CEOs must always communicate, demonstrate confidence

Call it foolish, selfish or just plain dumb. The drone accident that seriously cut the pinky finger on the throwing hand of Cleveland Indians pitcher Trevor Bauer put the team in a bind. But it also demonstrated that when a leader communicates a plan that is coupled with a contagious, positive team attitude, success can still be achieved in the face of adversity.

In a pregame radio interview, Indians manager Terry Francona spoke of the plan he had shared with his team in the event that Bauer’s injury forced him out of the game.

With only two outs in the first inning, Bauer’s finger began to bleed profusely and Francona, with great calm and an upbeat attitude, guided the initiation of his plan. The team fed off Francona’s confidence, executed his plan and won the game, despite the overwhelming odds.

CEOs are constantly trying to anticipate the myriad changes in the market, customer expectation, material costs and shortages, supplier status and legal compliance requirements, among other things. What makes our analyses even more complex is that changes in these strategic drivers almost always happen in combinations, thus making plans to address them highly complex.

Experienced CEOs are able to develop appropriate plans that allow their companies to overcome the uncontrollable, external challenges they constantly face. The most successful of these leaders commit these challenges to paper.

Mine is a living, matrix-based document that often changes daily based on the ebb and flow of the issues at hand. As the potential issues move toward the more likely column in my matrix, I create a plan for them, which I begin communicating to our management group and ultimately to our entire team.

As we present and then execute plans to overcome these challenges, our management consciously displays the positive and high confidence we feel deep within our bones. Why? Because we know that all of our employees are watching us and will be guided by how we are acting.

Our obvious confidence infects our entire team with the spirit that by working as a close-knit unit, we will execute the most effective solutions to whatever we are facing.

If we all work together, we can turn the challenges into previously unattainable growth opportunities for our company. We remind our team that as we strive to be the best at planning for and proactively addressing each problem we encounter, we will maintain our strong competitive advantage over those companies who choose to wait and then react.

I must admit that I was in awe watching how Francona had his team ready to face any challenge that night. I admired how to a man, each was confident that their teammates were ready and able to do their part to ensure victory.

Francona encouraged, congratulated and energized each player while showing obvious great joy in leading them through the plan. Why? Because he knew that everyone was watching him! 

We are proud to present an education program at FABTECH 2016: Dynamic Working Capital Preservation: Transforming Coil Storage Warehousing from Square-Feet into Cubic Feet

Our education program and paper demonstrates that through proper use of working capital, operators can improve the safety in their coil storage facilities, greatly improve housekeeping, increase the volume of stored coils by 30% to 70% of that being stored in the current footprint, save substantial capital investments by avoiding construction of new warehouse space and free up additional cash for purchase of steel.

Through the implementation of a well-planned coil storage system that employs highly-engineered, polymeric coil storage systems, operators can accomplish all of this and gain a significant return-on-investment in a short period of time.

The life cycle cost comparisons shown in our education program and paper were established by inputting variables, specific to the case study facility. This tool can be found below and allows operators to approximate and compare costs of the options to expand its warehouse or upgrade the current facility from square foot to cubic footage of storage

Start planning for dynamic growth with the 70/30 rule

I don’t recall ever meeting a successful businessperson that kept a list of dreams. However, they all have a list of goals, supported by clear, measurable plans.

Although many business managers have told me that they are not risk averse, I learned that many need almost 100 percent certainty of success before they execute on an initiative. CEO’s with this belief system have endless lists of questions that stall decision making to the extent that the opportunity has moved on while the grueling evaluation process continues to grind on.

At Philpott, we create a strategic plan each year that is condensed into a one-page Objectives vs. Strategies matrix which guides every employee’s activities. This plan provides the roadmap that I use to steer our team through each opportunity that has an acceptable likelihood to fulfill our objectives through execution of our strategies.

Opportunities can be identified by anyone in the company and are usually communicated to a corporate officer.

