Chicago Businesses Discover the “New Fluidity”

By Jon Liberman

When a good history of the New Economy is one day written, it will focus not on microchips and 25-year-old Palo Alto millionaires but on the deeper changes wrought in the basic structure and manner of social intercourse.

As leader of a consortium primarily serving Midwest manufacturers and distributors, I am lucky to witness first hand how the New Economy is sweeping into and changing the culture of Chicago-area businesses. I am also learning some important lessons.

The innovators and entrepreneurs in the Silicon Valley rightfully captured the public’s imagination in the early stages of the Information Age. Now is the time to shift attention to equally interesting new places such as Chicago and the Midwest. Today, we here are poised for the next phase of the Information Age, the one in which the Internet is so interwoven in our lives that we give it no more thought than we give breathing.

The New Economy is a reality in Chicago just as much as in the Bay Area, in manufacturing as in dot-coms, in the life of the pinstriped executive as in the programmer wearing baggy cargo pants. For the “New Manager” a key to success is figuring out how the dynamics of the New Economy have changed the shape of the successful venture. What, today, is the ideal business model?

The corporate structure in which many of us came to maturity has gone away. Companies that use pyramid tables of organization to describe themselves tell us little about how their businesses actually function. The one-size-fits-all approach to customer relationships is gone. Supply chains take on creative new shapes as technologies allow new forms of commercial transaction and delivery. There is a “new fluidity” to the structure of business, and the key is to understand that fluidity, adapt to it and find the opportunities hidden therein.

For companies like mine these changes are a godsend. The clients with whom we work include several mid-market Chicago area businesses that are rapidly and shrewdly adapting to these changes. We help them manage change by keeping them current on best practices, selecting and deploying the smartest technologies and recruiting the best talent for both full-time and consulting roles.

Take, for example, Stericycle, a Lake Forest medical waste management firm. It serves a booming market experiencing rapid industry consolidation and increasing regulatory scrutiny. Stericycle recently acquired the medical waste division of Browning-Ferris Industries along with numerous smaller firms serving smaller geographic markets. Successfully integrating disparate, formerly independent, businesses is essential to success.

For Bill Mundo, director of business and process development, this means a continuous flow of strategic decisions and challenges requiring specific expertise he is not staffed to address. Our company, Wilmette-based Rainmakers, serves as a sounding board and navigational aid pointing them to the right technologies, consultants and personnel to help them solve problems such as business process design and improvement, technology evaluation and specialized expertise and capabilities critical to change management.

“We all get involved in the daily grind of the business,” says Mr. Mundo. “Rainmakers help me sort through the issues and help me see the forest for the trees. They get me to people and organizations that can quickly pinpoint potential solutions and provide quick resolution,” he says.

Artful outsourcing is now fundamental to good management. Companies like Stericycle routinely turn to small teams or individuals who come in from outside the company, fix problems, then leave until called again. Managers need to know the difference between tasks that fall under their own core competencies the ones that make them money and tasks that are more wisely handed off to outside vendors. With each new challenge, executives must ask themselves: Is this what we are good at? Will we make money doing it? Are our employees willing, ready and able? If this distracts us from our company's greater mission, can we find an outside firm to do it better, faster and with greater cost efficiency?

Outsourcing is part of a trend observed by former U.S. Labor Secretary Robert Reich, who predicted that, “the so-called big corporation of the future will be a big brand. It will have the capacity to generate trust among consumers and give them the quality they want.

“Arrayed around these big brands will be large numbers of small teams. Some of them will be independent companies … some will be independent profit centers… some will be units that are quasi-independent … The days of the big, old bureaucracy, designed primarily for economies of production scale are over. You simply cant be nimble enough … And theres no reason to be organized for a large production scale because new technologies allow you to achieve low unit costs.”

Paul Adams, chief information officer of Tempel Steel Company in Chicago, thinks that medium sized companies have a structural advantage because, “small companies have no capital to invest in change and large companies have too many internal political barriers to change.”

Moreover, firms such as Rainmakers give a medium sized company like Tempel Steel access to the same technical and management consulting talent that the bigger competitors use. In the past, you needed deep pockets to hire high-priced talent or to bring in one of the big accounting firms. Rainmakers is one of the new breed of business consortia that allows Tempel Steel to identify the boutique specialty firms previously only known through word of mouth.

With markets changing at Internet speed, never has it been more important to continuously improve and intelligently manage change. Continuous improvement and change sound trite today, but if they aren't second nature to you by now they better be soon.

