Wisdom Exchange 2010 Reporter

524 views

Published on

In today’s dynamic economy, it has never been more important for leaders of Ontario’s high-performing businesses to leverage their capacity to pursue growth opportunities. The May, 2010 program demonstrated how Ontario and its business leaders can prepare to move forward and capture the many opportunities that are developing both in the province and around the world.

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
524
On SlideShare
0
From Embeds
0
Number of Embeds
2
Actions
Shares
0
Downloads
3
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Wisdom Exchange 2010 Reporter

  1. 1. May 4 - 5, 2010www.ontario.ca/economy CONTENTS1 Monte Kwinter1 Steven J. Spear, The necessity of innovation WISDOM EXCHANGE 2010 REPORTER THE FORUM FOR CEOS AND PRESIDENTS OF ONTARIO’S HIGH PERFORMING FIRMS2 Charles F. Knight, Six keys to global growth Workshops 4 • Financing strategies for the new decade 6 • Leveraging core competencies to drive new business 8 • Sustainability as a competitive advantage10 • Driving growth: new markets, new revenues12 Mike Miller, New technologies and your business: Shift! LEVERAGING OPPORTUNITIES IN THE NEW DECADE Ways to market and collaborate onlineAt the Wisdom ExchangeThe networking reception buzzed with energy asbusiness leaders made new connections andre-connected with other CEOs, president and ownersof Ontario firms. The opportunity for one-on-onediscussions with peer CEOs about current issues andbest practices, as well as hearing presentations fromleading business strategists, draws innovativedelegates who are committed to the growth of theirfirms to the annual Wisdom Exchange conference. THE NECESSITY OF INNOVATION Steven J. Spear, Author Innovation is widely hailed as the key to winning new customers and market share. But what if it’s moreMonte Kwinter essential than that?welcomes delegatesDelegates to the 2010 Wisdom Exchangewere welcomed at the opening night dinner byMonte Kwinter, Parliamentary Assistant tothe Honourable Sandra Pupatello, Minister ofEconomic Development and Trade.Kwinter began by thanking the delegates for their hardwork and perseverance during the recent economicdownturn. The Conference Board of Canada, he noted,forecast that Ontario’s GDP would grow by 6 per centthis year. The Ontario government is helpingbusinesses to build on the momentum of thatturnaround and leverage the opportunities of the newdecade through a series of tax and program initiatives.As a result of the business tax cuts and the move to aharmonized sales tax, he pointed out, the tax onbusiness investment in Ontario is being cut in half.“Our goal is to make Ontario the most competitivejurisdiction in North America for business investmentand it’s working,” said Kwinter. “GE credited Ontario’stax cuts as one of the main reasons for their recent$100 million investment in Peterborough.” For Steven Spear -- a well-recognized expert on how select companies generate unmatchable performance by converting improvement and innovation from inspiration to repeatable, broad-based, skilled-based disciplines --Those tax cuts will help business make the investments manufacturing and providing high-value services have become so complex that perfection is impossible.it needs to close productivity gaps and accelerate the Problems will always arise and solutions will be found that generate new knowledge.growth of their companies. Capturing and leveraging that knowledge requires a disciplined approach to managing the innovation process. InAt the same time, Ontario’s “Open for Business” fact, it becomes an essential strategic process as systems become more complex.program is making it faster and easier for companiesto do business with the government. For more Steven J. Spear, a Senior Lecturer at MIT, five-time winner of the Shingo Prize and author of Chasing the Rabbit:information about the program, visit www.ontario.ca/ How Market Leaders Outdistance the Competition and How Great Companies Can Catch Up and Win, providedopenforbusiness insights into how innovation can be successfully managed and leveraged during his keynote address on the opening night of the 2010 Wisdom Exchange.“I encourage all of you to take full advantage ofthe services offered by the Ministry of EconomicDevelopment and Trade,” said Kwinter in closing.“After all, we share the same goal – growing Ontario’s1economy and businesses.” Continued on page 2
  2. 2. SIX KEYS TOGLOBAL GROWTHEmerson, although not well known to consumers, has become aglobe-spanning manufacturer through a remarkable management process Charles F. Knightcharacterized by simplicity, intense competitiveness and discipline. EmersonAlong the way, Emerson racked up unprecedented less than $1 billion to more than 60 global divisions “This is more than a platitude,” Knight said. “Keeping itfinancial results including 53 consecutive years of generating revenues of more than $15 billion. simple is one of the hardest management principles toincreased dividends per share. follow because it requires intense focus, discipline and Much of that growth came through acquisitions – 254 of commitment. It forces you to develop a clear set of“We had a great run,” admitted Emerson’s legendary them at a cost of $14 billion over the 27-year period. priorities and communicate them to the entire organizationChairman Emeritus Charles Knight during his morning Billions more were invested in engineering and design to in ways that all employees can understand.”presentation at the Wisdom Exchange. “And let me tell transform Emerson from an industry follower to ayou – it was a lot of fun!” globally recognized technology leader. 2 Commitment to planningKnight, along with Emerson Chief Operating Officer “This is all about winning,” said Knight as he began toEd Monser, detailed the company’s unique management outline Emerson’s approach to managing what became They say at Emerson that planning is a contact sport, ansystem in a two-hour overview. They added personal during his tenure a complex, worldwide operation. axiom that reflects both the sense of competitiveness andinsights to the story outlined in Performance without the teamwork that pervade Emerson’s corporate culture.Compromise: How Emerson Consistently Achieves Winning A set of core values are the foundation for the process,Results, published by Harvard Business School Press. including integrity, profitability, industry leadership and Emerson’s planning process is rigorous and intense. adding value for customers. “They may sound like Unlike many corporations, Emerson has no dedicatedFrom Midwest to the global stage motherhood values,” said Knight, “but that’s the way it is.” planning staff. Executive management is deeply involved. The people who make the plans are the peopleLaunched as an electric motor manufacturer in St. Louis Six management essentials who execute them. They agree to the targets and areduring the 1950s, Emerson is today a technology leader responsible for achieving them. The company-widewith 250 manufacturing locations – more than half of There are six key elements to Emerson’s management coordination process is a mammoth operation. Quarterlywhich are outside the U.S. – along with 129,000 process. planning conferences in St. Louis involve four thousandemployees and revenues that top $20 billion annually. people.Emerson also stands out among U.S. corporations for 1 Keep it simple The planning cycle was developed during Knight’s tenure.another reason. During its entire history, Emerson has only Management guru Peter Drucker was a champion of A number of lessons were learned along the way.had three CEOs. The average CEO tenure for a company simplicity, and, said