That officer generally takes the lead on the project and forms a multidiscipline review team to create a due diligence list. Each listed item is weighted and then graded by each member of the team as information is assembled.

The team leader establishes what may seem to be an unreasonably short timeframe for team members to gather the needed information. However, since our team members are all highly competitive, with few exceptions, this work is completed on time.

Once the information is gathered and assembled, the data is evaluated and a determination is made as to whether or not to move forward with the initiative. When I joined Philpott and introduced this process, many asked, “How will we know when we have sufficient data so that we do not make a mistake?”

First, I explained that our weighting/grading process turns the data into information. Then the rollup of information from all team members creates intelligence on the initiative. Experience has regularly proven that mistakes occur when less than 30 percent of readily available data becomes intelligence through our process, but waiting for much more than 70 percent will ensure that the opportunity has passed.

So, having somewhere between 30 percent and 70 percent of intelligence on an initiative must suffice if a prudent, yet timely decision is to be made.

The 70/30 Intelligence Rule must always account for the most critical variable: likelihood of success. Surely, no one would embark on an initiative where the team composite likelihood of success is less than 50 percent.

Although we are not risk averse, our composite opportunity ranking is usually on the upper side of the 70/30 Intelligence Rule to move forward. In addition, each team member’s rating allows us to separate the skeptics from the supporters of the initiative. If the initiative moves forward, we have identified those on the team who will take the highest ownership and thus exert the most success-assuring energy in the project

By: Mike Baach

The sharing of ideas with your team must be a two-way street

In most successful companies, innovation and ideas come from their valued customers. For this to be the case, ideas must be brought into the company from the people that have the greatest amount of contact with customers.

Many may think that only the sales force does this. Although this is true to an extent, the responsibility is not exclusive to sales team members. In our company, we listen to our customers through the ears of our finance, purchasing, operations and sales personnel, all of whom are expected to have regular, formal interaction with our customers.

Think about it. Your accounts receivable personnel are in regular contact with your customers’ payable personnel who, believe it or not, often hear of ideas from others in their company. If you do not create an environment where everyone on your team shares a common vision for growth through customer engagement, this productive resource for innovation is lost.

It can’t be all you

Sure, as CEO of an enlightened company, you spend much of your time interacting with customers, but to think that you will be the only one to recognize innovation opportunities is foolhardy. When you do, it is critical that you present the idea to refiners and activators in your company.

This team should consist of three or four energetic employees from several layers of the reporting chain. When you present the idea, do so in a very succinct manner focusing first on what value the idea will bring to customers before you talk about how it will impact your company’s bottom line.

Then encourage critique and expansion of the idea. This will not only allow the employees to expand on your point of view, it will also identify who should lead the development project based on which employees demonstrate the greatest amount of understanding and enthusiasm.

Some CEOs discover that the roadblock to hearing about employee innovations or getting his or hers’ effectively communicated to the team lies within the executive team, i.e. the CEO’s direct reports.

Our company embraces the idea Gino Wickman presents in his book, “Traction: Get a Grip on Your Business.” In it, he teaches that the executive organization chart should have the “right seats,” meaning that there is clear definition of the activities for which each position (seat) is responsible and accountable.

A strict rule in making this concept work is that although one person may sit in more than one seat, each seat can only be occupied by one person. Then, you must regularly determine if you have the right people in the right seats. If you don’t, you have likely identified an innovation bottleneck.

If you are to have a company that is truly innovative, you as CEO must set a culture that encourages creative participation at every level. Although you may have great ideas, consider yourself the facilitator. Only then will your company succeed. ●

Mike Baach is president and CEO at The Philpott Rubber Co.

Why CFO-to-CFO relationships should be encouraged

Imagine the look on your CFO’s face when you tell him or her, “I want you to make sales calls on our most important customers.” Expect to see a look as though you grew two more heads and hear responses of, “Huh?” “You’re kidding” and “No way!”

