Real-world insights for empowering business leaders
JUNE 2019
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MAXIMIZING PROFIT THROUGH PRICE
APARTMENT FINDER
Five easy, yet powerful price levers you probably aren't addressing
IN THIS ISSUE: Industry Focus: Pharma & Life Science Quality culture and getting it right the first time Startup: Restaurant & Hospitality Takeout food meets artificial intelligence Public policy Surviving the TRADE WAR
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Real world insights for empowering business leaders” CSuite Times was created by industry experts with an insider’s look at modern business, seasoned business journalists and PR experts specializing in working with business consultancies, PE firms and funded startups. Our goal is to offer real-world best practices and case studies, insightful analysis and the latest in business trends and industry news essential to formulating the most successful business strategies. After decades of combined experience, the founders of CSuite Times saw an emerging need. Business strategy is changing, M&A activity is growing and new trends are creating a window for new entrepreneurial activity. CSuite Times was born to fill that need with expert commentary, observations and journalism to help executives not only get the job done, but to tap into industry knowledge and insights to create value and fuel growth.
EDITOR-IN-CHIEF Dan Blacharski dan@uglydogmedia.com CONTRIBUTING EDITORS: Roman Kowalski roman@uglydogmedia.com Victoria Twyckenham vicky@uglydogmedia.com
From The Editor . . .
After nearly 30 years in the PR business serving the very specific needs of high-tech, startup and management consultancy firms, I realized the need for a publication that offers meaningful insight and quality content to executive readers. My team and I launched CSuite Times to give a voice to thought leaders and innovators. In this premier issue, we take a deep dive into some of the most pressing issues. Our lead story, “Maximizing profit through price,” examines an often-overlooked but successful (and low-risk) lever for creating value. Blue Ridge Partners’ Kevin Berger offers five powerful pricing actions that most companies are not yet fully addressing, which could immediately begin to impact the bottom line. On the startup front, I spoke with founder of Tyme Commerce Bobby Marhamat about how he is rapidly revolutionizing the restaurant takeout industry with his San Francisco-based startup, and how his app’s “digital concierge” named Emily gets to know what you like, how you like it and when you want it. We all know that ecommerce has fundamentally changed the nature of retail, and in our article “Navigating the last mile,” we speak with founder and CEO of Greenwich, Connecticut based Point Pickup about how delivery has become the most important key to success in retail – and how Point Pickup is changing the game. We are also very fortunate to feature the latest thought leadership from Rutesh Shah, founder and CEO of Infostretch, who writes about the evolving role of the CEO in his article, "Why CEO Should Really Stand For Chief Engagement Officer." Finally, every business of every size in every industry understands the need for quality, but for most it’s just another buzzword. In “Quality culture: Getting it right the first time, we speak with Tunnell Consulting’s Al Riles about how to integrate the concept of quality culture into your day-to-day business. Watch for more one-on-one interviews, industry insights and deep dives into what makes business work, and thank you for joining us on this exciting journey. Thanks for reading, and be sure to visit us online at http://www.csuitetimes.com and sign up for a free subscription to the digital magazine. Dan Blacharski Editor-in-Chief
IN THIS ISSUE: Maximizing Profit Through Price Kevin Berger, Managing Director, Blue Ridge Partners page 5 Book Review “Total Value Optimization: Transforming your global supply chain into a competitive weapon.” Page 9 Startup Focus Ask Emily: Next-generation restaurant ordering apps know what you like. Page 8 Industry Focus: Life Sciences Fighting Back Against Unpredictable Business Risk With A Quality Culture. Page 12 Feature: Vaping Startups Take On Big Tobacco Industry Page 16 Feature: Why CEOs Should Really Stand For Chief Engagement Officer Rutesh Shah, CEO and President, Infostretch Page 18 Strategy: Surviving the TRADE WAR by Joe Catanzarite, CFP, Catanzarite Financial Services Page 21 Interview: Q&A with Stephen Thies, CEO of Integrated Biometrics Page 24
Pricing can be one of the most impactful profit levers, but is often neglected. Few companies think of pricing as a strategic capability. While some pricing actions take courage, many don’t and can be considered low risk with higher upside due to the huge impact on EBITDA and enterprise value. Pricing improvements typically have a 1:1 impact on profit, and at least 200 to 500 basis points of margin improvement. Here are five relatively easy, yet powerful, pricing actions that most companies aren’t fully addressing and that could immediately begin to impact the top and bottom lines. These levers include: Exercise your pricing power in the long tail of small customers and avoid giving away margin. Ensure your sales teams are not offering hidden discounts such as (unearned) volume discounts, or free or discounted freight, samples, or marketing. Enforce a price exception approval policy as a system of checks and balances for salespersons who too quickly, and too often, rely on price discounting. Measure price impact on gross margin to identify and replicate examples of success, and detect areas that need corrective action. Incorporate pricing-related levers into sales compensation plans (e.g., based on margin or discount-to-list modifiers). Exercise your pricing power in the long tail of small customers and avoid giving away margin. While sales organizations can get maximum impact by focusing on the 20% of customers and products that drive 80% of revenue and margin, in pricing, the opposite is often the case. The biggest and most immediate impact lies