Colorado success stories: Source Office Products

Editors Note: Source Office Products was recognized as a 2010 Colorado Company to Watch.

Faced with a difficult economy in 2008 with existing customers forecasting 15-20 percent reductions in volume, the leadership at Source Office Products had to make a decision. Most organizations were cutting staff to reduce expenses. However, as Chairman and Founder, John Givens recently told me, "We felt we were already operating efficiently and would be cutting muscle. So we decided to hire and grow. We began to sell more lines of business to those customers who already liked doing business with us."

While it might seem counterintuitive to some, for Source Office Products, the strategy worked well. Source, founded in 1990, grew revenues 40% between 2007 and 2010 and is enjoying an anticipated growth rate of 18% in 2011.Source Office Products is a regional single source provider of business to business office products and services including office supplies, multifunction printers and copiers, managed print services (document management), web-managed commercial printing (business printing & marketing collateral), office furniture, and coffee services.

How is Source Office Products different?

Source Office Products seeks to tailor a solution for each client. We combine a strong commitment to superior IT systems and business processes with a commitment to serve each client as they want to be served. Each client has different priorities and pain points. Our account managers meet with each client 2-4 times a year to assess their needs.

Then we develop customer-specific programs and solutions. One client may be growing rapidly and office products are a relatively small percentage of the total expenses. That client may be looking to make things easy, simple, and convenient. Another client that is a more competitive environment may need us to provide the lowest cost solution. With automation and IT, we can provide 'mass produced customization'. Process and work flow is very important since minimizing the number of times people touch the order leads to higher quality, speed, and efficiency. We stress automation with both customers and our suppliers - greater than 94 percent of our business is conducted online in real time by customers.

This carries through to your culture which is very customer-centric.

Ultimately our biggest difference is that we hire the most experienced and talented account managers and provide them a lot of autonomy and the freedom to serve the customer. We let them act as entrepreneurs and we manage to results through reporting and automation. We have a very egalitarian culture. We work hard to make certain that every team member knows how important and valued they are. Management's role is to remove obstacles for team members so they can do their jobs better. We stress what I call "cross-lateral pollination" which means people from all areas are involved in team selling and team implementation.

Founders sometimes have difficulty giving up control. You brought in management with significant growth experience.

In the growth of every organization the best leaders must learn to follow. They must be willing to follow the advice of people they disagree with when the consensus of those they trust goes contrary to their opinion. They must serve the team by continuing to remove obstacles and hurdles that impede success. They must be acutely aware of their limitations and highly alert to the extraordinary qualities of those that make up their team.

Given our growth, it was obvious that we need a seasoned leader to help us assemble the team and integrate corporate resources necessary to provide effective support for our internal and external customers. Ken Larson, our president, has already taken the journey of growth in his career and has very strong opinions about what needs to be done and why. His core ideology and deep genuine passion aligns incredibly well with our high performance culture and guiding principles. Peter Burch, our CEO, puts the team and the organizations success ahead of all else. His knowledge, skills and ability to integrate various departments and team members are beyond impressive. He allows leaders to lead. Peter has high expectations and is constantly working to improve. He is all about taking responsibility and owning your work.

What are the keys to continued growth over the next 5-10 years?

We have to execute well and manage successfully what we've undertaken in the last 2 years. We've added Managed Print Services (document management), iPrint (commercial printing), and the Coffee division. Mergers are also important. To date, we have done three mergers, including Wyoming Office Solutions and a recent merger with Valley Office Supplies in Grand Junction. We need to integrate these well and to identify other possible mergers that have good cultural fit and strong entrepreneur-owners who want to grow with us, and can support our objectives as a regional SINGLE SOURCE B2B provider.

When did it become OK to just be OK?