How often have you wasted sales professionals’ valuable time helping to collect delinquent accounts receivable when they should have been out selling? Further waste of sales time surely results when your sales personnel have no relationships with people in the customers’ finance departments. But why should they? Our sales teams are supposed to be in touch with those who can specify and purchase our offerings.

Considering this, who better to interact with the head of your key customers’ finance teams than their peer in your company — your CFO? When payment problems or money-related opportunities arise, do you want your customer’s finance department to know you as “account No. 167432-26” or “Joe, our trusted supplier’s CFO.”

Forging relationships

Delays in payment usually occur because you or the customer are in trouble. If it is you, it is most likely that your company did not meet the customer’s expectations for quality or service. If the customer is in trouble, it is almost always financial in nature. Regardless, if your CFO has forged a productive relationship with his or her customer peer, you have a very good chance that he or she will get a call from the customer to relate the nature of your problem, to let you know why payment will be late, or that you have earned the benefit of being higher up on the vendor priority payment list than those that have not invested the time in developing such relationships.

Such CFO-to-CFO relationships can also provide new business development opportunities. As an example, during the economic meltdown in 2008/2009, our CFO was meeting with the lead finance person at a multinational, megametal producer to whom our sales team was trying to get an order for one of our products that required a capital expenditure by the customer. The customer’s safety, operations and purchasing departments were convinced that our product was what they needed. The snag was that although the customer was extremely creditworthy, its banks had cut off its supply of facility improvement capital. Within a day of my receiving the call about this from our CFO, our company had formed a leasing subsidiary. This allowed our customer to equip its entire facility with our system at a relatively low monthly payment. For us, the new venture provided us with a margin on the sale of our system, which would not have occurred had our CFO not been in contact with the customer.

Examples like these have happened throughout my career when we created CFO-to-CFO relationships. Remember, regardless of the department that is driving a transaction, people like to deal with people. If your CFO isn’t actively and regularly engaged with his or her customer counterparts, isn’t it time to start?

Winning the race

By: Mike Baach

What a fabulous place we live in for economic development, especially for the industrial segment. The recent development of both “dry” and “wet” gas wells in the nearby Marcellus and Utica Shale basins place economical energy and industrial manufacturing inputs, such as ethylene, right at Northeast Ohio’s doorstep. These resources will become even more readily available as more transportation pipelines are installed.

With our proximity to Lake Erie, where better to locate water dependent and “green” focused industries, such as beverage, semiconductor and pharmaceutical? Fully developed water treatment technologies, which often return water in a more purified condition than its source, are now commonly used by industries that use water in industrial processes. Where else but Northeast Ohio is there such immediate proximity to every type of intermodal transportation, such as freight handling by truck, rail, air or ship?

We, however, lack the skilled, motivated workforce needed to entice companies to our region. Since this is a nationwide problem, the region that provides a sustainable supply of skilled workers will win the economic development race. With everything Northeast Ohio has to offer, we must find a way to show companies looking to start, grow or relocate a business that we have a supply of qualified workers to meet their demand.

Wanted: People to train

Ohio, as well as a number of regional organizations, already has both the funds and training resources required to give men and women the skills they need to obtain well-paying jobs of which they can be proud. Generally, we are not lacking in training infrastructure, we simply lack the number of people to train.

The notion that you cannot get a good job without going to college is both a false and often damaging statement to our youth. We must begin the process at home and in our schools to let our children know that there is great respect for skilled tradesmen.

We all know of seemingly smart college graduates who are saddled with student loan debt and cannot find jobs, often because they have pursued degrees in areas of study that are not in high demand. The sooner we begin to send the message that there is no shame in pursuing a job that not only requires them to use their brains, but also their hands, the better off their generation and our economy will be.

As for filling the recruiting funnel, don’t forget our military veterans. The uninformed believe that military people are too rigid for civilian jobs. What some may call rigidity could be called keen focus. These men and women are accustomed to taking and giving orders while working as a team. I challenge our public and private training organizations to consider hiring our respected military veterans.