Elkay Manufacturing Company, an 80-year-old kitchen sink and plumbing supplier based in Oak Brook, could have gone the way of other local smokestack industries overtaken by foreign competition or done in by outdated manufacturing technologies and inflexible management. Instead Elkay sought outside advice on how to help cultivate a culture of nimbleness and Kaizen-style continuous improvement. In one 5-day period, Rainmakers helped Elkay establish cross functional teams, teach shop floor process improvement techniques and show how a routine of incremental change can eventually add up to a revolution. We also identified technical specialists who could help Elkay meet its deadlines for adopting a new enterprise resource management system that is integrating computer systems of all major business functions.

“When your company has been around for 80 successful years and maintains good market share, its hard to find a compelling reason to change,” said Jim Scott, president of the Elkay Division of Elkay Manufacturing. As Elkay began acquiring small suppliers and diversifying its product offerings, Mr. Scott knew that survival would require the help of outsiders like Rainmakers, who he describes variously as “change consultants” and “our concierge of business services.”

In the area of information technology, for example, “Rainmakers helped us benchmark our performance against other companies. You needed somebody on the outside who could help us benefit from what others have learned.”

National Casein Company, like Elkay, shows how the marriage of culture change and technology has become a model for the New Economy enterprise here in what was once known as the Rust Belt. National Casein, a family owned business on Chicago's South Side, had a tradition of autocratic management. By the 1990s, they knew that an autocracy could never introduce needed computing technologies. That approach would never achieve rank-and-file buy-in.

“In the 70s, if we wanted to make big changes in the way we did business, we might spend seven to eight years getting it done,” said Charles Cook, chief information officer. “Now that kind of change needs to happen in 18 months.” Cook turned to Rainmakers, who he refers to as a “consultant on consultants.”

National Casein asked Rainmakers to identify software products needed to put them on the World Wide Web, streamline accounting and update customer relationship management. Just as importantly, they asked us to become facilitators, bringing management and employees together to institute a culture of continuous change and improvement in which everyone participated.

These companies some rooted in the old economy -- are now all poised for success in the New Economy. Why? We at Rainmakers think it is because of their strong adherence to four principles:

Principle #1. Remember the basics. It is taken for granted that much of the dot-com bust happened because tech savvy business neophytes overlooked basic principles of good management. Before investing too much in a nifty technology, make sure the company behind it has effective leadership, profitable cash flow, a sharp focus on customers, and a valid business plan based on meaningful competitive advantages.

Principle #2. Apply technology where technology pays. Don't introduce technology for technology's sake alone. Too many executives fall in love with a software product that produces tiny improvements in company performance while chewing up enormous resources on implementation. Focus on applications where the pay off will be big, such as customer relationship management, order fulfillment or supply chains and procurement. Before you invest, know in advance where the pay off will be and how the technology will help you achieve broader improvements in processes. Plan big, but be ready to implement through a long sequence of small, incremental changes.

Principle #3. Stay nimble. It may sound uninspired to stress the need for continuous improvement and good management of change, but the need has never been greater. It must be in your company's culture to repeatedly look at every business transaction, every interaction between humans, to find those incremental changes that will combine to improve profitability. As markets, technologies and competitors change at Internet speed, your company's performance will change too, like it or not. Managing that change means winning or losing.

Principle #4. Keep your organization fluid. Focus on your core competencies, on those things that you do best. Outsource the rest, unless the need is so fundamental and long-term that recruiting full-time talent or even acquiring a company enhances your business. Customer relations need not all occur through your sales force if outsourcing to a call center provides better service. If adapting a new technology makes sense, software support need not be handled internally if internal expertise is lacking.

Through nonstop restructuring and fluidity -- made possible through continuous outsourcing, recruiting, acquiring and divestiture -- you can constantly reinvent your business as conditions dictate and your core competencies contribute value in changing ways. New information technologies make organizational fluidity easier to achieve by making it easier to integrate outside talent. Make that new fluidity your secret weapon.

That last principle might be the most important. A company like Rainmakers could not have existed five years ago, before new information technologies made it possible for members of our consortium to bring their boutique specialties from place to place with such ease. Now we bring our virtual office to our customers. They send us email as easily as they send it to a coworker sitting steps away.

These facts illustrate a deeper truth about the New Economy and the capabilities it is bringing to Chicago area business, new and old, large and small. There is a new fluidity today that could not exist previously, an ability to tap talent, change form and adapt to change faster than ever. That makes us more competitive than companies anywhere else in the world. It is an exciting time to be in the Midwest.