A funny thing happened during the last four years of the recession. It seems that it has now become OK to just be OK. It appears that we have re-defined success at much lower levels of expectation than prior to the recession. It shows up everywhere in our language. A few examples:

· “Flat is the new up”

· “We’ve maintained our position”

· “We’re up from last year” (but up is still well below 2008 or 2009)

· “We’re holding our own”

· “We’re doing well…considering the economy”

Is it true that we no longer seek to achieve new heights or lofty objectives? Have we become less powerful, less motivated, less capable, and less confident? When was the last time a leader advanced a bold objective like “Put a man on the moon in the next decade?” How would we react if someone did advance an idea so bold? Would we snicker and roll our eyes? Do we now feel powerless to take on such a significant challenge?

We not only no longer expect and demand greatness; we have become tolerant of mediocrity. It now seems unfashionable to differentiate between levels of performance. People are incapable of providing and accepting constructive criticism about improvements. We congratulate each other for mediocre performance. The overwhelming us of the word “awesome” is one example.

I seldom attend a meeting anymore where someone is not congratulated for an “awesome” performance. It doesn’t seem to matter what the performance level is, the response is still the same: Someone who can’t get the basics right for an event or project is congratulated on an awesome job; a leader who barely maintains an organization’s or government entity’s status is saluted for an awesome term; the president of a company who avoids risk and therefore doesn’t make a mistake is saluted for maintaining the status quo.

Certainly there are pockets of exciting opportunity. I see these everyday as our consulting firm works with the firms who are becoming Colorado success stories. However, this innovative segment is less than one-third of the economy. It is a different world with the mainstream two-thirds. Is this malaise of mediocrity the product of the “everyone gets a ribbon” generation, or “grade inflation,” or just lowered expectations? Is this condition temporary, or are we witnessing a seismic cultural shift? Has our collective desire for greatness and achievement been battered and diluted by economic stress?

Is it just me, or has it become OK to just be OK?

Colorado success stories: Ayuda Management Corp.

Under-promising and over-delivering are keys to government contractor, Ayuda's success

This series of interviews with Mead Consulting clients and friends focuses on companies that have succeeded during the recession through disruptive innovation, new business models, or superior execution. The stories are told by the CEOs and business owners themselves. This article was first published on April 5, 2011 in ColoradoBiz magazine or you can read it below.

Maria Vogt and Sonya Yungeberg are co-owners who lead Ayuda Management which provides services to a select client base in the areas of general contracting/construction management, construction defect repair, homeland defense consulting/security system design and installation, and environmental consulting.

The company became a Small Business Administration 8a-certified minority business contractor in 2006. Today, a significant portion of its business is in projects with government entities. The company has grown from $275,000 in revenues in 2006 to $25 million in 2010. Ayuda Management has been recognized as one of the 2011 Colorado Companies to Watch.

When I recently met with the two partners over lunch, they collaborated on the responses to my questions about the business. I was reminded how well they work together. Over the last five years, they have developed a close business partnership that has been a critical ingredient to Ayuda's successful growth.

Your operating philosophy seems unusual for a government contractor.

We operate with a few basic principles: We do what we say we'll do. We under-promise and over-deliver. We focus most of our energy on building clients for life. Our processes, hiring, reward systems, and training are centered on the belief that delivering high quality service to our clients leads to repeat business. We stress to all of our people to put client interest before profit. We reward our employees not based on profit, but on customer satisfaction. We feel that, if the customers are pleased, profit will follow. We like working with the Federal government. We understand the Federal systems and procedures and perform well in that environment.

You have an unusual sales compensation system. You don't reward for generating new customers, but for repeat business with existing customers.

It bothered us in previous companies that the emphasis was always placed on getting the next new customer, but not necessarily on doing the best job for existing customers. So we decided that we would reward our people for getting repeat business with existing customers. This puts the emphasis on maintaining excellent relationships, encouraging strong, open communication, and a commitment to over-delivering on the current projects. Clients have responded. When they are pleased with our performance, they want to offer us opportunities on newer and larger projects.

Has the recession caused any bumps for you?

