Lurching from crisis to crisis, growing faster than they could handle, Wes and Nancy Creel's company was in trouble. So were they
IT'S CALLED A STRESS TEST. A DOCtor hooks you up to a monitor and has you walk on a moving treadmill that keeps getting faster and steeper until you find yourself running, not walking, and gasping for every breath. As you struggle, your mind starts to wander, searching for something -- anything -- to concentrate on. More often than not, you start to think about the treadmill itself.
A treadmill, thought Wes Creel as he sweated through his stress test at Dallas's Cooper Clinic back in January 1986. Perfect. That pretty much summed up life at his company, Creel Morrell Inc. Sure, business was booming. And yes, the Houston-based graphic-design firm had made the INC. 500 list of fastest-growing private companies for three years running. But the faster it grew, the harder he found it to continue. We're on a treadmill, he thought, and "someone keeps raising the incline."
Every employee had a favorite anecdote. Cinda Debbink, who was running the Austin office back then, says this one is pretty typical. "We tell a senior designer to produce an annual report," she recalls, "and as always, we are close to deadline by the time we tell him." But no sooner does he sit down at his desk than he is called away to do a business card for another client. Then, before he can get back to his office, there are questions about a brochure, and someone else stops him in the hall to talk about an ad running in tomorrow's newspaper. The designer, glancing up at the clock, wonders how he'll ever meet the deadline for the annual report, when he realizes they have run out of paper. He excuses himself and rushes out for supplies.
Since the company was constantly juggling four or five big jobs (such as the annual report) and scores of little ones (such as the business cards), it wasn't unusual to see the lights burning all night in Creel Morrell's offices. About this time, employees started saying, not entirely in jest, that the company's initials, C.M.I., stood for Crisis Management Inc. Creel appreciated the humor; after all, he had horror stories of his own to tell. There was the time, for example, when he'd been flying all week, scurrying around for business, and returned to his hotel to find a message that read, "Can you give us the OK to send a $100 check to the typesetter?"
This isn't funny, Creel thought. Here we've been in business for seven years, and my employees are making jokes about putting a mobile home on the roof so they can get some rest, and I am still deciding what kind of soft drinks should go in the company vending machine and when we should pay the smallest of bills.
Something had to be done. Only 33, Wesley L. Creel was grossly overweight -- the result of gobbling down fast food between crises at the office. That is what had brought him to the Cooper Clinic in the first place. He felt lousy and wanted to know what physical toll he was paying for the stress of running the business. He already knew the emotional cost. He rarely saw his two small daughters and nobody -- especially not his wife, Nancy, who is also his business partner -- could remember the last time he had been in a good mood. So he knew there were problems. What he wanted was reassurance that his health would hold out while he worked on solving them.
He didn't get it. "The doctor looked at the test results from the treadmill and everything else, and he asked me how old my kids were," Creel recalls. "I told him the girls were four and one. Then he said if things didn't change, I'd never see them graduate from high school."
The results of the physical exam, combined with the general chaos, left Creel reeling. Now things had to change. But how? He had no idea. He was totally unprepared to deal with such problems. Like so many company founders, he had been too busy getting the company up and running to think about what might happen if the business took off, and he had never dreamed that success would come so fast. It had been only seven years, after all, since Wes and Nancy had teamed up with designer Eric Morrell to launch the business, laying out brochures in their home. If you had told them back then that they would soon be running a $4-million company with a 50% annual growth rate, they would have laughed at you.
But now success was here, and it was no laughing matter. They had 40-odd employees who could hardly keep up with the work -- designing signs for shopping malls and office buildings, creating corporate logos, writing and printing annual reports, what have you. It was a dangerous period, the point at which small companies often die. The orders are coming in faster than you can handle them, and you are, ironically, being smothered by success. In this case, moreover, there was a chance that, even if the company survived, its president and chief executive officer might not. That was scary. Even more frightening was the fact that Creel didn't know how to change things. True, he could watch his diet and start an exercise program, but that would only buy time. The real challenge was to eliminate the underlying problems with his company.
Creel tried everything. Management by wandering around was in vogue, right? So he wandered around -- and promptly got in everybody's way. Managers manage, right? So there were lots of meetings, especially about the crisis at the office, but nothing ever came of them. "When we got together, people would talk about the things that were bothering them," says Nancy Creel, who was in charge of the company's marketing. "That made everyone feel a little better, but -- after the meeting was over -- the things that made them unhappy were still there. Nothing really had changed."
It was at about this time that Creel saw an ad for a planning seminar being given by Robert M. Donnelly, a former corporate planner for IBM and Exxon. Why not give it a whirl? he thought. So he went, listened, and walked away convinced that Creel Morrell could use an outsider's perspective. Maybe someone else could see patterns in the confusion, patterns that he was missing.
His first thought was to hire Donnelly, but he had some reservations. At $1,500 a day, plus expenses, the guy certainly didn't come cheap. And anyone who introduces himself by saying, "I am a business doctor. I listen, examine, and prescribe a course of action," is not the sort who makes you reach instantly for your checkbook. On the other hand, Creel needed help and saw a way to get it without spending cash. After looking at the rough handouts that Donnelly used for promotion, Creel proposed a barter deal, offering to redesign Donnelly's marketing materials in exchange for help with planning. Donnelly agreed.