Jon Liberman is Chief Rainmaker at Rainmakers, a Wilmette-based consortium offering Midwest businesses wide-ranging professional consultation on best practices, technology and human resources. His career began with 24 years in a family business. Graduating from the University of Illinois in 1978, he entered the information technology industry during its “mini revolution”. In 1988, Liberman merged his consulting practice, Corr Concepts Inc., with a mid-market CPA firm, Checkers, Simon and Rosner. In 1996, that firm was purchased by American Express Tax and Business Services and Liberman took responsibility for business development in the technology practice. He founded Rainmakers in 1998. Liberman, the author of “Supercharge Your Sales Force,” also is a speaker and lecturer.

Chicago Businesses Discover theThe “New Fluidity” of Chicago Area Businesses

By Jon Liberman

When a good history of the Internet New Economy is one day written, it will focus not on microchips and 25-year-old Palo Alto millionaires but on the deeper changes wrought in the basic structure and manner of our social intercourse.

One such change is the relationship between employee and employer. Recent massive layoffs by Lucent, Sara lee, Motorola and AOL-Time Warner seem to show a greater willingness of corporations to make fundamental changes in direction, even at great human cost.

As leader of a consortium primarily serving Midwest manufacturers and distributors, I am lucky to witness up closefirst hand how the New Economy is sweeping into and changing the culture of Chicago-area businesses. Trends in hiring and firing can be brutal, but other culture changes are welcome and necessary. I am alsoAlong the way I have learning learned some important lessons.

The innovators and entrepreneurs in the the nation’s technology centersSilicon Valley rightfully captured the public’s imagination in the early stages of the Information Age. Now is the time to shift our attention to equally interesting new places such as Chicago and the Midwest. Today, we here are well situatedpoised for the next phase of the Information Age, the one in which the Internet is so interwoven in our lives that it eludes consciousnessthat we give it no more thought than we give breathing.

The New Economy now encompasses everything, not just the technology sector. Itis a reality is in Chicago just as much as in the Bay Area, in manufacturing as in dot-coms, in the life of the pinstriped executive as in the programmer wearing baggy cargo pants. For the “New Manager” a key to success is figuring out how the dynamics of the New Economy have changed the shape of the successful new venture. What, today, isof the ideal business model?.,

The corporate structure in which many of us came to maturity has gone away. Companies that use pyramid tables of organization to describe themselves tell us little about how their businesses actually function. The one-size-fits-all approach to customer relationships is gone. Supply chains take on creative new shapes as technologies allow new forms of commercial transaction and delivery. There is a “new fluidity” to the structure of business, and Tthe key is to understand these changesthat fluidity, adapt to themit, and find the opportunities hidden therein.

For companies like mine these changes are a godsend. The clients with whom we work include several mid-market Chicago area businesses whothat are rapidly and shrewdly adapting to these changes. We help them manage change by keeping them current on best practices, selecting and deploying the smartest technologies and recruiting the best talent for both full-time and consulting roles.

Take, for example, Stericycle, a Lake Forest medical waste management firm. It serves a booming market experiencing rapid industry consolidation and increasing regulatory scrutiny. Stericycle recently acquired the medical waste division of Browning-Ferris Industries along with numerous smaller firms serving smaller geographic markets. Successfully integrating disparate, formerly independent, businesses is essential to success.

For Bill Mundo, director of business and process development, this means a continuous flow of strategic decisions and challenges requiring specific expertise he is not staffed to address. Our company, Wilmette-based Rainmakers, serves as a sounding board and navigational aid pointing them to the right technologies, consultants and personnel to help them solve problems such as business process design and improvement, technology evaluation and specialized expertise and capabilities critical to change management.

“We all get involved in the daily grind of the business,” says Mr. Mundo. “Rainmakers helps me sort through the issues and helps me see the forest for the trees. They get me to people and organizations that can quickly pinpoint potential solutions and provide quick resolution,” he says.

Artful outsourcing is now fundamental to good management. Companies like Stericycle routinely turn to small teams or individuals who come in from outside the company, fix problems, and then leave until called again. Managers need to know the difference between tasks that fall under their own core competencies – the ones that make them money – and tasks that are more wisely handed off to outside vendors. With each new challenge, executives must ask themselves: Is this what we are good at? Will we make money doing it? Are our employees willing, ready and Take, for example, Stericycle, a Lake Forest medical waste management firm. Medical waste managementIt serves is a booming market experiencing rapid industry consolidation and increasing regulatory scrutiny. Stericycle recently acquired the medical waste division of Browning-Ferris Industries along with numerous smaller firms serving smaller geographic markets. Successfully integration integratingof disparate, formerly independent, businesses is essential to success.

