and a Masters Degree in Education Administration and associated credentials, but I did not know a balance sheet from a sheet of music.   And, then came this angel on an airplane.

This gruff businessman sitting next to me in First Class, on a trip to New York City, assured me that I did have the Focus, Passion and Discipline to succeed in business and those attributes were all that I needed.   By the time that flight ended,  I realized that I did have the power within me to establish and run what was then a national company.   It was really a miraculous revelation from God.   I have had many more revelations, or so it would seem, since then facing many challenges in business during various Recessions,  9/11 and during and since the financial collapse that began in 2008.  When times are tough, the tough really do get going and rise to the occasion. 

In any case, when I got off that airplane I called both my wife and the President of our parent company and advised them that we wanted to buy the division of the company that I had founded.  After some very tense negotiations, we ended up with two notes totaling several hundred thousand dollars that required repayment first in three years and then in five years.   So, I signed my name for the first of many times taking on risk like I had never done before.  

I soon realized that the difference between working for a large company and owning a company was in fact the willingness to risk it all in the event of failure because I was signing my name to pay off huge debt and it involved personal guarantees.   Everything my wife and I had worked for during our first 16 years of marriage was on the line like never before.   This was a defining moment for me and for our company.   Signing your name and taking on risk is the moment of truth and it is either a sign of guts, or blatant stupidity depending on whether you succeed or fail.  

The other thing that hit me like a ton of bricks was the need to not only support my family, which I knew I could do, even if I had to sell apples on a street corner; but now with founding our company, I felt the weight of 13 additional families since we left our parent company with 13 employees.  I realized for the first time in my life that my actions and decisions in running our business could impact other people.   And, that if I failed, it would not only impact my family, it would impact 13 other families in a negative way.   Many more employees later and around the world, I still feel that responsibility as I always act to insure the survival of our company as Job One.