There was one... very large bump. In 2009 we had a client that went into bankruptcy leaving a large balance unpaid. We still owed the subcontractors and suppliers. We recognized that how we handled this problem was a defining moment for our business. We wanted to do the right thing - to pay everyone. So we met with all the subcontractors as well as our bank and had a direct, open, and honest discussion about what we thought we could do. Everyone bought in to the plan. Our bank and our bonding company could not have been more supportive. It took us over a year but everyone got repaid - it was over $1 Million.

Taking a $1 million out of your pockets must have been painful.

We took a hard look at every expense and really tightened our belts. We decided we could answer our own phone calls for a while. It was actually a good experience because it forced us to really re-examine our overhead and expense structure. We feel really proud that we were able to make everyone whole.

What are the keys to continued growth over the next five years?

We want to expand our services and revenue in the Federal marketplace. We are exploring the development of a teaming arrangement that has been sanctioned by the SBA. This is a "mentor-protégé" relationship with a larger firm with a greater geographical footprint so that Ayuda can meet the qualifications for larger federal projects. We would operate as a joint venture on a project-by-project basis. This relationship benefits both companies since the larger firm would be able to bid on projects with an 8a-certified firm, and Ayuda would have greater capacity to be able to perform these larger projects. The selection of the right industry partner for such an intimate relationship is a critical decision for us. We are looking for a company that has a similar culture and commitment to the customer.

I have to ask you about your partnership. What makes it work so well?

We genuinely like each other and respect each other. We think it also helps that we have different strengths and skills- Maria's background is in construction and business development, while Sonya is a civil engineer and very knowledgeable about project management. We operate by consensus. We agreed that if one of us ever strongly disagreed with a decision, that was probably a good reason to reconsider.

Colorado success stories: Qualvu

Quallvu grows by making every consumer's opinion count

By David P. Mead

Editor's note: This article was first published in ColoradoBiz magazine earlier this year.

Recently I spoke with John Williamson, CEO of Golden-based Qualvu, which has introduced disruptive innovation to the world of consumer focus groups, surveys and qualitative consumer market research. Qualvu was recognized as a 2010 Colorado Company to Watch.

Q: How did you decide to get into the business?
A: Every Fortune 1000 consumer-focused company in the world uses qualitative research extensively. The industry offered interesting opportunities for a startup: the chance to disrupt a market largely untouched by web-based innovation, to introduce self-serve methods, and importantly to make qualitative research accessible to thousands of companies beyond the Fortune 1000.

Qualvu, founded in early 2008, pioneered a breakthrough online experience for conducting web-based consumer feedback, allowing businesses to take their qualitative research online without losing the face-to-face connections crucial to understanding customers. By connecting companies with their customers around the globe via webcams, flip cams and even consumers' smart phones, Qualvu delivers more compelling and actionable business intelligence than focus groups, and because of cost efficiencies, it's available to any business. We call it "finding your truth" - and it's a really empowering Do-It-Yourself experience.

Q: How do you compete and achieve differentiation?
A: Qualvu was first to market with an innovative process that allows any user with an Internet connection - either PC or video mobile phone - to provide video-based feedback at the press of a button. Clients realize speed, cost and global reach advantages. Our clients can set up projects at any time day or night, and gain access to their consumers at home, at work, while shopping, or anywhere they interact with the client's products. Over the past 3 years, we have developed a proprietary process and technology to convert the data to highlight reels of key insights as well as online video reports too.

Q: What have been your biggest challenges?
A: We have constantly fine-tuned every aspect of the experience - from a self-serve project portal, to finding better participants, to delivering online reports within hours complete with video highlight reels of the most relevant and compelling consumer feedback, to creating completely searchable video. Every day is a new breakthrough in our refinement.

Our biggest challenge is getting the word out! We're just now starting to really pop on the industry radar, as we've attracted a who's who of clients, such as Chrysler, Procter & Gamble, eBay, Yahoo!, T-Mobile, Disney, Adidas, Pfizer, just to name a few. We'll start expanding our penetration beyond these larger companies as people begin to realize we're a site for any business that needs deep insights to make better decisions.