For Bill Mundo, director of business and process management, this means a continuous flow of strategic decisions and challenges requiring expertise beyond the scope of his existing staff’s core competencies for which existing full-time staff seemed ill=prepared. Our company, Wilmette-based Rainmakers, serves as a sounding board and navigational aid pointing them to the right technologies, consultants and personnel to help them solve problems such as software integration, training and record keeping.

“I get all tied up in the daily laundry and underwear of the day-to-day business,” says Mr. Mundo. “Rainmakers helps me when I cannot see the forest for the trees. They get me to people and organizations whothat can quickly pinpoint problems and provide quick resolution,” he says.

If managing is a form of art, it is now best expressed in the form of the networked organization. The media of expression include strategic alliances, skillful outsourcing and an internal team focus on what it does best. Artful outsourcing is fundamental to good management today. Companies like Stericycle, for example, routinely turn to small teams groups or individuals who come in from outside the company, fix problems, then leave until needed called again. The networked organization is fluid, its shape constantly changing as circumstances warrant.

Artful mCompanies anagers need to know the difference between tasks that fall under their own core competencies – the ones that make them money – and tasks that must be donethat are more wisely handed off to outside vendors. but cannot be done well with internal employees. With each new challenge, executives must ask themselves: Is this what we are good at? Will we make money doing it? Are our employees willing, ready and able? Ifable? If this distracts us from our company’s greater mission, can we find an outside firm to do it better, faster and with greater cost efficiency?

The fluid, networked organizationIt is a trendis symptomatic of a trend observed by former U.S. Labor Secretary Robert Reich, who recently predicted that, “the so-called big corporation of the future will be a big brand. ,” generating consumer trust and controlling quality. It will have the capacity to generate trust among consumers and give them the quality they want.

“Arrayed around these big brands will be large numbers of small teams. ,” Reich continued. “Some of them will be independent companies … some will be independent profit centers… some will be units that are quasi-independent … The days of the big, old bureaucracy, designed primarily for economies of production scale are over. You simply can’t be nimble enough.”

New technology, he said, achieves low unit costs without a large production scale. … And there’s no reason to be organized for a large production scale because new technologies allow you to achieve low unit costs.”

Paul Adams, chief information officer of Tempel Steel Company in Chicago, thinks that medium sized companies have a structural advantage because, “small companies have no capital to invest in change and large companies have too many internal political barriers to change.”

Moreover, firms such as Rainmakers gives a medium sized company like Tempel Steel access to the same kind of technical and management consulting talent that the bigger competitors use. In the past, you needed deep pockets to hire high-priced talent or to bring in one of the big accounting firms. Rainmakers is one of the new breed of business consortia that allows Tempel Steel to identify the boutique specialty firms previously only known through word of mouth.

With markets place changinge coming at Internet speed, never has it been more important to continuously improve and intelligently manage change intelligently and continuously improve operations change. Continuous improvement and change and improvement sound trite today, but if they aren’t second nature to you by now they better be soon.

Elkay Manufacturing Company, an 80-year-old kitchen sink and plumbing supplier based in Oak Brook, could have gone the way of other local smokestack industries overtaken by foreign competition or done in by outdated manufacturing technologies and inflexible management. Instead Elkay turned to Rainmakerssought outside advice on how to help introduce cultivate a culture of nimbleness and Kaizen-style continuous improvement. In one 5-day period, Rainmakers helped we helped Elkay establish cross functional teams, taught teach shop floor process improvement techniques and showed how a routine of incremental change can eventually add up to a revolution. We also identified software productstechnical specialists who could help Elkay meet its deadlines for adopting a new enterprise resource management system that is integrating computer systems of all major business functions.

that vastly improved their database and human resource capabilities.

“When your company has been around for 80 successful years and maintains good market share, it’s hard to find a compelling reason to change,” said Jim Scott, president of the Elkay Division of Elkay Manufacturing. "Yet we recognize that continuous improvement is the key to long term success."

As Elkay began acquiring small suppliersother manufacturing companies and diversifying its product offerings, Mr. Scott knew that survival would require the help of outsiders like Rainmakers, who he describes variously as “change consultants” and “our concierge of business services.”

In the area of information technology, for example, “Rainmakers helped us benchmark our performance against other companies. You needed somebody on the outside who could help us benefit from what others have learned.”