Knight, “my predecessor lived andlisted on the New York Stock Exchange today is five years. “We learned it was important to separate quarterly profit died by Drucker.” reviews from growth planning,” said Knight. “We foundKnight was CEO from 1973–2000, a period when Emerson When simplicity is an overarching element, it shapes that we’d get so excited about the revenue side that wegrew from a dozen divisions generating revenues of every aspect of the business: simple plans, simple didn’t pay enough attention to the growth side.” communications, simple organization.THE NECESSITY OF INNOVATION Continued from page 1Steven J. Spear, AuthorGood news for customers, The same good news/bad news paradox can be seen in of different components are interwoven to interactbad news for managers healthcare. A patient diagnosed with breast cancer in the simultaneously in a relationship more like a spider web 1950s faced, at best, two choices: radical surgery or than sequential links in a chain. And while theCompare a 2010 Ford Mustang with the famous 1964 what we would call today minimal palliative care. The interconnections and interactions among all theseMustang that inspires reverence among classic car diagnosis was virtually a death sentence. components go through rigorous testing before thebuffs. On the outside, the two vehicles look almost the vehicle is put on the market, the number of productsame, from the aggressive front hood to the swept-back Today, dramatic improvements in early detection and the recalls – even among automakers such as Toyota –styling along the side panels. development of a wide range of targeted treatments from speaks to the complexity of today’s designs. pharmaceutical cocktails to radiation therapy andBut pop the hood and it’s a very different story. The surgery have increased the survival rate for localized Similarly, healthcare has become more complex as it1964 version had a big engine block, carburetor, battery, breast cancer to 98 per cent, according to the American involves more knowledge and people. In the case of breastradiator and a few other components. In the 2010 Cancer Society. cancer, a treatment regime that 50 years ago requiredversion, the engine itself is pushed into one corner to surgical expertise and post-operative nursing care nowmake room for air conditioning, power steering, ABS And that’s great news for patients. calls for several teams of experts that are expected tobrakes, GPS and a host of other elements all designed stay current with what seems like a daily flood of newto keep the driver safer and more comfortable. For healthcare providers, cancer treatment today involves drug discoveries and breakthroughs in medical technology. a host of experts and technologies – MRIs, chemotherapy, How the various drugs and therapies interact varies with“There’s no question that the 2010 Mustang is a better, nuclear medicine, nutrition, rehabilitation – and a each individual and must be monitored carefully.more powerful and more efficient vehicle,” said Spear. continuum of care that must be carefully orchestrated to“Not only that, when the price is adjusted for inflation, meet the unique needs of each patient. These incredibly complex systems have become the normit’s cheaper. In fact, measured in constant dollars, the across virtually every sector. Our expectation is that they2010 Mustang costs less than a Model T back in the day.” From linear simplicity to spider web will work perfectly. Our experience tells us they won’t. The complexity challenge lies in how we react to that shortfall.Clearly, the consumer is a big winner from all thoseinnovations. For all its complexity in terms of mechanical engineering, the 1964 Mustang was a relatively straight-forward “You will never, ever develop a system that works product of almost A + B = C linear simplicity. Its design perfectly the first time,” said Spear. “The trick is to turnFor Ford, however, the 2010 Mustang is infinitely more was governed by well-known principles of engineering those system failures into opportunities. You need tocomplex to design and manufacture. The 1964 version and physics that could be calculated with a slide rule capture the knowledge gained by solving the problemwas a superb example of mechanical engineering, built and a set of reference tables. and leverage its impact as innovation.”mainly from steel and a few other materials for upholsteryand interior trim. Today’s vehicle requires software Today’s Mustang is built with advanced materials, some Problem solving as knowledge creationengineers, experts in advanced materials and a long listof systems design specialists all working in concert. of which did not exist a decade ago, and incorporates The world’s best product launch, said Spear, was the software that was designed last year to control, for U.S. Navy’s nuclear propulsion program. That success example, the integration of flexible fuel systems. Dozens2
  3. 3. Ed Monser, Emerson’s COO and Knight’s co-presenter at To minimize turf battles and the growth in corporate staff be and when it would likely occur. It was all laid out forthe conference, characterized the planning process as positions, Emerson doesn’t publish an organizational him. Even today, he said, he knew where he would be inKnight’s “greatest legacy because it generates such a chart. “Our focus is on planning, implementing programs, two years and even five years from now.wealth of benefits.” solving problems and developing opportunities,” he said. “The people working on these things need to be able to “When people know what lies ahead, they have hope andA well-executed planning process, according to Knight: work directly with each other. Reporting along optimism for the future,” he said. “The result of that• helps develop better strategies organizational lines can create barriers and delays.” confidence is a tremendous level of loyalty and commitment to the company.”• keeps everyone on track with discipline and intensity• provides the link between strategy and action and a 5 Operational excellence The importance Emerson places on developing and structure for setting priorities, evaluating results and retaining the right people is shown by the fact that, Emerson’s definition of operational excellence is simple solving problems. despite the size of the global operation, Human and straightforward: offer customers the best products, Resources reports directly to the CEO. services and solutions, and produce them at the best cost.Large-scale, company-wide planning also creates ablameless organization. No time is wasted assigning “Dave Farr spends more than 30 per cent of his time on “This demands a deep understanding of your customerblame because everyone was involved in the decision. HR,” said Monser. “If you treat people fairly, if you needs and priorities,” said Monser. “It also requires a develop good two-way communications programs and rigorous and ongoing examination of your globalAs an added benefit, all that cross-divisional contact have effective compensation programs tied to competitors.”offers managers an excellent opportunity for talent- performance, you will make unions unnecessary.”spotting. High-performing staff can be identified, To achieve “best cost,” Emerson focuses on constantdeveloped and groomed for more senior positions. cost reductions at every level of the organization. Monser The big picture illustrated the corporate emphasis on this principle by Emerson’s six-point management process not only 3 Strong systems for describing how Knight (and now his successor David Farr) helped generate impressive financial results, it helped would arrive for meetings at an Emerson plant and go the company globalize its