Q: What are the keys to continued growth over the next 5-10 years?
A: Relentless innovation to keep our technical and process advantages. A lot of that has to do with enabling breakthroughs in data mining video content, so our clients can increase the value of every project over time as they consolidate and re-assess consumer video data, trends, and insights. The beauty is that the more you use Qualvu, the better it gets.

Q: How do you maintain the culture and still build the management team required to grow?
A: We find great people and promote from within. We find smart, creative people who have a positive attitude and a strong work ethic who want to be a part of what Qualvu is accomplishing. One of our mantras to every new hire is, "Welcome to Qualvu. You'll do the best work of your career here." People see career paths because Qualvu is a meritocracy. We try to reward effort, talent, initiative, and values.

Q: How do global factors influence your growth?
A: Anyone with an Internet connection around the world can provide information vital to our clients' products and services. Certainly given the economic conditions globally the past couple of years, more brands are trying to do more research with less - and that's helped Qualvu gain traction more quickly I believe, as these types of conditions have the tendency to spawn new models that break through because buyers are more open to innovation to solve their business problems.

We opened an office in Dublin this year to expand our global reach. Dublin is accessible, has a multi-national workforce, and is cost efficient. Interestingly more money is spent on qualitative research today in Europe than in the US, and we intend to support our global client base with expansion to other markets too.

Failure to launch: Seven reasons business strategies don't succeed

By David P. Mead

Superior execution is one of the strengths of the Colorado success stories we have been profiling over the past few months. But these companies are the exceptions; nearly 65 percent of all strategies fail to reach expectations.

Why do so many business strategies fail? Barriers to successful planning and execution develop in all companies over time. In fact, some of the very things that help a company succeed at early levels can prevent them from succeeding at the next level. The key is to address these challenges so that the path to execution is uncluttered. Below are seven reasons company strategies fail to deliver desired results:

1. No clear definition of success
Fuzzy goals lead to fuzzy outcomes. While it seems obvious, many organizations simply don't articulate the specific goal of a business strategy. If the goal of your customer intimacy strategy is to form deeper customer relationships, that's fuzzy. If the goal is to increase customer retention by 10 percent and increase annual revenue per customer by $10,000 and net profit by $1,000, that's clear. Here, forming deeper customer relationships is simply the mechanism to achieve the goal.

2. Too many goals
When everything is a priority, nothing gets accomplished. Many so-called strategic plans have too many goals, objectives, success drivers, strategies, initiatives and so on. Worse, it's not clear how these various appendages are linked. Is it any surprise these plans sit on shelves and collect dust? Choose to do fewer things, but do them much better.

3. Metrics and alignment - Either no metrics or vague metrics
Many plans are simply a brainstormed list of things to get done by unspecified people at indeterminate times. A plan with specifics outlines who will do what by when. It takes into account the sequencing and timing of tasks, activities and resources. Make certain that the goals of everyone in the organization are aligned to the few key objectives.

4. Visibility - Progress isn't measured and managed
Ever notice how plans placed in the spotlight flourish while those left in the dark shrivel? Any plan worth executing is worth tracking. A monthly meeting with a tight agenda can quickly determine what actions have been taken; what progress has been made; what will be accomplished over the next month and by whom, and what, if any, challenges have emerged. This builds commitment, accountability and confidence in the process.

5. You lack the right people
Some of those nice people who work for you may not be the right people to get the job done. That statement makes you uncomfortable, doesn't it? Many have been loyal, are committed to the culture, and may be friends and family. However, if you are truly committed to winning, or achieving success - however you define it - then at some point you have to take a long, hard, honest look at the capabilities of your people. Point them in the right direction, support them, develop them - give them a fair chance to succeed. But if they can't get it done, then your responsibility is to get people who can.

6. Flexibility - Failure to update the plan to stay real
Reserve the right to do what makes sense. Plans are based on assumptions that can change over time. If they do change, then the plan may need to change. A "recalibration" meeting every 8 to 12 weeks is a good forum to test your assumptions and determine which, if any, have changed. The meeting may result in either a revalidation or redesign of the plan. It ensures the plan stays real and relevant.