in taking meaningful action on the 80% of customers that account for 20% of revenue and margin. Businesses often underestimate their ability to command higher prices with smaller customers and overestimate the related risks. Underlying drivers of this opportunity include: Small customers can be hard to serve; losing the customer may still be a win. Factoring in cost-to-serve and minimum fixed costs often reveals many small customers to be unprofitable or nearly so. Small customers tend to have limited bargaining power. While not a certainty, bargaining power often resides with the supplier if the customer’s purchases are a small portion of the supplier’s revenue. These changes can fly under the radar. Customers tend to focus procurement resources on products that make up a larger portion of their spend. Your competition is probably not trying to steal the business. Winning new business takes effort, and your competitors are probably not investing heavily in efforts to steal away your smallest customers. A similar pricing lever exists for low-velocity, niche products. Ensure your sales teams are not offering hidden discounts such as (unearned) volume discounts, or free or discounted freight, samples, or marketing. A pocket price and margin waterfall can reveal numerous sources of leakage, both at an aggregate level and for individual customers, that can cumulatively cause significant margin erosion. While the specific components of the waterfall will vary for each business, the impact is often the same: Multiple, uncoordinated discounts can stack, resulting in invoice prices far below what was intended. Off-invoice items such as rebates, payment terms, and freight are often negotiated independently of each other and of price in general, limiting visibility into their cumulative impact. Other services are often provided for free and without good visibility into costs. Leakage may result from poor policies, lack of policies, and failure to adhere to existing policies. Enforce a price exception approval policy as a system of checks and balances for salespersons who too quickly, and too often, rely on price discounting. A well-designed price exception approval policy and process ensures price exceptions are managed in a thoughtful, orchestrated way without introducing bottlenecks to closing the deal. In its absence, salespersons are often forced to make profit-impacting pricing decisions with what is often insufficient, tribal knowledge that may not reflect the broader business strategy. The benefits to a price exception approval policy and process include: Maintaining control, where people work within the system and not around it. Ensuring the salesperson is aligned with the broader business strategy and not relying on outdated or inaccurate information. Maximizing velocity for routine transactions and not slowing down the sales funnel. Communicating prices that reflect the value created and not anchoring to prices that are artificially low. Enabling salespersons with a price-negotiation support system and not leaving them to swim with the sharks. Minimizing price execution problems and unintended price variation. Measure price impact on gross margin to identify and replicate examples of success, and detect areas that need corrective action. Measuring price impact can be a strategic tool and not just record-keeping. To be effective, you must maintain a regular review cadence with dynamic reporting that allows you to slice and drill down by key customer, product, sales team, and geographic factors. The margin dollar bridge measures the results of your price actions by segmenting the change in gross profit, and provides transparency and insight into the hundreds of pricing decisions that occur each day. Price impact measurement helps answer key questions, such as: Where are my price increases sticking and where aren’t they? Are my price decreases generating enough volume to offset lost margin? Are my price adjustments outpacing cost changes? Is my change in profit due to effective pricing or a change in mix? Incorporate pricing-related levers into sales compensation plans (e.g., based on margin or discount-to-list modifiers). Aligning incentives to support pricing goals and gross profit maximization is an important piece of the puzzle when it comes to understanding the pricing opportunity in B2B companies. Companies that compensate salespersons based on revenue alone without regard for differences in margin can often lead to suboptimal outcomes where sales reps spend too much time and effort on low-margin products and services and too little time and effort on higher margin products and services. World-class sales compensation plans take into consideration incentivizing margin growth. Compensation plans do this effectively by incorporating one of the following elements: Paying commission directly on Gross Margin where appropriate Adjusting payouts based on a price discount or premium to list / target price Adjusting payout rates or credit based on revenue categories (i.e., differentiating low value vs. high value) The Bottom Line Well-run businesses use pricing as a strategic lever in their revenue management toolbox. Some strategic price decisions may seem courageous, but there are equally impactful price execution actions that are low cost and low risk. All you need is confidence. The five price actions included in this paper are easy to implement, yet powerful due to their immediate bottom line and enterprise value creation. The investment decision is clear so go ahead — pull the pricing lever. About the author: Kevin Berger is Managing Director, U.S. of Blue Ridge Partners. Kevin has more than 15 years of experience working with senior executives to drive top-line and bottom-line impact through acquisition due diligence, growth strategy development, sales and marketing effectiveness, pricing optimization, and go-to-market model design and transformation. He has worked across a variety of industries including industrial products, business services, hospitality and lodging, retail, transportation, utilities, aerospace & defense, and technology.
