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Face Value

CEOs collect and collate information in at least 27 different ways-nine are discussed here-but most insist on personal interactions for the real truth.

“Garbage in, garbage out.” It’s a phrase that could apply to how corporate leaders make decisions as readily as it does to the results of computer-data input. And that is why effectively gathering and filtering information may be one of the most important requirements of success for CEOs, even though it’s not the most obvious.

Gary Hirshberg certainly believes that. Concerned with how well his company, organic yogurt-maker Stonyfield Farm in Londonderry, N.H., was communicating with adolescents, Hirshberg flew to New York last fall and met with a dozen teenagers for a couple of hours. He came away “stunned” by what he saw and heard. The teenagers showed up in plain, long-sleeved shirts with subtly marked logos. That gave Hirshberg a better understanding of what adolescents favored. Instead of the company’s brand splashed all over the garments, the 47-year-old CEO decided to produce shirts and other licensed merchandise in dull colors and with understated graphics.

Similarly for Hal Rosenbluth, CEO of Rosenbluth International, a travel-services company of 6,000 employees in 23 countries, one of his most important sources for insight about what consumers are thinking are his friends. “I know they’re totally honest with me,” says Rosenbluth, 49. Based in part on conversations with friends, he has taken an optimistic stance-in terms of staffing and other issues-toward the return of travel this year to pre-September 11 levels.

CEOs of both large and small companies appear to be devoting more time than ever to dealing with information. Part of the urgency, they feel, is the pace of business, with its demands for leaders to collect, interpret and act on data instantaneously. CEOs closely in touch with what is happening within and outside the company are the ones who will more decisively and sensitively take action. “You can’t make an important decision without getting several different vital perspectives first,” says Richard Hebert, 43, CEO of iSKY Corp., a call center operator based in Laurel, Md.

No one needs to sell Bill Zollars. “Everyone in their career has made decisions with less-than-good information and has had to live with the results. So you begin to look for multiple sources of information to confirm what you think you know,” says Zollars, 54, chairman, president and CEO of Yellow Corp., a $4 billion truck-freight concern based in Overland Park, Kans.

Zollars uses a systematic approach. For external information, he relies heavily on his combination PDA and phone, tapping into the Internet several times a day. “It can become an obsession if you’re not careful because of the real-time component,” he says. “For example, I try not to check our stock price more than a couple of times a day.” He also regularly visits Yellow terminals and offices and holds what he calls all-day “town-hall meetings” with employees. “You really can’t have a good feel for your business if you just stay in your office at Intergalactic Headquarters, so I spend a lot of time in the field.”

Cinda Hallman’s workaday information-gathering process begins with perusing The Wall Street Journal, The New York Times and local Florida papers. She has ditched her handheld in favor of a new laptop computer with voice-to-text capabilities that she uses to tap into the Internet. But for the 56-year-old Hallman, who has been president and CEO of Spherion, a staffing firm in Fort Lauderdale, Fla., since last spring, the much more demanding chore is filtering information that has a specific short-term purpose: helping her make a major decision.

Right now, for example, the $4 billion firm is pushing to double, by 2004, the size of its business devoted to recruitment outsourcing, a market that now amounts to less than 20 percent of Spherion’s business. To learn more about it, Hallman hired outside analysts. “I brought them in as a cross-point check to see if what we’re doing makes sense,” Hallman says. The analysts helped identify missing competencies as well as talented people the company should consider hiring.

To Bob Beauchamp, CEO of BMC Software in Houston, knowledge is the foundation of good decision-making. “As CEO, you need to be doing your own primary research, or you’ll have a very incomplete picture of the real world,” he says. Such a first-hand grasp can protect leaders against “what often happens in meetings, for example, where someone will throw out numbers, and say, €˜Here’s what the numbers say.’ A well-informed CEO will be able to respond: €˜I’ve just talked to too many customers and employees myself to believe what is being said,'” explains Beauchamp, 41.

Having the confidence of his own research also helps Beauchamp with major challenges. Last year, for example, industry buzz was that one of BMC’s major competitors was trash-talking BMC, promoting the idea that its technology and customer relations were superior to BMC’s and that it was steadily stealing clients.

“I’d read magazine articles about this. I’d read it in their press releases, and the analysts were saying this too,” Beauchamp recalls, but declines to name the competitor. “But because I’m talking with our customers on such a regular basis, I don’t believe what [the competitors’ executives] are saying about themselves. They’d talk about their wins, and I’d drill into the details and I wasn’t able to find these wins.”

With his own grasp of the situation, Beauchamp made a gutsy decision to redouble his company’s efforts to compete directly with this rival, instead of “possibly shifting sideways” into another market. “If I felt my customers were very happy with this competitor’s products, I would be spending a lot less time trying to replace them,” he says. “And if I’d just read the magazine articles instead of actually talking to my customers, I would have backed off.”

