Secrets of 2012’s fastest-growing company executives (part 2 of 4)

Last month, in conjunction with Gazelles coach Ron Huntington, we held an executive breakfast featuring four CEO’s from among the area’s fastest-growing companies.

Together they shared more than an hour’s worth of great insights, best practices and advice for companies big and small, old and young, with a focus on how they have accelerated innovation, driven culture, cut costs and sped up revenue growth for their businesses.

This is the second in a four-part series highlighting some of their best insights from that breakfast.

Ron Huntington
What are some of the challenges that you’ve encountered in putting this process, or these processes, in place and getting results? I think every one of the organizations and probably all of you here have a desire to improve the bottom line performance of your organization.

Alignment is an important part of what this process brings to an organization and it was key to get everybody in the organization on that same page if the buyback was going to work correctly.

Steve, some of the challenges that you had along the path here to making these things work the way you want them to?

Steve Carrigan
One of the things in our organization is I have severe attention deficit disorder, and so people that work for us get very frustrated. We got a lot of benefit from that Top One of Five Goal thing that was in the original Rockefeller Habits book that’s now called The Four Decisions.

I read the book over Christmas, I think in 2008, and at that time we were probably like a $30 million dollar a year business, maybe $25 million; we never had any sales or marketing. Then we hired Matt who is in the back of the room to help us with marketing and then we had one salesperson and myself. So we made the top one of five what we call Sales To Whales, and we call our large customers whales. I have a customer in the audience and I hope they are not offended by that.

We made a t-shirt that had a whale on the front and the top five were on the back; it was for 2009. We put all of our focus on it, got everyone in line for Sales To Whales. It was kind of funny because there were only two of us really selling, but within two weeks we had so much new business just by putting that focus around it, like actually paying attention to it, that we had to immediately make a new t-shirt. The top one of five was now Never Lose A Whale because we realize there’s just a finite amount of those customers.

I guess the point is it worked so well to get the focus through. Once we had the top one of five and we put some focus on it, it worked so well that within two weeks we had to change our top one of five. That was one of the other things; people were like, “Wow, we’re changing it?” But we changed it and everyone agreed it was the right thing to do.

It’s kind of ironic because just yesterday, you know we have a totally different set of goals, and the gentleman who runs our 27-person IT department is extensively working on this new thing which is our new software platform and everything. We had a problem with a big customer and I was like, “Michael, what are you doing? For the last day and a half you’ve been working on something that’s not your thing.” He said, “Well remember, never lose a whale.” So even though that was our thing for 2009, people still think about it and it resonates, and it’s kind of part of the DNA today.

So I thought it was kind of neat because as you change, some of the things you focused on at one time become part of the culture and people remember it, and it’s still sort of alive. So that doesn’t answer Ron’s question but it speaks to the success.

And the challenges are if you’ve got 400 people, you’ve then got to change everybody and get everybody realigned. But I think Norm spoke to that, that once people are “down with it” so to speak, and they’re into it, then you can do that; you can make those changes because people have bought into it.

Ron
Yes, and the more people that understand precisely where you’re going—for those of you that are CEOs—you know that the higher level of agreement and alignment you have on the destination, your job as the leader of the organization gets easier, particularly if you’ve got the right people in place to be able to take the vision and run with it.

One of the things, Hiram, that you have is you’ve got three other equal owners in the business. When we started this process, alignment at the top among the ownership group was a critical factor. Can you speak to that and kind of how you settled this process down and started to make it really work for you over the last year or two?

Hiram Machado
Right. Yes, I think there was always this kind of clear understanding of the strength of each one of us and the role that we played, but there was no structure around how to play those roles together. There is clearly someone who is a visionary, there’s clearly somebody who is [donors] and trying to get the job done, there is the shiny object guy, which is me.

So going through this process really gave us focus, understanding of the responsibility of each one of us, it brought to surface the strengths and weaknesses of each one of us, and everybody was humble enough to accept and realize what were the strengths and weaknesses and how to best play a role.

One thing I want to mention about the challenge, I think, is focus was a big challenge before. I remember having ideas and getting them started, but then we get idea after idea started and never finished any. Ron, if you remember when we first came up with the rocks for the quarter, I remember the very first exercise that we did, we came up with six or seven.

Ron
That was after we paired them down from about fifteen.

Hiram
Yes, that was the very first round of exercise; we have been doing that for a couple of years now. The last quarter when we decided what the primary initiatives are that we absolutely needed to focus on this quarter, we are down to three now. Not to say there’s not a whole lot more happening or going on at the same time, they are, but there is a clear understanding of what’s the next milestone, what do we need to accomplish next and what’s going to be the absolute thing that we’re not compromising. Everything else is still important, we still have to do it, but if we have to compromise, we’re going to comprise on something else, not on those three topics that we decided to accomplish by the end of the quarter.

That was an evolution; that was a big challenge before because we moved from initiative to initiative not necessarily closing the loop on the other one and it was complicated. So bringing this together between the understanding of our strengths and weaknesses, acceptance of which role we should play in the organization. And that extends beyond the ownership team that goes into the leadership team that we have in the organization.

We have grown from about 40 people a couple years ago to now about 115 people in the organization. Having that alignment, having that clear vision and goal was key for us to get where we are because as new people come on board, it is a lot easier for them to digest and understand where we’re going and buy into it, than it was before.

Before, it was pretty much, to be honest, me standing there a little bit in an ad hoc way explaining what we’re doing and where we want to go. Most of the time it worked and people understood it and bought into it, but I guess the execution of it was a little bit more complicated because it wasn’t a consolidated way of looking at it the way that it is now.

Ron
During this period where you’ve grown to 115 employees, you’ve doubled revenue and tripled profitability even after adding all of that additional labor cost to your cost structure. Can you speak to what has happened in that transition?

Hiram
Yes, I think so. I mentioned before that I think the very first year we saw growth and revenue but we did not realize as much in profitability when we first started these exercises. Profitability diminished a little bit but in my mind, even back then when profitability was low, it was a lot clearer to me why that was so.

I do believe that the proper investments were being made, the right people were being brought to the organization, and spending that money and compromising on profitability for that very first year I think was the right thing to do. But we had a clear vision of where we wanted to go, where we wanted profitability to be, and through the second year with the results that we got we have been not only diversifying our client portfolio quite a bit, we have acquired quite a few new customers.

I have a monthly employee newsletter that I send every month and I looked back and I announced almost one major customer almost every month on my newsletter to the employees this year, throughout the year. We added to the 100% growth, added to increasing profitability, but my point that I can share that was my experience is it doesn’t necessarily happen right away.

You have to know where you’re going, you have to understand and stick to your plan. It may compromise profitability at first, at least that was my case, but it will pay off with a more solid team, solid infrastructure behind it to support that growth that you’re planning for.