7. Reaction to failure - Failure is met with indifference or an inquisition
Is your team serious about its definition of success? Your response to failure sends a clear message about your commitment to winning. Just as importantly, it sends a message about your credibility. Do you ignore a failed initiative and move on to the next big thing (which conveys that you really weren't that committed and you shouldn't be taken seriously)? Do you look for scapegoats (which communicates that you don't take personal responsibility and can't be trusted)? Or do you first look in the mirror, take responsibility, then publicly commit to getting it right, and effectively engage your people to make it happen? Your choice speaks volumes about who you are as a leader.

Don’t be held back by past success

The greatest challenge can be the SECOND strategic success.

By David P. Mead

The business is profitable. It generates cash. There seems to be no end to new ideas and plans to invest and grow the company. But ideas seem to almost never get evaluated, or if evaluated, never are seriously considered. The company continues to focus on the familiar strategy, with the founder maintaining, “This is what got us here.” Many small and midsize businesses can be held back by past success. Their early strategies are so powerful and deeply ingrained in the fabric of the company that change is all but impossible.

Continuous rebuilding of strategic direction is not only healthy, but important to company growth. Where once a change in strategic direction occurred every generation or two, the pace of change now requires a new direction every three to five years…much faster in technology industries. Yet we find that “strategic renewal” is rare in closely-held entrepreneurial companies. The reason can often be traced to the source of their success.

The business strategy which ultimately emerges from the entrepreneurial survival phase is the product of years of trial and error. The successes and failures of personal interaction with customers, products and markets forge the confident and unshakable strategic view of the founder. Entrepreneurs with highly creative and successful strategies are often so charismatic and strong-willed that few managers have the self-confidence to challenge by fighting for fundamental change. Admiration and respect for the accomplishments of the founder can also discourage open disagreement. After all, if the strategy could be improved, wouldn’t the founder have already done so?

There is another reason that strategic change is difficult in successful entrepreneurial organizations. The founder surrounds himself or herself with people who believe in the founder. These people tend to view the world in the same way. This homogeneous group is reinforced through hiring, training, and leadership. The similarities are further strengthened by a shared company culture. This singleness of purpose helps greatly as the founder’s initial strategy fosters rapid growth, and consistent delivery of products and services is essential. These people are the implementers of the founder’s vision. However, when a fundamental change to strategic direction is necessary, these same implementers are not likely to contribute a creative perspective. They are more likely to review the reasons for past success than they are to visualize a different future.

In short, the founder’s creative strategic insight and charismatic organizational leadership will typically create blinders to the urgent need for fundamental change. When everyone shares the same perspectives and experiences, we have a very vulnerable business – even if it is successful today.
Studies of the strategies of entrepreneurial companies confirm this. The founder invents a great business concept. New strategies, however, rarely emerge until a new generation of leaders emerges. If talented potential successors eagerly advance their new strategies before they are in control, painful, destructive conflict often results.

Founders of successful companies have found ways to avoid the pitfalls of strategic stagnation:

• Share the credit for past successes. Describe them to the organization as group insight rather than as “my strategy”. Stress that change is critical to survival. Express frequent concerns about competitive threats to the current ways of doing business. Do not let anyone become comfortable with the status quo.

• Celebrate the diversity of opinion in the organization. Look for ways to recruit new people with different backgrounds and experiences into the company. Consider hiring people outside your industry.

• Make strategic planning everyone’s responsibility. Encourage everyone to challenge current strategic assumptions. In management meetings, ask everyone to identify the critical assumptions for continued success. Ask your outside board of advisors, or outside board of directors to question your intended sources for future growth.

• Be open to new ideas. Be “non-defensive” in your thinking. Encourage “non-linear” thinking and “what if” questions. Avoid justification of past actions or quick responses such as “we tried it before and it didn’t work.”