manufacturing operations and follow-up and control straight to the plant floor and begin talking one-on-one restructure in response to worldwide customer needs. with workers. One of the first questions to every employeeKnight noted that it’s not uncommon for a company to was “What cost reduction are you working on?” Most recently, it helped management respond to thehave a great strategy but fall short on the implementation. financial crises and economic slowdown.Emerson takes implementation as seriously as it does 6 Creating an environment “What do you do in a downturn?” asked Monser. “Youplanning and is organized to follow up on plans rigorouslyand routinely. in which people can and get ready for the upturn.One of the great benefits of this is that there are far fewer do make a difference “We increased our spending on engineering, technology and new product development,” he continued. “Then,surprises. Managers are often able to detect external The disciplined intensity of Emerson’s performance- when customers are ready to buy and they say ‘what’schanges at an early stage and modify plans accordingly. focused corporate culture provides a self-sorting new?’ you’re already ahead of your competition.” mechanism for hiring and promoting management staff. 4 Action-oriented If a new hire doesn’t take to it, they soon leave. To wrap up the presentation, Knight offered a series of CEO leadership tips. organization But people who thrive in that setting are developed through a career process as carefully planned, monitored Some of them were management focused, such as “setAs a performance-driven company, Emerson has an and evaluated as any other element in the Emerson and demand high levels of excellence.”aversion to bureaucracy. In the words of Ed Monser, environment. One result is that most positions are filled“too often, it just gets in the way.” Some were more personal, such as “set priorities for from within the organization. The executive turnover rate is less than 4 per cent. health, family and business that are balanced.”Emerson increases its organizational bias towards actionby pushing planning and decision-making down to levels But there was one piece of advice that was clearly Monser, who has been with the company for more thanclosest to customers and markets. closest to his heart. “Have fun,” said Knight with a big 30 years, revealed that he’d had 13 promotions during his career and he knew in advance what each one would grin. “This is the greatest game in the world.”was based on a highly disciplined approach to managing “It takes time to learn how to walk,” he reminded theinnovation that can be applied in virtually any sector. audience. “It starts with an infant learning how to roll over, then lift up its head, then crawl, then cruise alongIn 1948, scientists understood the explosive power of the furniture, then stumble and fall and pick itself up andnuclear energy. They theorized that it could be harnessed take a few steps and fall again.”to fuel engines but no one had actually accomplished it.But within six years, under the command of Admiral The child learns to walk through trial and error,Rickover, navy engineers designed, built and launched determination, learning from mistakes and applying thatthe submarine USS Nautilus – the world’s first nuclear- new knowledge. Companies can learn a disciplinedpowered vessel. approach to successful innovation in the same way: one step at a time.Since then, despite the millions of miles that have beenlogged by the U.S. Navy’s nuclear-powered fleet, there Spear suggests that companies begin with a few peoplehas not been a single injury due to reactor failure. on a focused project and let them develop innovation skills, then teach others on the next project. “Every problem is an opportunity to create knowledge,”The navy engineers faced a daunting challenge in terms said Spear. “Rickover’s mantra was ‘see a problem,of innovation: develop a fool-proof system for controlling “Think of it as an incubator project where employees solve a problem’ but then he took it one step further andand managing nuclear power within the tight confines of learn skills that can spread throughout the organization,” added ‘share every learning.’”a ship. Once the vessel was launched, system failure said Spear. “Choose a project with a small footprint butcould bring disaster of terrible proportions. a long leg.” Solutions discovered in one area of design could be applicable in another area, but only if that knowledgeTo guide the nuclear R&D program, Rickover worked An early and easy “win” for the project team will give was openly available. Rickover deliberately encouragedclosely with the engineers and demanded they follow a them the confidence to apply the approach more broadly the free flow of ideas and information among teams tostringent protocol. and multiply the impact of the skills they have learned. leverage the impact of every innovation.Rather than pursue open-ended experiments, he decreed This disciplined approach to managing innovation fitsthat the engineers predict what would happen for every Leadership in discovery very neatly with many continuous improvement practices.process, observe closely and measure what actually “Leadership is about modelling this disciplined approach At the same time, the tenets of ‘see a problem, solve ahappened, then figure out why there was a difference. to innovation and ingraining it within the organization,” problem, share the solution, engage employees’ also Spear told the CEOs. “The real job is to engage staff in provide a valuable tool for the ongoing work of buildingBy taking this disciplined, scientific approach to R&D and the process.” a stronger, more competitive company.product innovation, Rickover’s engineers were able tosteadily learn what works in nuclear propulsion and It’s also important to recognize that applying this Does the process work? It worked for the U.S. Navy. Itimprove on their designs. disciplined approach is a skill that needs to be practiced can work for your company. before it can be mastered. 3
  4. 4. WORKSHOPS MODERATOR PANEL Andrew Wilkes Dan Mishra Colin Ross Dan O’Toole Leon Raubenheimer Chairman, President and CEO, President and CEO, President, Managing Partner, National Angel Capital CSDC Systems Inc. Isle of Lewis Group Inc. Phoenix Systems ZED Financial Partners OrganizationFINANCING STRATEGIESFOR THE NEW DECADE It’s been a tough year for businesses, for banks, for consumers – for pretty well everyone. Yet, companies are still in business, and to stay that way they need to keep finding ways to turn a profit. “It all boils down to one thing: money,” was the assessment of one audience member as the workshop discussion focused on how to secure the financing you need to grow your business and revenues.Financing acquisitions “We do not acquire blindly,” he said. “We identify holes In exploring bridge debt, mezzanine debt, and senior in our offerings, and we acquire companies that make debt, he summarized:Acquisitions were a hot topic. Both Dan Mishra and Dan sense in that regard, for us and for them. We own them, • A bridge loan has to be a bridge to something concrete –O’Toole grew their companies by acquiring others. There but they continue being the boss. In the end, we haven’t it should not be a pier. It needs to get you somewhere.was considerable interest in the room about the changed their lives, we’ve made them more comfortable.” It is not a short-term survival tool!process, the risks and the benefits of doing this. • Mezzanine debt financing (a.k.a. Dequity) is the layer Debt vs. equity financing of financing between a company’s senior debt andDan O’Toole founded Phoenix Systems, which specializes The