Maximizing Profit Through Price Five easy, yet powerful price levers you probably aren't addressing By Kevin Berger, Managing Director, Blue Ridge Partners
STARTUP FOCUS Ask Emily: Next-gen restaurant ordering apps know what you like
Standing at the counter and waiting to give your order? You’re out of touch. Calling the restaurant ahead of time? You may as well be using rotary phones. The National Restaurant Association says that three in five consumers in the US order delivery or takeout at least once a week, and the third-party app space is getting more creative in an ongoing attempt to attract more diners to their platforms. The digital transformation of the restaurant industry has already begun to create a whole new dining experience, with artificial intelligence, big data and mobile apps giving customers greater convenience, and restaurants more information about what those customers really want. The restaurant experience may begin with the quality of the food, but it certainly doesn’t end there. Today, the restaurant experience begins when the patron is sitting in his or her living room and looking at the ordering app on their mobile phones, which increasingly represents the restaurant’s first point of contact. Giving customers the convenience of placing an order through a mobile app is no longer even considered a value-add – it’s what restaurants need just to have a seat at the table. Consequently, restaurateurs and the developers who create apps for them have already begun to roll out the next generation of ordering apps, ushering in an exciting new world of differentiation. Third-party apps are getting more creative as the tech side of the business gets more competitive. Attracting consumers to an ordering platform requires operators to think beyond offering simple order-taking mechanisms. What the next generation of restaurant apps look like In a recent Deloitte study, a survey of restaurant consumers, restaurant executives and brand leaders indicated that not only do restaurants need to understand the next-generation technology, they also need to understand the next-generation customer, adapt to their patterns of interaction, and build a meaningful digital experience. According to the Deloitte study, “Next-generation customers are value-driven, hyper-connected, health conscious, tech-savvy, social, collaborative—and time-starved.” And the results of understanding this type of next-generation customer are measurable – when locations provide technology for order-placing, customers will come back six percent more often, and will spend 20 percent more each time. The study also reveals that 70 percent of restaurant patrons look for apps that deliver a personalized experience and convey a sense that the restaurant “knows them.” Personalization, powered by artificial intelligence, is the driving force behind this transformation across the entire industry, from fast food to casual dining and beyond. Restaurants are emphasizing data collection as a means of personalizing the dining experience. For example, McDonalds’ recent $300 million acquisition of AI company Dynamic Yield was done to allow the fast food chain to create a more personalized experience for customers, by using the technology to recommend food choices based on a variety of factors, including the weather, time of day, current restaurant traffic and trending menu items. That next generation is already here, and those next-gen apps are evolving to meet the needs of next-gen customers who have become accustomed to mobile apps, automation, intelligent assistants – and most importantly, have become accepting of data collection as part of the promise. Those next-gen customers are now used to online apps which make recommendations, know their identity and preferences when they log on, and know their location in real time. Now, those customers want that level of convenience when they patronize restaurants. The restaurants which come out ahead will be the ones taking full advantage of that digital technology, seizing opportunities and engaging customers in a more personalized way. Doing so not only serves the customer better – it results in increased frequency of visits and larger check size. Ask Emily San Francisco-based startup Tyme Commerce understands the convergence of next-generation ordering technology with the next-generation customer. “The way people interact with mobile apps is rapidly changing and becoming more intelligent,” said Bobby Marhamat, CEO of Tyme Commerce. “Today’s mobile apps, whether they are for ordering takeout food or buying groceries online, are data-driven, they understand the customer on a personal level, and most importantly, they anticipate your needs.” Tyme Commerce has transformed online ordering into a new type of “digital concierge,” which goes beyond presenting menu selections and relaying orders. The digital concierge, named Emily, knows your preferences and favorites. Emily knows that, for example, you like pepperoni on your pizza, you like Chicago-style over thin crust, and that you usually order a two-liter bottle of Pepsi to go with it. Emily knows when you order from your favorite takeout burger place that you don’t like onions, and so even if you forget to specify “no onions,” Emily remembers for you. Tyme’s initial launch in San Francisco has been well received by consumers and restaurants alike. Enterepreneur Hawk Tea’s Braised + Bread, a small Cambodian restaurant in the city’s financial district, recently signed on as the latest in a rapidly growing collection of the city’s favorite restaurants to be listed on the app. Catering to a high-powered lunch crowd, Tyme’s ability to handle large group orders works well with Tea’s lunchtime office crowd who flock to his restaurant to enjoy his Cambodian cuisine. “Their order-ahead system and corporate order system is very enticing, and that stood out to me,” said Tea. “It’s nice to get an email notification the day before an order is placed, rather than getting a big order we can’t plan for. That order the day before lets us plan for things we need to prepare, so that’s a big plus.”
Image Courtesy of Tunnell Consulting
The business case for developing and maintaining a quality culture has never been more compelling. A convergence of factors has made doing so both necessary and challenging. Growing complexity and reach of global supply chains provide greater optionality, but that same complexity may also increase the opportunity for lapses in quality and weak oversight. Mandates to reduce costs may come at the expense of compromises in process and operations, and when such mandates are not accompanied with quality assurances, the result can be disastrous. Entering new global markets, as well as growth through mergers and acquisitions may also lead to unintended compromises in quality, especially when assimilating two different cultures in the case of a merger or acquisition or entering into a new market which may have vastly different expectations. Board-level mandates to increase EBITDA may also cause quality issues when an overwhelming demand for short-term growth may also cause a series of unintended consequences. And finally, macroeconomic realities like tariffs and trade wars may cause an organization to rethink their supply chains and break away from established and proven partnerships, entering into new deals with partners who have yet to be prove themselves. What is a quality culture Everyone has a different understanding of quality culture, but it is fundamentally rooted in improved operating performance and the ability to perform more effectively. The result in greater productivity and less risk, less re-work, and fewer interruptions to the supply. The concept applies to any industry, but in the case of pharmaceuticals, the concept of quality and achieving a “right-first-time” mentality is essential and potentially life-saving. Al Riles, former principal at Tunnell Consulting, defines quality culture by talking about its actual benefits: “Quality culture generates improved operating performance so the organization is performing much more effectively. There is greater productivity and less compliance risk. There is less re-work and fewer interruptions