National Casein Company, like Elkay, illustrates shows how the marriage of changing company culture change and technology that is becoming thehas become a ideal model for the New Economy enterprise here in what was once known as the Rust Belt. National Casein, a family owned business on Chicago’s South Side,, had a tradition of autocratic management. In By the 1990s, however,they knew that an autocracy could never introduce the introduction of new needed computing technologies became essential to beat much larger competitors and the autocratic approach. That approach would never would not achieve the required rank-and-file buy-in.

“In the ‘70s, if we wanted to make big changes in the way we did business, we might spend seven to eight years getting it done,” said Charles Cook, chief information officer. “Now that kind of change needs to happen in 18 months.” Cook turned to Rainmakers, who he refers to as a “consultant on consultants.”

National Casein askedWe at Rainmakers to could not stop at merely identifyying software products needed to put National Caseinthem on the Wworld wide Wide web,Web, modernize its streamline accounting and update customer relationship management. Just as importantly, they asked us to becomeWe also needed to serve as facilitators, bringing management and employees together to institute a culture of continuous change and improvement in which everyone participated.

These companies – some rooted in the old economy -- are now all poised for success in the New Economy. Why? We at Rainmakers think itthink it is because of their strong adherence to four principles:

Principle #1. Remember the basics. It is now all but taken for granted that much of the dot-com bust happened because young tech savvy managers business overlookedneophytes overlooked basic principles of good business management. Before you investing too much in a venture with a nifty idea or technology, make sure the company behind it has effective leadership, profitable good cash flow management, a laser sharp focus on customers, and a valid business plan based on meaningful competitive advantages.

Principle #2. Apply technology where technology pays. Don’t introduce technology for technology’s sake alone. Too many executives fall in love with a software product that produces tiny improvements in company performance while chewing up enormous resources on implementation. Focus on applications where the pay off will be big, such as customer relationship management, order fulfillment or supply chains and procurement. Before you invest, know in advance where the pay off will be and how the technology will help you achieve broader improvements in processes. Plan bigPlan big, but be prepared ready to implement through a long process sequence of small, incremental changes.

Principle #3. Stay nimble. It may sound uninspired to stress the need for continuous improvement and good management of change, but the need was has never greater than now in abeen greater marketplace changing at Internet speed. It must be a part ofin your company’s culture to repeatedly look at every business transaction, every interaction between humans, toto find those small incremental changes that will combine to improve profitability. As markets, technologies and competitors change at Internet speed, your company’s performance will change too, like it or not. Managing that change means need to change too. winning or losing.

Principle #54. Keep your organization fluid. Focus on your core competencies, on those things that you do best. Outsource the rest, unless the need is so fundamental and long-term that recruiting full-time talent or even acquiring a company enhances your business. Customer relations need not all occur through your sales force if outsourcing to a call center provides better customer service. If adapting a new technology makes sense, software support need not be handled internally if ifthe internal expertise is lacking.

Through continuous nonstop restructuring and fluidity -- made possible through ongoing continuous outsourcing, recruiting, acquiring and divestiture -- you can constantly reinvent your business as conditions dictate and your core competencies contribute value in changing ways. New information technologies make organizational fluidity easier to achieve by making it easier to integrate outside talent. Make that new fluidity your secret weapon.

1)

1)

Conclusion …

That last principle might be the most important.

A company like Rainmakers could not have existed five years ago, before new information technologies made it possible for members of our consortium to bring their executive boutique specialtiestalents from place to place with such ease. Now we can bring our virtual virtual office to our customers. Our customersThey send us email as easily as they send it to an a coworker assistant sitting nearbysteps away.

These facts illustrate a deeper truth about the New Economy and the capabilities it is bringing to Chicago area business, new and old, large and small. There is a new fluidity today that could not exist previously,, an ability to tap talent, change form and adapt to change faster than ever. That that makess us more competitive then than evercompanies anywhere else in the world. It is an exciting time to be in the Midwest.

Jon Liberman is Chief Rainmaker at Rainmakers, a Wilmette-based consortium offering Midwest businesses wide-ranging professional consultation on best practices, technology and human resources. His career began with 24 years in a family business. Graduating from the University of Illinois in 1978, he entered the information technology industry during its “mini revolution”. In 1988, Liberman merged his consulting practice, Corr Concepts Inc., with a mid-market CPA firm, Checkers, Simon and Rosner. In 1996, that firm was purchased by American Express Tax and Business Services and Liberman took responsibility for business development in the technology practice. He founded Rainmakers in 1998. Liberman, the author of “Supercharger Your Sales Force,” also is a speaker and lecturer.