acquisition discussion was followed by presentations equity. It is often used for acquisitions, leveragedin technology-based productivity solutions, in 1980. After from the two financiers. Leon Raubenheimer of ZED buyouts and recapitalizations.25 years of very modest growth, he embarked on anexpansion strategy that featured several acquisitions Financial Partners tackled what he termed the critical • There are two types of senior secured debt: asset-and saw the company’s sales increase from $3 million distinction between debt and equity financing. Both, he based lending (generally used by asset-rich companies)to $15 million. He financed these acquisitions by said, were valuable, but he cautioned that companies and senior secured cash flow (often best for service-deferring the debt against future performance, which in looking for financing must understand the different related, non-cyclical and high margin business.)effect resulted in the deal paying for itself. He conceded motivations at work.that it had been a risk, but said he had little choice. When preparing for financing, Raubenheimer advised: Debt providers, traditionally banks, are not in the • Get your financial house in order. Make sure your“As we assimilate and grow, we realize that traditional business of taking risks. Their rate of return is low – financial statements and systems are up-to-date andbanking finance isn’t doing it,” said O’Toole. “Our bankers 6–15 per cent per year – compared to equity providers, organized.don’t see us for our growth.” Dan Mishra agreed with so they are less inclined to stick with companies through • Know what you are looking for – equity (control orthat assessment, though he said it isn’t always the case. bad times. Debt providers will look at two things: non-control), short-term debt, bridge or long-term collateral and can this company make it? “They do not financing – and match your financing to your needs.“Banks do compete,” Mishra said. “They are not want to go through the whole lending process just tomonolithic – you just have to draw them into the send a receiver in six months later – they prefer cash • Prepare a comprehensive business plan. Be realisticcompetition.” flow to collateral.” As Raubenheimer joked during his in your assumptions and have back-up for your presentation, on a sunny day your bank will cheerfully assumptions. Make sure your business plan, numbersIn 2004, Mishra took CSDC Systems Inc. out onto the finance your umbrella, but if it starts to rain they may well and assumptions tie together.acquisition trail. Four significant acquisitions later, CSDC call your loan.has gone from being a $3 million company to a $15 million Asset-based lendingorganization, and is expanding from North America and By contrast, equity partners will really be partners. Theythe Caribbean into Latin America and India. traditionally look for rates of return that are much higher – Raubenheimer was followed by Colin Ross of the Isle of 20–35 per cent per year – and assume that if they incur a Lewis Group. Ross’ specialty is asset-based lending. HeThe acquisition challenge principal loss they can make it up on the next deal. They said that asset-based lending, in which the loan is are looking for companies that are going to grow, not flat secured by assets such as machinery or buildings, is notMishra was asked about the dangers of acquiring other very common in Canada but is definitely something to line, and so risk is something they are prepared to accept.companies – merging cultures that don’t go well together, consider if your company is looking for a significantresentment from within the company that is acquired, Raubenheimer said that because equity partners are in it amount of money. Ross said smaller companies lookingand service offerings that don’t really make sense for the long haul, they are often a more attractive option for amounts less than $5 million will generally not havetogether. As moderator Andrew Wilkes put it, “at least for companies looking to grow. But he cautioned that much luck in this area, because they won’t likely havehalf of all acquisitions should never have happened.” there is always a price to be paid. When you give up enough assets to secure the investment.Mishra agreed that there are significant dangers, and equity, he said, you give up control.credited his success to the fact that he always tries to His presentation underscored there is LOTS new in asset-make his deals worthwhile for both parties. based lending. However, he commented that, “business in Canada is going through one of the toughest periods in4
  5. 5. its history as market conditions have dictated that credit • Cash continues to be king. Collect receivables, reducemanagers in most lending institutions proceed with inventories, reduce and renegotiate costs, drive for Financing today:caution when considering a company’s creditworthiness.” short-term cash sales, reduce marketing costs through Learnings from the pros innovative strategies and strategic partnering ratherOne ripple effect of the recession has been that, than “greenfielding.”“equipment values have decreased sharply due to • It’s a great time to take market share. Those thatbusiness failures, making it a buyer’s market for • You can sometimes get better financial terms hustle will win!equipment. The same goes for inventory.” As a result from traditional banks by drawing them into a“new lenders are coming into situations where a viable • Focusing on the customer should continue to be your competition for your business.business has to be refinanced but the value of the single purpose.equipment, real estate and inventory has dropped and • Following an acquisition, the merger of two Wilkes talked with enthusiasm about how much hecan only be financed at the true net recovery value of corporate cultures works best if both parties enjoys helping companies. He said his goal is always tothese assets in today’s lower markets.” feel they benefit from the deal. take good companies and make them better. “When I“Company’s have to be careful when ordering look at investing in a business, if I can’t add value other • Banks and other traditional lenders, whileappraisals,” Ross further cautioned. “They are expensive than money, I shouldn’t be there,” he said. requiring a relatively low rate of returnand if the new lender does not trust the appraiser, he (6–15 per cent) on their capital, have a lowwill order a new one from someone he trusts. Now the What does it take? tolerance for risk. They might call the loan ifcost of the appraisal has doubled.” He offered ways to they feel debt repayment is in jeopardy. Following the presentations, the workshop settled into aavoid this, such as getting a rough evaluation (i.e. “a general discussion about what it takes to get ahead. Thedesktop appraisal”), possibly from a consultant, before • Equity investors have a higher tolerance tone was set by an audience member who said that “inapproaching a lender. for risk but require a higher risk premium life, it’s not what you deserve, it’s what you negotiate.” (20–35 per cent) on their investment.Angel investors Leon Raubenheimer echoed that sentiment. He said the worst possible thing you can do when trying to attract • Angel investors often structure theirThe final presentation was given by moderator Andrew financing is to present a false picture because, when the investment to cover a specifically definedWilkes. He is an active angel investor, who generally due diligence is done, you will be found out and lose phase in the company’s growth and tolooks for high-growth opportunities among companies your investor. The better approach, he said, is to have include their participation in managementthat have a technological edge in traditional industries. done your homework. decision-making.Wilkes said that angel investors invest in 30–40 timesmore companies than venture capitalists, and they “You have to be persistent and you have to be organized,invest with their own money. Angel investors tend to look because when you walk into that office, you have oneat making short-term deals, focused on taking shot,” he said. “Make it a good one because, most ofcompanies to specific milestones, after which they pull the time, you don’t get another.”out and look for the next company to help. That was a sober point of view reflecting that these areAs banks continue to clamp down (reduced lending, hard times in business. But Andrew Wilkes struck atightened security, personal assets), Wilkes shared more optimistic tone, saying that he sees companiesfive “angel” perspectives: every day that are getting ahead.