of supply to the market, which often results in lost revenue. So if you have a culture in place that drives these types of outcomes, that is what you want to embrace to ensure the organization is moving in the right direction.” Quality culture is characterized by multiple key components: A quality culture is characterized by motivated employees who consistently strive for high levels of quality. Achieving a quality culture is an ongoing process of continuous improvement and a mindset shared by all. A quality culture is led by example, and leadership will be visibly engaged in supporting the development of a quality culture, and will engage and motivate others to do the same. A quality culture is the “sum of all parts” of the organization and needs to be continuously monitored and fine-tuned as the organization grows. The benefits are significant. Beyond the superficial, maintaining a quality culture will generate improved operating performance, and in the case of the pharmaceuticals and life sciences industry, benefits include greater productivity and less risk in terms of compliance. In such an environment, there tends to be less re-work and fewer supply interruptions, and as a result, the risk of lost revenues will diminish. Right-first-time mentality Manufacturers of everything from consumer goods to pharmaceuticals have their own approaches to manufacturing quality, ranging from a “fail-fast” approach that allows for incremental improvements, which works very well in the case of software where launching a “minimum viable product” (MVP) is an acceptable way to get a product to market and make incremental changes along the way. MVP won’t work for all industries though, and a more studied “right-first-time” approach works best in highly regulated environments such as pharmaceuticals. Not surprisingly, leadership and employees alike often do not understand what a successful quality culture looks like, and often there are divergent ideas on what that quality culture vision should be. As such, the first step of a successful quality culture transformation is a comprehensive evaluation of all parameters that affect quality throughout the organization. Success involves engaged leadership, easily understood objectives and effective communication from the first point of on-boarding and training. Other factors of success include a centralized project management framework, a compelling message, and metrics to monitor and report on progress. The quality culture needs to be continuously monitored, with a process created for capturing lessons learned from both failures and successes. A cultural shift A “right-first-time” quality culture is part procedure, and part cultural shift. It can’t be affected with simple C-suite mandates – management needs to inspire staff members, get them involved in the process, and potentially initiating changes to technology and process on the back end. “You have a culture in place where everyone embraces that fabric that includes the right behaviors and values, rewards and recognition, clarity on roles and responsibilities,” said Riles. “The working fabric of the company gets well-defined because everyone is functioning around the same key elements that constitute what is considered to be a strong corporate culture.” There are obvious challenges to creating a right-first-time environment. Primarily, implementing such a shift means having to deal with employees who are in a mindset of doing things the same way it’s always been done, and clinging to their traditional roles. When emphasizing a culture of quality, it is incumbent upon leadership to make sure those employees understand the process that requires them to define the change, and to prepare the stakeholders for what’s coming – and make sure they understand the impact it’s going to have on the product, throughout the organization, and to all of the people in it. This represents a top-down, bottom-up approach. When you need a change in quality culture to happen, it has to happen where the work actually takes place. This cultural shift – besides creating an environment of quality – also leads to greater employee loyalty and less turnover. “That comes from the fact that they are being rewarded and recognized for their contribution,” said Riles. “It has an impact on employees wanting to work for a company that is generating a product that meets customer needs. They have pride in the fact that they are producing a high quality product – and there is an emphasis of quality over just production.” Make it measurable Everyone wants quality, but nobody really knows what it means unless metrics are in place to measure it and put it out in the open. According to Riles, “A lot of it has to do with being clear in terms of defining and communicating the quality values. We do this by getting the organization to incorporate quality values into the performance management process, and publicizing when quality has overruled manufacturing and why.” Defining metrics is part of the process and without that definition, quality initiatives will be reduced to simple and meaningless slogans. Having clear metrics, making the quality culture measurable and visible accomplishes two goals: It provides a framework to measure success, and it also creates more visibility and creates another way to encourage people to embrace the quality culture. Those visuals will also provide a way to remind people where they stand on the metrics. Making it measurable requires defining the terms, expectations and values. This becomes a mechanism to reinforce the commitment to quality. Case study In one example of creating an effective quality culture, Tunnell Consulting worked with a pharmaceutical manufacturer which had been exposed to increased regulatory inspections, compliance challenges and quality deficiencies as a result of rapid growth. An initial assessment uncovered existing strengths that could be leveraged, as well as cultural challenges that had to be better understood. Rapid growth in the biologics division of a pharmaceutical manufacturer had resulted in increased regulatory inspections, compliance challenges and unexpected quality deficiencies. To meet the company’s goal of achieving best-in-class quality, Tunnell Consulting conducted an assessment and created a roadmap for a sustainable quality culture to allow the company to improve operating performance and productivity, reduce compliance risk, maintain a reliable state of quality and compliance, and grow the business without further quality disruptions. The first step was to establish a cross-functional Quality Improvement Team to assess quality and compliance issues and recommend remediation strategies. Tunnell’s assessment addressed the process and people issues that make up the organizational culture, and uncovered several strengths that could be leveraged along with some cultural challenges. Some of the challenges that were getting in the way included divergent views between sites about the state of the company’s quality culture. An actionable set of recommendations included both quick wins and medium- and long-term wins, including steps in leadership development, strategic planning, organizational structure, on-boarding and training, succession planning and career development, rewards and recognition, process improvement and metrics. Making it happen A “top down, bottom-up” approach effectively builds a quality culture by holistically addressing the entire organization and getting across-the-board buy-in, from the board room to the production floor. This requires a two-front approach – communication of the goals and benefits of quality culture, and gaining the cooperation and buy-in from all personnel. Often the latter will require specific steps such as coaching and mentoring, as well as reward and recognition. Achieving the quality culture requires coaching and mentoring. This starts with seeking out individuals in the company that are the bright stars and individual contributors, and coaching them and mentoring them on how to implement the tools and processes needed to develop and maintain a quality culture. Often those individuals, if they are not yet leaders, will become future leaders of the company.