• Don’t accept a poor economy as an excuse! Too much credit is given to strategies that succeed in a good economy, but cannot hold up during a poor economy. Don’t accept a poor economy as an excuse. Make your company and its management stand on its feet regardless of the economic climate.
The greatest challenge for an entrepreneur to create the second strategic success. The critical review of the reasons for past success is a vital part of the process. If the founder and leader of the organization will demonstratively lead the challenge to his or her own aging strategic insights, new ideas and perspectives will be encouraged and the company will profit from consideration of a greater number of strategic alternatives.

Seven traits of Colorado success stories: Why some companies grow and others get stuck

Since the beginning of this year, I have met with the CEOs or owners of over 120 private companies. These companies range from new technologies, products and services in such diverse fields as education, web conferencing, burgers, trucking, logistics, steel distribution, medical devices, focus groups, outsourced services, and social media. Some of these companies are growing - some quite rapidly; others are stagnant or stuck.

Why are there such differences? Certainly companies that depend on some industries such as homebuilding or construction have been severely impacted by the economy. However, blaming stagnancy solely on the economic malaise that has descended on the US since 2007 may be an oversimplification. I believe in some cases, the recession has just highlighted the differences between the good, well-managed companies from those whose fortunes rise and fall with the economy.

Companies that have become "Colorado success stories" over the past four years share certain traits:

1. Lifestyle or Equity Value. Be clear with what type of company you want to be. A lifestyle company can allow the owner to call his/her own shots and to move at his/her own pace. It is run for the cash flow and lifestyle benefits of the owner(s). In an equity value company, the owner strives to build real assets with a scalable, tangible value that can be bought and sold. This leader is willing to sacrifice some short-term gains in order to invest in growing the market value of the business.

These owners focus more on building value as seen by potential buyers: sustained improvements in revenue/EBITDA, and a strong management team that can operate and grow the business without the owner's constant involvement. There is no right or wrong answer to the lifestyle vs. equity value question, but owners must be clear in the distinction. Straddling both lifestyle and equity value camps is sure to generate both lower current cash (compensation for the owners) as well as lower growth and value potential (lower equity value).

2. Empower employees. Companies can't grow beyond a certain point if all of the real decision-making stays in the hands of the owner or a small group of managers. Growth companies look to empower employees to make decisions. They also develop a culture that allows employees to make mistakes and a mechanism so that they can learn and grow from the mistakes. NewsGator, a pioneer in enterprise social computing, uses a facebook-like platform to communicate project status to a broad audience of employees. Employees not involved directly with the project are encouraged to post suggestions and comments.

3. Hire for the next level. Companies that want to grow understand that they need talent that can manage at the next level. Successful companies hire people who can grow 1-2 levels higher in the organization so that the talent pool is constantly being strengthened. These companies also understand that paying more for top talent more than pays for itself.

4. Develop flexible strategies you can execute well. Traditional approaches to planning and execution assume away uncertainties and set a fixed plan in place for a year or more. Successful companies are developing multiple possible views of the future, developing a plan and actions, then revisiting the plan every 8-12 weeks to adjust to changes in the market or the competitive landscape. Otterbox, the designer and marketer of protective cases for smartphones, has grown 1500 percent over the past three years with a flexible approach that re-evaluates operating plans every 6-8 weeks for possible adjustment.

5. Develop an adaptable organization. Successful companies focus on creating a culture of adaptability. They develop an organization, and leadership that can react quickly and make necessary course corrections in response to market opportunities.

6. Focus on a superior customer experience. Dan King of ReadyTalk calls it developing "emotionally-connected" clients; Maria Vogt and Sonya Yungeberg of government contractor, Ayuda Management, call it "under-promising and over-delivering". These companies focus on wowing the customer and build systems and hire and reward people who want to delight the customer with every interaction.

7. Play offense instead of defense. If you do anything long enough it becomes a habit; then it becomes part of your culture. Many companies have created defensive cultures with several years of cost-cutting and deferring or eliminating new projects and new products. "NO" has become the operating word for "stuck" companies. Successful companies are looking for opportunities to develop and test new business models, new products and new projects. They see this market as ripe with opportunities to grow and innovate. "HOW" is their operating mantra.