• There is investment capital looking for great companies that have proven themselves to be globally effective. “There is always money looking for great companies,”• Private and public equity markets have improved for said Wilkes, “but you have to have vision, you have to certain sectors (resource, financials, importers) but have guts, and you have to be able to sell yourself.” remain very difficult for the export and tech sectors. 5
  6. 6. WORKSHOPS MODERATOR PANEL Deirdre McMurdy Shelley Bacon Bruce Seeley Bill Van de Ven Vice President, President, President and CEO, President, Bamco Custom Public Policy Forum Northern Cables Inc. John G. Wilson Woodworking Inc. Machine LimitedLEVERAGING CORE COMPETENCIESTO DRIVE NEW BUSINESS What does it take to build a new business in today’s brutally competitive markets? CEOs shared their insights on the requisite skills for success in three very different scenarios and, although all three panellists work in the manufacturing sector, their diverse experiences in building successful businesses provided valuable lessons.A solid core group of “To get the most out of my experience, I went looking for a company based on high-quality products. Producing a metal fabricator and I wanted a company in rural top-notch custom millwork for premium contractors hastechnical people Ontario because I think it’s a good place to manufacture,” built a company with two plants in Guelph, 110 employeesNorthern Cables president Shelley Bacon kicked off the said Seeley. “Wilson had a good location, solid workforce and a 30 per cent annual growth rate.discussion with a brief description of the genesis of his and management, but it had lost a key customer in 2007 and had been unable to reduce overhead.” Even with that great success, Bamco is still striving forcompany, offering a fine example of key people creating growth in new markets and sectors. Van de Ven isa new enterprise by leveraging their skills and strengths. Seeley did a classic SWOT analysis that looked at the leading the company’s program to capitalize onWhen Philips Cable closed its doors in Brockville in company’s human capital, its competitors, response heightened interest in “green” products.1996, Bacon and four other Philips employees lost their times, customers and the corporate culture. The result:jobs – and found an opportunity. “I discovered a new water-based wood finishing system Wilson Machine was due for some major changes. at a trade show in Europe that offers great potential“There was great opportunity in the industrial power “I had to drive a culture shift,” he said, “to create a here,” said Van de Ven. “We got support from thecable business,” said Bacon. “We had the technical laser-like focus on customer service. I distributed Ontario government in 2008 to buy new equipment, andexpertise, and we had some skills and experience that authority to the shop-floor level and created a new then the recession hit.”could be put to good use. Our products are now used in atmosphere of transparency. We’re now focused onalmost every industrial or commercial building in North Bamco met that capacity challenge by creating a new sales, marketing, and branding, and I’ve implementedAmerica, from the Olympic athletes’ village in Vancouver brand for Euro-look cabinetry. When the company found it ISO (standards) and CRM programs.”to the Confederation Bridge in P.E.I.” tough to get a foothold in the new market, it adapted Seeley redirected the company’s efforts to concentrate once again.Bacon and his partners started with some used on delivering a “tailored value proposition” instead ofproduction equipment and, with crucial advice from an “We bought a local competitor, and we now have their simply the lowest price. Where necessary, he hiredaccountant advisor, set up shop in a 25,000 sq.ft. plant dealer network across North America to sell our line of external help for crucial tasks such as marketing, marketin Brockville. Focussing on the U.S. market, where another green, non-VOC (volatile organic compound) wood research, and optimizing the company’s website andsupplier had shut down, Northern was shipping product supplies,” he said. “Those same dealers are also selling search engine rankings.within seven months. The company was profitable within our custom millwork, and we are expanding into newtwo years, and has grown to employ 120 people today. “I leveraged my core competencies to complete the markets in the Caribbean.” SWOT, penetrate new markets, power up the sales“In hindsight, I can see that there are four main reasonsfor our success,” said Bacon. “We had a solid core group, and focus on new sales challenges,” he said. Can you buy growth? “One way we’re tracking new markets is by followinggroup of technical people. We decided early on to sell areas where government is spending on things like clean Workshop participants were very interested in thedirectly out of our factory, with no sales people on the tech, green tech, and medical technologies. You can’t different growth strategies outlined by the threeroad. We make service a priority. And finally, we are a shrink to greatness.” presenters. For acquisitions, Bruce Seeley advised onlylean organization.” buying existing businesses that have assets lenders will“You can’t shrink to greatness” Building new business recognize as solid collateral. from a downturn “My business is mainly commercial and industrial,”Bruce Seeley is building his company in a completely said Shelley Bacon, “and it’s very, very competitive, sodifferent manner. An operations executive with 30 years Like Northern Cables, Bamco Custom Woodworking Inc. it’s easier for us to vertically integrate, to watch forexperience in the automotive, medical and construction was founded in 1996, but the similarity ends there. competitors failing and move into new markets slowly.”products sectors, Seeley put his wisdom to work with Company president Bill Van de Ven was a carpenterthe purchase of John G. Wilson Machine Limited in working in a family company with limited room forPrinceton, Ontario. advancement. Van de Ven and his two partners founded6