INDUSTRY FOCUS: LIFE SCIENCES Fighting Back Against Unpredictable Business Risk With A Quality Culture Getting it right the first time By Dan Blacharski
Vaping Startups Take On Big Tobacco Industry
The rapid growth of the vaping industry is a phenomenon rarely seen in business and industry, and not since the invention of the personal computer and later, the dotcom boom, has something completely new grown so fast. As is often the case with new innovations, the smaller and more nimble innovators are the ones who get it started, and then larger and more established companies step in. The vaping industry is no exception. Once dominated by smaller startups and near-underground smoke shops, vaping has since captured the attention of Big Tobacco, and has become a force to be reckoned with. There will continue to be a place for those innovators, but as the industry matures and larger companies move in, those startup entrepreneurs will need to have a more focused strategy. The popularity of vaping has not gone unnoticed by tobacco giants like Altria. Facing a decline in smoking traditional combustible cigarettes, Altria has been taking aggressive action with its recent investment in Cronos Group, a Canadian cannabis company, and its 35 percent stake in Juul Labs. Altria stocks initially declined dramatically since 2017, corresponding with the increasing popularity of vaping; Altria’s stock has rebounded after its $12.8 billion acquisition, delivering strong earnings this year, offering up a rebound from its previous decline and positioning tobacco stocks – as well as the vaping industry – as an attractive growth opportunity. Altria is likely to emerge victorious in the e-cigarette revolution, and analysts are expecting the company to perform well this year, despite the fact that Altria missed its first quarter earnings slightly, coming in at 90 cents per share, two cents under expectations of 92 cents, a shortfall that can be attributed to its investments in Cronos and Juul. Those very investments though, will help ensure that Altria meets or exceeds its full-year targets. Imperial Brands is also following Altria’s lead by selling its global premium cigar business and investing in vaping products as a key growth area. Imperial’s divestments generated £280 million at the end of September, with the sale of the premium cigar business expected to raise another £1 billion, giving them a strong position to take a page from Altria’s playbook and invest in the vaping business. A major difference in the emerging vaping and e-cigarette industry though, is that the combustible cigarette market is dominated by a handful of very large companies with powerful lobbying capability. And although those companies are making inroads into the vaping industry, it is still powered mostly by smaller operators – a factor that not only offers consumers more meaningful variety, it also continues to create new opportunities for small businesspersons and entrepreneurs looking to make a difference in this industry. It’s not just Big Tobacco The big opportunity though, still lies with the smaller, privately-held innovative online startups like Vapor Authority, an early innovator in online sales which has led the way in variety, service, and proactively implementing safe and ethical age restrictions for online purchasing. The vaping industry is in a perfect position for growth. The industry was built by smaller and more innovative manufacturers, importers and vape shops, and they still are the face of the industry. Those innovators are seeing plenty of growth, making this an ideal opportunity for smaller entrepreneurs. E-cigarettes and vaping are one of the fastest growing sectors, and according to an Ipsos survey of consumers concerned about wellness, 28 percent of adults and 45 percent of millennials have in the past, or plan to in the future, try e-cigarettes. The growing interest can be attributed to rising health awareness among consumers, a desire to seek out alternatives to traditional combustible cigarettes, and a need for more workable alternatives to smoking cessation strategies. According to a recent Orbis Research report, "The market is expected to gain traction over the forecast period [2018-2025], owing to growing popularity of these products among millennials. Moreover, availability of a variety of e-cigarette options is another factor projected to provide a tremendous push to the market over the forecast period." BIS Research has also weighed in with a prediction that the market, which was estimated at $11.43 billion in 2016, will grow to $86.43 billion by 2025, with a phenomenal CAGR of 23.25 percent between 2017 and 2025. The vaping industry has changed rapidly to adapt to these desires. Many vaping companies are offering reduced-nicotine, or nicotine-free vape liquids, and people are becoming more aware of the abundant research that shows e-cigarettes are a healthier alternative to combustibles. As a result, investors and entrepreneurs are seeing the vaping industry as the next growth opportunity for investment.