Other CEOs corroborate Beauchamp’s view that information derived from conversations and face-to-face contacts is a bulwark of their management style. Here are nine other ways that CEOs make sure they are on top of the information flow-and not the other way around:

1) Slice through the organization. This starts with an efficient approach for fielding information from lieutenants, but chiefs also must break out of executive-suite insularity and carve a data swath through the company. Last April, Stephen Polk, CEO of R.L. Polk & Co., a family-owned automotive market- research company in Southfield, Mich., began arranging Monday sessions, along with Joseph Walker, president of North American operations, called Breakfast with Stephen & Joe. Over scrambled eggs and ham in an office conference room, the two officers field questions and provide answers for 10 to 20 rank-and-file employees for up to two hours. “We don’t go in with an agenda but just to listen to what’s on their minds,” says Polk. At a recent session, concerned employees convinced Polk to establish a new quality-control management position.

2) Seek out peers. Company board members typically understand the kinds of things CEOs need to know. That’s partly why Zollars not only serves as a director of three other companies-Butler Manufacturing, Rogers Group and ProLogis-but also is on three trade association boards-the American Trucking Association, National Association of Manufacturers and the U.S. Chamber of Commerce Presidents’ Council.

3) Lock a beam on customers. Particularly during a downturn, customers provide the most important information. Three to five times a week, John Sheaffer visits customers and asks things such as “Where’s your pain? What are the projects you have coming up?” Sheaffer, the CEO of Sysix Technologies, a Chicago-based software and hardware reseller, says that customers “will tell me more than they do sales reps.” He adds: “I could be a complete moron, but because my card says €˜President and CEO’ and I’m talking to an MIS [management information systems] manager, I’d ask questions sales reps never would ask.”

Sheaffer credits such sessions with helping the company avoid what would have been a disastrous expansion into the consulting business “even though trade journals, analysts and others were touting such a move as a no-brainer for resellers at the time.”

4) Peek in on competitors. John Donahoe, managing director of Boston consulting firm Bain & Co., makes a point of buttonholing CEOs of competing companies. For example, after chatting with a few of them last fall, he felt that they weren’t planning to withdraw job offers that already had been made to new graduates, despite the worsening economy. That gave Donahoe confidence to stand behind the offers Bain had made.

5) Check in with the troops. Last year Donahoe also made a point of trying to meet with most of the firm’s employees-nearly 2,500 staff members scattered among 27 offices in 20 countries. “I always pick up key intuitions about key issues from their point of view,” he says. “It also establishes a personal bond that can then be followed up with email and other communications.”

Stonyfield Farm’s Hirshberg likes to give speeches to groups outside his firm because his company is in the natural-products business, and such talks expose him to emerging cultural change. During a recent appearance on Chicago’s WGN Radio to talk about the company’s promotion of energy-conservation programs, for example, Hirshberg got a call instead from “a farmer ragging on me” about genetically modified organisms. The episode made him realize that Stonyfield’s strident advocacy of certain environmental positions might be implying to its fans that the company takes strong stances on a whole range of related issues. Now, Hirshberg says, he’s better-prepared to respond in such cases.

6) Bring randomness into play. Many CEOs say a main weakness of any systematic means of communication is that the respondents are always ready for them. Paul Ray, CEO of Ray & Berndtson, an executive-search firm in Fort Worth, Tex., for example, calls his law partners “randomly, because that gives me more insights than if anybody was able to predict when [or why] I was going to call.” Travel industry CEO Rosenbluth stops people on the street or on airplanes and asks them how they now feel about flying.

7) Find a mass-media edge. Many CEOs spend a lot of time surveying mass media, continually searching for that one extra outlet that will give them an edge. Donahoe, for instance, likes reading op-ed articles for points of view that will help sharpen his own.

At least one CEO makes a daily check of the The Drudge Report an online priority. Hebert, from iSKY, swears by some of the infamous site’s articles. “Last year,” he recalls, “Drudge came out with a story that Gerald Levin left AOL [Time Warner] because of a disagreement with Steve Case. That was what really had occurred. Right then, we were in the process of pitching a division of that company, so it was useful in conversation.”

The Net has become both a powerful instrument and a huge intrusion for CEOs. Polk, the automotive research CEO, regularly visits customers’ Web sites to see not only what they are doing, but how they present themselves. Jim Orr, CEO of Cincinnati-based customer-relationship-management company Convergys, uses “push” technology to keep a variety of reports streaming to him online, including those from industry and securities analysts.

8) Sift and winnow. Much of what enters a CEO’s data funnel is pre-filtered. But many CEOs dictate that they be allowed to see certain types of information in their raw form, in part because the unaltered context helps them figure out what to make of the data. “I get reports and other information via 15 to 20 Lotus Notes a day,” says Orr. “I do it to see what’s surprising or contradictory or to corroborate what I think is going on.”

9) Beware of spin. Every CEO has to watch out for the tendency of those packaging information to put their own twists on the facts, some with nefarious purposes. Spherion’s Hallman says it is important for her to “understand that because of my position, a lot of things are filtered before they get to me. It’s just natural. It’s not like people are trying to be bad€¦ But sometimes that’s not the right perspective, and I have to adjust [my perspective] to what’s going on.”

About Dale Buss

Dale Buss
Dale Buss is a long-time contributor to Chief Executive, Forbes, The Wall Street Journal and other top-flight business publications. He lives in Michigan.