  7. 7. Bill Van de Ven’s growth through acquisition strategy Technical excellence was another crucial core competencyoffered both challenge and opportunity in the form of identified by the panel. Building on strengths:new employees. Northern Cable maintains its technical advantage with Learnings from the pros“We also acquired 35 employees with the purchase, formal training, in-house meetings each quarter, and anand it was a challenge at first, because some of them annual plant shutdown where all outstanding issues arethought that they had saved us,” he said. “But good discussed in detail. At John G. Wilson Machine, Seeley • A plant closure or the loss of a key customerpeople are hard to find, and having experienced enhances the skills of current employees with co-op can sometimes free up valuable technicalemployees at the start does fast-track you to where you training programs run with local colleges. expertise to tackle a new opportunity.want to be.” “We meet that technical challenge by treating our • When necessary, hire external experts for helpCustomer service was another core competency that suppliers like partners,” said Bamco’s Van de Ven. “They with crucial strategic tasks such as marketdrew a lot of interest from the audience. In Bamco’s can help the most with our high-tech challenges, so we research and web design.case, the three owners all had wide experience that they choose suppliers who offer total solutions.”transferred to new employees as they joined the company. • Choose suppliers who can help you meet Retaining employees who have the core competencies challenges, then treat them as partners.“Planning is crucial in our business,” said Van de Ven, necessary for the company’s success was the final“so if we can get the new home buyer to pick the issue addressed by the panel. Van de Ven noted that the • Acquiring a competitor can provide access tomillwork in the home early in the process, it gives us a woodworking industry’s high-wage environment is a new markets and dealer networks for yourbigger lead time. We showed our builder clients that by challenge. existing product lines.encouraging home buyers to decide early, the builderscould also sell more upgrades. It’s a win-win benefit of “We want our people to be informed. We plan to publish • Recognize customer service as an essentialgood customer service.” wage rates for all our positions, so people can aspire core competency and make sure new to a better position or leave if they feel they can do employees receive training.At John G. Wilson Machine Limited, top level customer better somewhere else,” he said. “We’re also offeringservice is part of the new culture. profit sharing.” • Retaining good employees who have the“I lead by example,” said Seeley. “When I first bought When Seeley purchased John G. Wilson Machine, a wage core competencies you need can be bestthe company, I interviewed all of our customers but I rollback was a necessary part of the company’s accomplished by building a win-winwasn’t happy with the answers I got. So I hired a third restructuring. relationship with them.party to survey them, and I got much more valuablefeedback. We also have customer tours every week. “I also gave the employees full financial disclosure andWe’re communicating all the results throughout the set up a profit sharing plan. It’s working very well.”organization.” A common thread running through all these examples isPersonal service is the standard at Northern Cable, the ability to negotiate win-win solutions with employees,which has followed a “no voice mail” policy since its customers and other stakeholders. And as markets growinception. The company has two core groups assigned to ever more competitive, negotiating skills will becomedeal with specific customer service issues. Any new even more essential and join the short list of coreorder is confirmed in writing the day it is placed. competencies needed for business growth. 7
  8. 8. WORKSHOPS MODERATOR PANEL Rob Colman Rick Jamieson Philip Ling Brett Wills Leon Williams Editorial Director, Co-founder and CEO, Vice-President Technology, Senior Green Consultant, Senior Business Advisor, Environmental Group, ABS Friction Inc. Powersmiths International High Performance Solutions Ministry of Economic CLB Media Inc. Development and TradeSUSTAINABILITYAS A COMPETITIVE ADVANTAGE Environmental issues have become part of the business mainstream and many companies are trying to figure out how to respond. Those that get it right can gain a significant edge in the market. It’s a growing opportunity that brought four panellists together, and they quickly and unanimously agreed on two core ideas.The first was that sustainability represents a profound Like ABS Friction, many companies find themselves Other competitive advantages include the potential forparadigm shift in business thinking that goes far beyond pushed into sustainable business activities by rising costs increased customer loyalty, the ability to develop newrecycling and energy conservation. Sustainability entails or other pressures. Increased prices for raw materials products and access to higher value markets.examining operations from cradle to grave to find and have forced some operations to use those materialsexploit new opportunities. more efficiently, reducing costs for both materials and “It’s an opportunity to move away from the price/delivery waste disposal. business model,” said Philip Ling. His company,Panellists also had no doubt that the drive for Powersmiths International, specializes in green buildingsustainability had passed the proverbial “tipping point” Other companies are drawn to greener practices by their technologies such as high-efficiency power transformers.and would exponentially grow more important to every customers. Brett Wills from High Performance Solutions “It means working with customers whose businesscompany’s bottom line. gave two examples of large organizations – Walmart and values are more complex than pure cost.” the Toronto Transit Commission (TTC) – that haveThe sustainability imperative established procurement policies that focus on green or Part of the task sometimes involves helping customers sustainable business practices. deal with internal challenges. The initial cost for green“I didn’t set out to make my company more sustainable, technology is often higher than traditional products, butbut here we are,” revealed ABS Friction’s Rick Jamieson Other major corporations – Dell, SC Johnson, 3M, Disney, the cost-saving payback is spread over years or evenwhose company now diverts nearly 100 per cent of its PepsiCo – have formed a sustainability consortium to decades. This can be an issue when the initial purchasesolid waste stream. develop sustainable guidelines for large-scale enterprises. comes out of a capital budget, while the savings are realized in the downstream operations budget.A manufacturer of aftermarket brake pads, ABS Friction In some cases, there is a clearly stated preference forwas taken by surprise a few years ago when Guelph’s doing business with suppliers that can provide, as in the Moving money from one budget to another is rarely easy.new mayor, who was elected on a strong environmental case of the TTC, “products and services that are Fortunately, organizations that are committed toplatform, closed the city’s dump. produced, distributed and disposed of with the least sustainability are often more open to innovative environmental impact.” Other companies ask suppliers approaches and corporate change on a broader scale.Jamieson quickly realized that tipping fees for industrial how they can help the company reduce its carbon footprint.waste would climb steeply – fees that would undermine “There is a real sense among people that we are on athe company’s competitive position. Fortunately, he A growing list of spin-off benefits journey towards more sustainable practices,” said Ling.found a recycling company in Hamilton that took a large “People say ‘Here’s where we are and there’s where weportion of his solid waste for free. They in turn resold the The impact of sustainable business practices has grown, want to get to. What can you do to help?’ There is a lotwaste to a U.S. company that could used it as fuel. For and with it certain competitive advantages have emerged of openness to new ideas and a sense of shared purpose.”ABS Friction, the result was not only that they avoided consistently across virtually all business sectors.rising dump fees, they actually cut operating costs. First steps on the sustainability path In addition to cost savings, one of the clearest advantagesThat eye-opening experience helped put Jamieson and involves recruiting and retaining good employees. The complexity of sustainability issues can make youhis company on the path to sustainable business throw up your hands in despair over deciding wherepractices. He then found even more support for “Studies show that 79 per cent of employees want to to start.sustainability concepts as he travelled across the work for an environmentally responsible company andUnited States and internationally. 64 per cent said that a company’s environmental efforts Philip Ling suggested companies begin by checking out made them feel more loyal,” said Wills. “Your employees green organizations within their industry association or“The landscape has changed permanently, people’s want to get involved, and they can be a tremendous the industry association of their customers.perspective has fundamentally shifted,” he said. “The source of innovative ideas on how to make yoursustainability concept has gone viral.” business more sustainable.”8
  9. 9. The Canadian Manufacturers & Exporters (CME) recently “What we’ve found is that presidents and owners ofjoined with Ontario’s Independent Electricity Systems companies are already thinking about sustainability but Going green:Operator (IESO) to publish The Bottom Line on Managing those thoughts are not filtering down through the Learnings from the prosYour Electricity Costs: A Guide for Manufacturers. organization,” said Williams.Brett Wills pointed out that there may also be green Leveraging the power of your peoplebusiness associations within your community. Partners • Sustainability is not just a current trend; itin Project Green www.partnersinprojectgreen.com, for PROBE is designed to help companies engage staff in represents a fundamental and permanentexample, is an organization involving businesses in the the sustainability process. change in how companies do business.Pearson airport eco-zone which encompasses Toronto,Mississauga and Brampton. Supported by municipalities, That step is absolutely essential, said Wills. “If you want • Contrary to what many business owners believe,power utilities and the Greater Toronto Airport Authority, to fully leverage sustainability and green business going green can reduce – not increase – costs.the association is helping local businesses “green” their practices, you have to focus first on internal change andbottom line. It recently published a financial assistance transformation.” • Customers that want your “greener”directory of federal, provincial and municipal energy- and technologies and services sometimes needwater-efficiency incentive programs. The best way to get staff engaged is to show how their additional support to handle barriers within workplace sustainability efforts can connect with their their own companies.Leon Williams, from the Ministry of Economic Development personal commitments.and Trade, described PROBE (PRO-moting Business • Take advantage of environmentally-focusedExcellence), a business sustainability benchmarking tool People spend more time at work during the week than at industry groups or business associations inthat he is piloting with a number of companies. any other activity. As Philip Ling pointed out, by helping your community to find out how sustainability to design and build a more efficient transformer that practices can help you.For this initiative, the ministry is partnering with one of conserves energy for the next 40 years, an individualthe world’s leading benchmarking organizations. employee’s work has a huge impact. The key is to • Provincial, municipal and federal governments translate that long-term broad impact into something also offer a wide range of incentives and otherPROBE tools come with impressive credentials. They meaningful for the individual. programs that can help offset some of yourhave been used by 7,000 organizations in 40 countries. The “green” skills employees learn in the workplace can initial costs and help you “green” your company.They are built on a research foundation that includesdevelopment partners such as Cambridge University (U.K.), also be useful to them in their homes, communities or future jobs. • Good environmental policies and businessChicago Manufacturing Center (U.S.), Enterprise Connect activities can help attract “the best and the(Australia), Fujitsu Tokyo & Centre for International Public The panellists agreed that, however and wherever you brightest” potential employees.Policy Studies (Japan), Harvard Business School (U.S.)and London Business School (U.K.). start on your company’s path to sustainability, you should start now – and the sooner the better.Essentially, PROBE is a self-assessment processinvolving teams of employees from across the “You have to be prepared to answer the basic question –organization. The objective is to provide companies with what are your sustainable business practices?” saida comprehensive sustainability profile that positions workshop moderator Rob Colman. “It’s a question that’sthem within their industry. It also identifies areas for going to be asked if not by journalists then by yourimprovement that can help them achieve their goals. customers, shareholders and potential employees.” 9
  10. 10. WORKSHOPS MODERATOR PANEL Rick Spence Jill Anderson John Dominelli Kevin Astle President, President, President and CEO, Chief Administrative Officer, Canadian Entrepreneur Aecometric Corporation NRT Technology Corp. Syncapse Corporation CommunicationsDRIVING GROWTH:NEW MARKETS, NEW REVENUES Whether it is expanding globally or tapping into potential new markets through innovative ways like leveraging social media tools, CEOs find they must be flexible in shifting their businesses and adjusting their products and services to respond to the speed of change and demands in the marketplace.Jill Anderson of Aecometric Inc., manufacturers of heavy Door opener Capitalizing on new trendsindustrial combustion equipment, is constantlyexpanding her company’s products and markets served. Sometimes a marketplace “shock” will create an Market changes can also present opportunities for the opportunity for a company to get on the radar and grow start-up and growth of new companies, like SyncapseAecometric, which started as a home-based business in exponentially. Corporation.1972 with sales to the cement industry, now has amanufacturing and R&D facility in Canada, a plant in That was the case for John Dominelli of NRT Technology This technology firm is taking advantage of the burgeoningChina and a recently opened office in India. “The key has Corp. His technology solution for the gaming industry social media trend. It provides products and services tobeen building on our core and entering new markets became very attractive to Las Vegas casinos post 9/11 help companies strategically manage and leverage theirwhile always focusing on what the customer wants,” when casino visits dipped and they sought to lower presence in this fragmented space – an opportunity thatsaid Anderson. labour costs and automate. Today, the company is a is eluding many firms, particularly B2B marketers. global leader in cash handling redemption technology inA motivating factor in the global growth was Anderson’s the gaming industry, with 4,000 of its devices in But with the exploding growth of social media such asdesire to eliminate dependence on a single industry or 350 casinos worldwide. Facebook, which has 13 million users in Canada andmarket. The