Traditionally, the role of a chief executive officer (CEO) has focused on high-level corporate strategy, major company decisions and interactions with the board and shareholders. But modern CEOs have to be more dynamic, interactive and accessible than ever before, engaging with stakeholders internally, externally, physically, socially and virtually. The imperative for CEO engagement was clarified in a 10-year C-suite survey, which found that CEOs who deftly engage with stakeholders based on their respective needs and motivations are 75 percent more successful in their roles. Putting that plan to action takes many forms. Silicon Valley pioneers William Hewlett and David Packard followed an approach of “management by walking around,” which meant being in touch with their workforce as a matter of routine, not just on a whim. Advancing those concepts further, the traditional role of CEO should evolve to that of Chief Engagement Officer, in which the CEO leads by example and manages by engagement. Moreover, that engagement should occur on a multi-relational level, with customers, partners, employees and the media. Successfully expanding and integrating engagement should be done with a focus on several areas. Focus 1: Engage across numerous channels With the range of channels available today, engagement can occur in many different ways for both internal and external communications. CEOs should consider engaging through the company blog; by writing thought leadership pieces for industry publications; through the development of webinars that allow attendees to ask questions; with highly targeted videos; and by attending and speaking at relevant industry trade shows. Without question, social media like Facebook, Twitter, LinkedIn and Instagram also hold a great deal of value as communications channels for engagement. Yet according to Forbes, more than 60 percent of Fortune 500 CEOs have no presence on social media at all. The benefits of social media should absolutely be weighed against their potential to distract or cause harm. However, social media provides engagement opportunities that shouldn’t be discounted outright through fear or lack of knowledge about their potential. Focus 2: Engage with mentors Most people who reach the level of CEO have a number of mentors that have helped them do so. But mentors can also be people whose examples transcend a personal relationship. For instance, I’ve incorporated the ideas of two different CEOs, neither of whom are living: Mahatma Gandhi, whose leadership role in the Indian independence movement qualifies him as an unofficial CEO, and Steve Jobs, the founder and longtime CEO of Apple. Gandhi once famously said, “Be the change you want to see in the world.” I’ve applied Gandhi’s “be the change you seek” mentality into my role as CEO, always striving to lead by example. Doing so creates a very different bond with the team, wherein the CEO actually becomes a mentor and a trusted advisor. This type of engagement results in cohesion in addressing common objectives. I’ve also incorporated a famous quote from Jobs into my engagement practices: “It’s better to be a pirate than to join the Navy.” For me, being a pirate means focusing on outcomes vs. processes. Doing so enables a CEO to bypass bureaucracy, being nimble, agile and creative to deliver positive outcomes in difficult environments. Focus 3: Engage about things outside your direct control It’s also important for CEOs to engage about things that fall outside the scope of their direct control but which, nonetheless, impact the company, its employees, customers and other stakeholders. This engagement happens at different levels. At a local level, engagement can occur on issues like education and taxes. Moving to a countrywide level, engagement can occur on issues like labor and infrastructure. On a global level, engagement addresses issues that impact humanity at large, such as the environment. For instance, I’m a vocal supporter of educational programs that promote science, technology, engineering, math and the arts (STEAM). The move to incorporate the arts into the core curriculum of STEM programs encourages the application of problem-based learning methods that are used in the creative process. Research shows that the study of music helps students’ learning abilities in all subjects, especially the STEM subjects that are so vital to our economy. STEAM will power the educational culture, which, in turn, will help change work culture. This process will take time, but my engagement is worth it on a personal and professional level. Focus 4: Engage your wider community Happy and healthy communities influence businesses in positive ways, and companies can likewise significantly impact the happiness and health of their wider communities. In fact, companies that don’t engage with the community are missing a key opportunity to drive future success. For instance, Pledge 1% is an organization that helps companies of all sizes integrate philanthropy by pledging 1% of their equity, profit, product and/or employee time for their communities. A myriad of similar organizations likewise encourage the top-down involvement of all stakeholders to participate for a common cause. Doing so encourages engagement both internally and externally and can significantly improve the community in which you and your employees live and work. Finally, it should be noted that engagement should not only happen at the CEO level. All C-level and upper management employees can benefit from adopting strategies that improve their engagement with other employees, customers, partners and the community. CEOs that are most successful at engaging are those that promote such a culture for all managers within their organizations. Thus, allowing them to thrive. About the author: Rutesh Shah founded Infostretch Corp. in 2004, and serves as its president and Chief Executive Officer. A highly-respected quality and management consultant based in Silicon Valley, his extensive experience in software development processes has resulted in his unique insights into methods for applying technology to deliver superior solutions. His acute ability to successfully identify business, technology and quality trends has made him successful in leading 200 consultants serving more than 50 clients and 120 projects. Prior to Infostretch, Rutesh Shah served as Vice President of Reliability Services at Arsin Corporation, where he deployed quality solutions for mission critical distributed applications for clients like Bank of America, McKesson, Oracle, Informix, Charles Schwab, Wells Fargo, Varian Medical and E2Open. He has been a frequent speaker at conferences nationwide and various user groups where he has spoken about quality and test automation.
Why CEOs Should Really Stand For Chief Engagement Officer by Rutesh Shah, CEO and President, Infostretch