Our company’s first recruiting call is to the Wounded Warriors Project. We owe a great degree of gratitude to these brave men and women. Why not look to them as being the resource we need to rebuild the Northeast Ohio and U.S. economies into the most vibrant in history.

Mike Baach is president and CEO of The Philpott Rubber Co. Founded in 1889, Philpott is a leading innovator and provider of cost effective polymeric systems and solutions in the industrial and energy markets. Mike has guided Philpott’s transformation from a relatively obscure industrial rubber company with great people to one that now serves a multitude of markets with a vast array of polymeric product and service offerings.

We are proud to have our CEO represent Philpott at Northeast Ohio's Smart 50

Northeast Ohio’s Smart 50 play a large part in region’s rebirth

By: SBN staff

On behalf of Corporate College and Cuyahoga Community College, I want to personally congratulate the recipients of the second annual Corporate College Smart 50 Awards, presented by Smart Business. 

We are privileged to partner with Smart Business and present the Corporate College Smart 50 Awards in celebration of Northeast Ohio’s top executives and in recognition of their talent to effectively build and lead innovative and “smart” organizations. All of this year’s honorees have made a difference in their organizations and in the region. Their positive impact on employment and business sustainability, and ability to generate new ideas and innovation in everyday expectations, has reinvented the Northeast Ohio landscape into one of the most up-and-coming business regions in the country.

These large, midsized and emerging companies’ leaders motivate and inspire people, and are passionate and focused in what they do. The executives we are celebrating today are able to tackle unique business challenges and continue to lead their organizations toward success. Corporate College is honored to acknowledge this year’s nominees.

Corporate College is a division of Cuyahoga Community College, a nationally recognized leader in higher education and member of the League for Innovation in the Community College. Corporate College is known for its best in class client solutions including training, consulting, conference and hospitality services to the business community and its strategic partners. Since its inception in 2003, Corporate College has worked with organizations in all sectors and professionals at every level. We run our organization as a business would run theirs and understand the challenges leaders and organizations face. Clients turn to us for training solutions to meet their strategic business goals and consulting services that improve individual, team and organizational performance. Corporate College provides professional
training and development tailored for today’s dynamic business environment.

Mike Baach
President and CEO
Philpott Solutions Group Inc.

Prior to Mike Baach becoming president and CEO of Philpott Solutions Group Inc., the company was listless, and its growth only kept pace with annual inflation. When Baach joined in 2009, he helped employees regain their confidence while encouraging their creativity. He made prudent capital investments, added jobs, protected the company’s intellectual property and expanded its business influence, to which employees responded quickly and productively.

Externally, the company moved away from historically low margin markets and into new segments while continuing service to its key legacy customers.

To compete with the cost advantage global competitors gain through use of inexpensive labor, Philpott partnered with other polymer molders, placing its manufacturing equipment in their facilities and “renting” their labor to produce Philpott parts. Creating nearly 100 percent labor utilization drove down costs to be globally competitive.

Our CEO explains how to "Keep it simple" with a strategic plan

More often than not, strategic plans consist of five to 50 pages containing precise, highly granular details. Like male peacocks strutting through a harem of hens, management presents the plan to the employees, board of directors and shareholders while our magnificent tail feathers are in full bloom for all to admire.

Let’s face it, as awestruck as our audiences might be during our presentation, everyone in attendance will compliment our effort, politely accept their copies and file them deep in a drawer never to be seen again. But what use is the written plan in guiding the company if it’s buried in everyone’s files?

Toss out your plan

In a prior career managing a small business, I was blessed when our company was selected to be in the first class of twelve strategic material and service supply partners for a top five, multinational energy exploration and production company. Our alliance kickoff meeting was held at the customer’s headquarters to which we were asked to bring our company’s strategic plan. The meeting attendees, including me, arrived at the first morning’s session where we all proudly displayed before us our three-ring binders containing our plans. Since mine was one of the thickest, I knew that the customer would be thrilled by how much time and energy our team put into it. Imagine my chagrin when the CEO of this multinational giant told us to stand up, walk to the waste can and toss our plans into it.