danger of relying on the U.S. market 750 million globally, and with digital media spendingbecame abundantly clear after the recession of the 90s NRT, which exports 90 per cent of its products, has expected to grow to $28 billion annually in the U.S. bywhen the company’s revenues tumbled and staff had to offices in Toronto, Macau and Las Vegas and will soon 2012, Syncapse is banking on its own explosive growth.be cut, a situation which fuelled her decision to go be opening a Singapore operation. NRT is also enteringglobal. Although Aecometric’s equipment was sold in the Korean, Philippine and South African markets. Started in 2007 by serial entrepreneur Michael Scissonsover 40 countries worldwide through engineering firms, (who launched Facebook into Canada), Syncapse landedshe decided to go direct – first to China, then the Middle But the success of the company did not come without its RIM as a client in 2008, which forced it to expand itsEast. It took patience and time – two years – to get the share of challenges such as dealing with gaming service line quickly. It also fast-tracked the company’sfirst sale in China. commissions and securing gaming licenses in this highly growth globally. Today, the firm can execute global media regulated industry. Maintaining a laser-like focus has programs across a wide variety of geographic regionsA pro at modifying equipment, penetrating various been key. “We have 140 employees, mostly engineers and languages.industries and expanding into new countries, Anderson is and developers, and we design, manufacture and installnow preparing for yet another change with the increasing everything ourselves since strict gaming regulations “It’s been a wild ride,” admitted Kevin Astle, Chiefdemand for green technology in the marketplace. mean that outsourcing is not an option,” explained Administrative Officer, who expects the pace to continue Dominelli. “We just keep developing new products in as the company shoots for its target of $100 million in“There are all kinds of things happening in the biomass response to what the casinos need.” sales within five years. The goal is to stay ahead of thearea, so I’m trying to position us to go in different game in what is emerging as a very competitive industry.directions,” she noted. “It’s a whole new world dealing He feels strongly about continually adapting and teaching Syncapse has already expanded to new headquarters,with green energy companies coming on the scene his staff to do the same. That was a lesson he learned attracted new clients like Sony, Pizza Pizza and Rogers,compared to doing business with large, established and early on when he started in the tech business developing launched two new products, and acquired a softwareoften conservative industries, like oil and gas.” software and hardware for retail stores. Since margins development company. were low, he moved on to providing ATM transaction solutions for casino floors. He said it was the best thing Evangelism is an important aspect of the company’s he could have done. “I’m passionate about this business growth strategy, explained Astle. “We speak regularly at and will never retire,” said Dominelli. “It’s just too much global conferences on new technology to generate fun…and I get to travel all over the world!” interest.” This is part of their competitive positioning – differentiating themselves “by emphasizing technology and measurables, rather than showing pretty pictures.”10
  11. 11. Top talent a must • Build relationships with customers and prospects. As Dominelli said, “It’s important for your people to Going global: have EQ (emotional quotient), not just IQ.” Share yourWhether in pursuing rapid or more measured growth, one Learnings from the prosof the biggest challenges for all the panellists is finding expertise as a fellow business person, not just as aand retaining good people. vendor or supplier.“Because we are so focused and specialized, our biggest • Explore sales to Tier 2 companies. “The majors are • Join associations, participate in tradechallenge is finding and attracting top talent to drive beginning to skip over Tier 1 suppliers and go to missions to gain valuable contacts, and sharecontinued growth,” said Astle. More than half of its Tier 2,” observed Anderson. solutions to problems and challenges.workforce are developers. • Avoid dismissing social media quickly. As one • Hire someone who is willing to travelAnderson cautioned against parachuting in someone at a delegate pointed out, there is a lot of apprehension extensively, build relationships and feedsenior level in a small company due to the potentially about social media among business people. The trick market intelligence back home.damaging ripple effect on employee morale. is separating the facts from the noise amidst all the hype. NRT has found it can sometimes glean better • Attend the best trade shows for your industryDominelli said that NRT has had good success looking and quicker market intelligence from social media since visitors are scouting for new productsabroad for talent when it’s not available here. sites than from its global offices. Astle suggested and ideas there. using social networking sites like LinkedIn as aThe panel emphasized that learning about different recruiting tool to let potential employees know what • Be creative in packaging your product. NRTcultures and ensuring that your work environment your company is all about and to attract new talent. tweaks its legacy system in many ways torespects differences are critical when employing a He also recommended establishing a presence on adapt to the international market.diverse workforce. Anderson has invested in cross- Facebook to position your company as the educationalcultural training for staff to address this. funnel for your industry. • Ensure after-sales service. The internationalIf someone is not the right fit for a key role and lacks the market can sometimes be very complex in In addressing challenges going forward, Astleskills to take the company where it needs to go, the terms of laws and regulations, but the recipe anticipates growing competition. “Don’t just allow yourpanellists all agreed that it was necessary to cut ties for success is the same as in the domestic business to evolve,” he cautions. “Look at it in a holisticquickly even though it can be very difficult. market. Provide excellent, ongoing customer way.” As part of its response, Syncapse is building its service to uphold your reputation. infrastructure to hopefully absorb new competitors thatBusiness owners tend to defer the decision to let people could pose a threat. For her part, Anderson is grapplinggo when they’ve built relationships with them. “Be totally with supply chain challenges since many companies didupfront and professional and don’t let your emotions rule not survive the recession. “I don’t want to oversell andyou,” emphasized Dominelli. underproduce,” she emphasizes. As Aecometric gains bigger contracts, her need for good process engineers isThe panellists shared a number of additional tips that heightened. “We started out building simple burners.can help drive growth in the rapidly changing marketplace. Now plants need more complex burners that can switch• Tap into opportunities to provide green business or fuel sources.” Dominelli’s advice to drive growth in a green applications by offering innovative solutions constantly shifting marketplace focuses on the business and green payoffs. Aecometric, for example, is proving plan. “Share it with all your people, and be prepared to that its industrial burners can use wood dust, municipal adjust it if necessary monthly.” waste, char ash and even peat moss as fuel. 11

×