Quarterly earnings reports have diverged from the standard (and usually boring) overviews of the balance sheet, to talk of how the company is being hit by – and how it is preparing for – a lengthy trade war with China, and more recently, Mexico. There is worry across most board rooms, as executives scramble to re-evaluate their supply chains, play out alternative scenarios and assess the potential risks. While politicians like to appear strong, we underestimate the strength of China at our own peril. In reality, we need them as much as they need us. An article in World Policy Journal noted that “China’s growth is something that Europe and the Americas are reluctant to accept: China’s innovation engine and status as a serious competitor is on the rise.” It is fairly simple to rearrange one’s supply chain to find new sources for the manufacture of cheap commodity goods – but China’s manufacturing sector is high-tech, sophisticated and far more advanced than we give it credit for, and they rank second in the world in high-tech manufacturing, only very slightly below the US. In short – a trade war with China is not easily winnable, and is very likely to do harm to American businesses, consumers and investors. Impact on small to midsize business Larger US-based corporations may be able to absorb the additional costs they are facing due to the tariffs, and are more likely to be able to devote resources to the supply chain engineering that has already become prevalent. But those worries are not limited to Wall Street – small and midsize businesses are feeling the pressure as well, especially in the retail, agricultural and manufacturing sectors, and without the right preparation, some may not survive. Smaller and midsize corporations with $10M or less in annual revenues are more likely to feel an outsized pinch, and less able to roll with the punches. And finally, at the consumer level, individuals are starting to realize they too, may have to re-evaluate their own financial plans, spending patterns and investments as a result. Smaller companies are not ready for a trade war, and many were waiting to re-evaluate their supply chains and inventory levels under the belief that the disputes would be resolved quickly. The National Retail Federation notes that tariffs tend to undermine growth in the retail sector, and one of the largest and fastest-growing retailers in the country – Dollar Tree – has already warned that tariffs on Chinese imports will affect their business as well as their shoppers. Walmart has echoed the same sentiment, saying that additional tariffs will mean higher prices for US consumers. How companies can respond The stated political goal of tariffs and trade wars are to attempt to force other countries to alter their industrial, economic and trade policies, while encouraging companies to re-shore manufacturing to the United States. From a business perspective, this is mostly impractical and often impossible. Manufacturing often involves multiple parts sourced from a deep supply chain across many countries, and disrupting existing supply relationships can be inherently dangerous to any business. Businesses are likely to respond in one of two ways: Keep existing relationships despite tariffs, or find new relationships, likely in emerging locations such as Vietnam or India. In some cases, companies may either (1) decide to stay with existing relationships even with a 25 percent tariff, because they have come to trust their Chinese supplier and changing the relationship could cause a significant disruption to sourcing and may even cause major delays as a new supplier may have to re-tool to get up to speed; or (2) look to new suppliers in alternate locations. A less likely, but often efficient option is to attempt to drive additional value out of the supply chain by keeping the current supply chain intact, but re-visiting protocols with an eye towards greater efficiency, reducing inventory levels and therefore costs, and bringing in more analytics to better understand things like customer trends so as to better anticipate demand. How individuals can respond The trade war doesn’t just impact how corporations think about how they operate and invest, it will impact how individuals do as well. According to the New York Federal Reserve, tariffs which have already been imposed on Chinese imports will cost American families an average of about $800 a year. Now is a good time for conservative investing. Tariffs translate to an increase in material costs for corporations. If those corporations absorb the added costs, profits will decrease; if they pass the costs onto the consumer, market share will decrease. Either way, share price is going to take a hit. As a result, investments in companies most likely to bear the brunt of tariffs, such manufacturers using steel, or retailers relying heavily on Chinese imports, would not be advisable. Because trade wars are inflationary, one likely result would be the Federal Reserve raising interest rates to counter that inflationary trend. This would be bad news for the housing and construction industries, but somewhat better news for those interested in simply putting money into interest-bearing accounts. On the other hand, it will be more expensive to borrow money, which may negatively impact mortgages, home equity lines of credit, or business loans. At least in the short term, markets will be volatile. International stocks may become a lot more attractive, keeping in mind that the trade war is playing out to be less of an all-out global trade war (everyone against everyone) and more of a US-versus-everyone-else trade war. More secure investments and ETFs for example, which avoid industries that will be most susceptible to tariffs (such as semiconductors, electronics, agriculture, and steel-consuming manufacturers) would be in order. In day-to-day consumer life, get ready for somewhat higher prices, which may dig into your ability to invest or save. This will be a good time to take a close look at your personal finances and spending habits, as well as your personal investment portfolio. About the Author: Joe Catanzarite, CFP, is a financial planner in South Bend, Indiana. In 2006, Joe chose a new career path – financial planning – with determination to offer financial guidance and oversight to individuals, small and mid-sized business owners, professionals and organizations. In addition to earning a Bachelor’s Degree in Finance from Saint Joseph’s College (2003), he attained the Certified Financial Planner (CFP®) designation in 2010. Joe and his wife Katie have three children ages 8, 5 and 6 months. Learn more at http://www.catanzaritefinancial.com/.
Surviving the TRADE WAR by Dan Blacharski, editor and Joe Catanzarite, CFP, Catanzarite Financial Services
Dan Blacharski, Editor, C-Suite Times: Tell us a little something about Integrated Biometrics Steve Thies, CEO, Integrated Biometrics: Thanks, Dan. Ten years ago, Integrated Biometrics (“IB”) developed a Light Emitting Sensor (LES) film technology for scanning high-resolution fingerprint images in a completely new way. It didn’t require an internal light source, a glass platen to put the finger on, a box to house all the optics, any of it. It was a real leap forward. When we first demonstrated it for the US government, they immediately realized we had something very special. We knew it, too, and so our team went into product development-mode, introducing the market to our first FBI-certified sensor a little over than 5 years ago. We named it Watson. Back then, Integrated Biometrics was very small – just three people. During that 5-year period of development, we grew quickly – at a rate four or five times the industry average. That growth has continued. In fact, we’ve been named to the Inc. 5000 “fastest growing” list three years in a row. Much of this can be attributed to our steady output of biometric fingerprint scanners: Sherlock in 2013, then Columbo, then Kojak, and the FIVE-0 just last year. We wouldn’t have experienced that kind of growth without great people and products, but great customers have really been the key to our success. They remain loyal and enthusiastic because our devices allow them mobility, are easy to use and highly affordable. They also recognize that our focus is entirely on serving them quickly and