I was then mesmerized when the CEO showed us his strategic plan, which consisted of a single page. He shared with us that it not only served to provide a clear and concise explanation of the plan to employees at all levels, it also provided a powerful, motivating guide to help keep every employee’s actions aligned with the company’s plans since it could be posted in every workstation for constant reference. Since implementing and observing the dramatic results this tool creates, I have used it for every business, nonprofit, charitable and government activity I have lead.

One-page plan setup

The process that results in a one-page plan can take many forms, but keep in mind that it must boil down to the plans essence of no more than four objectives (the “Whats”) supported by five strategies (the “Hows”). Each objective and strategy includes metrics that are compared to numeric, time-bound goals, which are established during the preparation of the plan. The plan is setup in matrix form that also shows the company mission and vision. The relevant blocks in the center of the matrix are then filled using behaviors agreed to between each employee and his or her manager during the employee’s performance review where up to three individual, measurable behaviors are recorded. 

The development of a clear, concise strategic plan involves input from all appropriate company stakeholders that normally contribute to the process. By condensing the plan to its essence of key objectives, supporting strategies, tactics and metrics, the likelihood of its success is greatly enhanced

Partnering with third-party specialists can often improve customer service and operational efficiencies

By: Mike Baach
Even the highest-level managers in certain businesses find it almost blasphemous to talk about partnering with other entities to accomplish activities that they have been doing for years. The discussion usually finds its way to someone stating that paying someone else to do work currently done in-house would reduce profit.

Although such an assertion could prove true, enlightened, successful companies regularly review their core competencies and compare the costs/benefits to services that are available from competent, third-party providers. One of the key drivers for Philpott is understanding what we do well and ensuring time, energy and money are not wasted on keeping certain operations in-house that others could do faster, more efficiently and often at less expense.

Taking a closer look

A relatively recent example of the benefits of such partnering emerged when I joined Philpott in 2007. In reviewing our historical operating metrics, I found that we consistently experienced significant negative variances on our freight expense line. As a small company, Philpott did not have a sophisticated logistics program. The person responsible for arranging our product shipments was firm that the amount of product we shipped would lead to the best available freight rates. When presented with the alternative of having a third-party manage our logistics, it was met with the disbelief that adding the expense of a third-party
provider could result in better prices than we got working directly with the freight companies.

During our interviews with three highly experienced freight logistics companies in Northeast Ohio, we learned that logistics were not our core competency. We have been successfully working with professional logistics partners ever since that have not only allowed us to eliminate our negative freight cost variance, but also allowed us to pass on cost savings to our customers.

Building on the idea

This same partnering concept was employed more than a dozen years ago when foreign competition for industrial rubber and plastics took the bottom out of the market due to the relatively insignificant cost of labor in Asia. Since no manufacturing facility is ever 100 percent utilized, inefficiencies in labor utilization compounded the significant employee cost advantages global competitors already enjoyed.

Rather than throwing in the towel and moving all of our manufacturing to China, Philpott negotiated contracts with several rubber and plastic molders whereby our partner would act as the host for housing our equipment, tooling and compounds. Philpott then essentially rents labor from the host partner to make our parts. This provides benefit to our partner by increasing overall labor utilization and overhead absorption while providing Philpott nearly full labor utilization. Although this does not entirely close the gap with Asia’s labor cost advantages, it has kept pricing close enough at certain volumes that has allowed our
customers to purchase high quality, made in the USA parts at a competitive price. More importantly, this partnering approach serves to create and maintain jobs here in America.

In manufacturing, focusing on our core competencies while partnering with competent third-party providers can keep us focused on satisfying customers while increasing profits.