efficiently. To maintain that level of satisfaction, we’ve assembled a team of seasoned executives, a strong group of investors and advisors, wonderful employees and suppliers. And so, ten years later, thanks to our customers, our team’s diligent productivity and ingenuity, and the devices they’ve produced, we can proudly say we work with governments, industries and integrators in more than 50 countries. It’s an exciting story to tell. C-Suite Times: We hear you’re introducing a new product this week. What can you tell us? Integrated Biometrics: We’re announcing the world’s smallest FAP-30 biometric fingerprint scanner - Danno, an announcement we’ll officially make at the ID4Africa 2019 Conference in Johannesburg Africa is experiencing the fastest growth in demand for biometric technology on the planet. One of the reasons is that government and banking officials of African nations have realized that, to experience the kind of economic growth they are planning for, they must know who their citizens are. People can’t safely and effectively engage with the banking system unless their identity is established. In many countries, we take identity for granted; we’re issued a birth certificate as soon as we’re born, we get a driver license at 16, a passport, and on and on. Identity is woven into every aspect of our daily experience. But some countries are just now beginning to address this issue. The UN and World Bank are convinced that a secure system of individual identity is the key to Africa’s future, and are committed to helping make it happen. And it goes beyond banking; healthcare, welfare, voter registration—to name a few. Accurate identification is of paramount importance across the board. This is what makes the arrival of Danno so timely. In regions where infrastructure may be lacking, identity can’t be developed without mobile biometrics, and Danno is the smallest and lightest FAP 30 device on the market, while still meeting the FBI’s global standard for image accuracy and image quality and the NIST (National Institute of Standards and Technology) size recommendations for single finger applications. Our partners are already designing Danno into a range of mobile devices to be used in any number of applications; tablets for immigration and border control, healthcare program enrollment devices, devices for identifying people at the point-of-service for all kinds of things. Danno requires very little power and weighs only 25 grams, so it can be powered all day by something as small as a cell phone, yet it is unaffected by environmental conditions that bedevil market-adjacent products – bright lights, dry or wet fingers, dust, and on and on. It’s extremely rugged and requires almost no maintenance or upkeep. Another exciting development has been the recent selection and adoption of our Kojak device by the U.S. Customs and Border Protection agency (CBP). Our Kojaks are now installed in the busiest airports in the country; Atlanta, Chicago, LAX, Dulles, Miami International – and more. It’s a very important project for us because United States immigration programs are closely observed all over the world. In addition to CBP, IB’s extensive USA customer list includes the Department of Defense, the FBI, Department of State, Army, Navy and the Coast Guard, the Department of Justice, several divisions of DHS, CIS (Citizen Immigration Services), ICE - the Immigration and Customs Enforcement body. The FBI was one of our very earliest customers. They were an early user of our Watson Mini and have since moved to the FIVE-0 – the smallest, lightest FAP-50 (capable of capturing all 10 prints) in the world. CSuiteTimes: Where you see biometric fingerprinting technology heading in the future? Integrated Biometrics: Danno is a prime example of what’s driving the future for our industry; It’s simple, affordable, and supremely mobile. Simplicity is crucial for any device used in high-volume situations – customs, law enforcement, healthcare, voting. It’s impossible to rely on technology that is difficult to learn, complex or requires regular or extensive maintenance or repair. All our products are based on our patented LES technology, making them extremely simple to use. Set up is virtually “plug and play” and they work – with no added effort - in environmental conditions that are hostile to competing technologies; bright natural and artificial lights, cold temperatures, hot temperatures, dirty and dusty conditions and more. Wherever you need them, they simply work. Mobility means the integrator can develop products that bring sophisticated biometric capabilities to the exact point of need, whether that’s a border, a train station or airport, a point of sale, or use by a public safety or law enforcement officer in the field. Mobility also means the end user can leverage the smartphone or tablet they already have into a multi-purpose operational platform. Finally, affordability; cost is something that has cut off many regions of the world from the benefits of identity. Low Initial and total cost of ownership means our products can be put to work – as we’ve discussed – in healthcare, social programs, voting and national identification – in places where price would have made that impossible only a few years ago. We all know how technology has changed our lives; things come to us instead of us having to go somewhere. Food comes right to us, packages come to our doorstep. Biometrics will be no different. That’s where devices like Danno will shake things up. The benefits of secure identity will come right to our fingerprints. Most of us had our first biometric experience on a smartphone; it helped us access and secure them, which made our lives easier and more convenient. Now, governments and commercial enterprises worldwide are deploying biometrics to enable the same convenience while simultaneously achieving security and identity. Bulky “jump kits” are disappearing, replaced by tablets and smartphones. Mobile biometric devices such as Danno and Five-0 bring identity to the people instead of forcing people to travel to an identity solution. CSuite Times: What’s next for Integrated Biometrics? Integrated Biometrics: We’re not sitting still. By the end of this year we will have deployed more than a quarter-million certified fingerprint sensors around the world. Today, airline passengers, ballpark attendees, the banking industry, the healthcare industry – all secured by our sensors. And that list is growing rapidly. We’re adding some great new features to further enhance the user experience across our entire product line and have a major project well underway to introduce some new value-added services. We’ve increased manufacturing capacity, are expanding our supply chain, and are building our staff in every area. I’ll also tell you have more products in our pipeline – so stay tuned! Our successes have created the kind of growth that’s challenging for any organization, but our team is dedicated and determined. We’re having fun while focusing squarely on the identity business. It’s our mission to deliver the many important benefits of convenient identification to individuals and organizations around the world. CSuite Times: This has been extremely interesting. Thanks so much for giving our readers your perspective on such a fascinating, growing sector. Integrated Biometrics: Thank you, Dan. I look forward to speaking with you again. * * * * * Integrated Biometrics is in Spartanburg, SC.
Q&A with Stephen Thies, CEO of Integrated Biometrics
Steve Thies, CEO Integrated Biometrics
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