"Was I surprised when Wes called in Donnelly?" asks Morrell, the firm's chief designer, who leaves most of the company's administration to Creel. "No, he was desperate. He would have done anything."
The company's problems were rooted in its basic mode of operation. For one thing, the company had fallen into the habit of accepting every job that came down the pike. "We were flattered that anyone would want to use us," says Creel, who had dropped out of a Ph.D. program in American studies at the University of Texas to start the company. "We couldn't say no if someone offered to hire us." But flattery doesn't pay bills, and Creel Morrell's margins, which had averaged 10% when the company started in 1979, had since been cut in half.
By taking every job in sight, the company was forced to hire more and more people, which it had less and less time to train. The result: tremendous fatigue and burnout. People were too exhausted to operate efficiently. Some just left. And since Creel Morrell hired only when there was a vacancy to fill, the company was chronically shorthanded.
Managers agreed that the situation called for dramatic action. They were not convinced, however, that Donnelly was the man to provide it. He was a planner, after all, and planning is a subject that puts most people to sleep. The word itself conjured up images of a thick volume, probably written by a consultant, that generally lies unread on a dark shelf in a moldy basement.
So it was a reluctant senior staff that headed off for the first meeting with Donnelly. "A lot of people thought [planning meetings] wouldn't accomplish anything," says Wes Creel, "and I have to admit, I had my doubts, too." Nancy Creel was also skeptical, but she figured that all they had to lose was a few hours of their time. "I thought we'd show up, Donnelly would talk to us, ask 18 questions, and come back in February with a plan."
Donnelly, however, had other ideas. He didn't care much why the Creels had hired him, or what they expected to get from him. He had his own approach to planning, and he didn't doubt for a minute that it would work here as it had worked elsewhere. "The problems all companies have in growing are always the same," he says.
Arrogant though he was, he quickly impressed the staff with his seriousness about the process. To begin with, Donnelly insisted that all planning meetings (and there were to be seven over the next 10 months) be held away from the office. That way, the phone wouldn't ring, and people couldn't pop in to ask "quick questions." He also demanded that all eight senior staff members be present, including Eric Morrell, who works on the West Coast, and the Creels. Not that he intended to let Wes Creel run the meetings, though he ran every other meeting the company had. When the staff assembled in The Woodlands Hotel Conference Center in Houston that January morning, the man at the front of the room was Bob Donnelly.
That had an immediate effect. There is, not surprisingly, a reluctance to tell the boss what he is doing wrong when he is also running the meeting. Indeed, Creel himself sometimes had the uneasy feeling that people told him only what he wanted to hear. "I never got a real strong sense of what people were unhappy about," says Creel.
Now he found out. His staff either told him to his face, at the sessions chaired by Donnelly, or they did it through anonymous comments submitted after the first meeting, when each attendee was required to write up a list of the company's strengths, weaknesses, opportunities, and threats -- or SWOT, for short. Suddenly, Creel, who had thought communications were pretty good, discovered that they weren't.
"You are the only one who knows what is going on."
"We never get to discuss things."
"What kinds of work should we be doing?"
The discussion was not all one-sided. Creel, too, got a chance to voice his frustrations. "I told them, and I think they knew this, that I hated doing all the administrative stuff, keeping track of the receivables, and I also didn't like the fact that I was the only one thinking about the company's future."
After the general airing of grievances at the February meeting, there came the moment of revelation: "Gee, Creel's unhappy because he has too much to do; we're unhappy because he is the only one who knows what is going on. You know, we have similar concerns." From that point on, the meetings began to resemble one of those Russian dolls that opens to reveal another doll, which opens to reveal another doll, and so on -- except that, instead of dolls, Creel Morrell's staff kept finding solutions.
The process could be triggered by almost any complaint. One of the first meetings, for example, was devoted to the company's weaknesses, and right at the top of the list was problems caused by the company's habit of completing jobs at the last minute. Because the staff was constantly behind, Creel Morrell billed only when someone got around to sending out an invoice, usually at the end of the month. "The whole situation was a mess," Morrell points out. "When we did get around to billing, nobody ever followed up to see if we got paid or not."
That got the staff talking about receivables, and they realized that different clients paid at different times. So if the Creel Morrell bill arrived on the fourth or fifth, and the client paid only on the first, nothing would happen for four weeks. As a result of that conversation, Creel Morrell now asks every client when its billing period ends -- and makes sure the invoice gets there a day or two before.
That's simple, basic, and it improves cash flow. Perhaps more important, he discussion got the staff talking -- at that meeting and the subsequent one -- about why the work was backing up in the first place. "It turned out that the problem really stemmed from the client as much as anything else," Creel says. "For example, they would ask a senior designer, someone who was working with them on a major project like an annual report, to do their business cards as well. All those little projects were keeping the designers from the major work."
This revelation led to another discussion, at the April meeting, about the kind of work those designers, and everyone else, should be doing. The issue was closely related to a major problem at Creel Morrell, namely, the confusion felt by the senior staff about the overall direction of the firm. That confusion came directly from the Creels and Morrell, who would often express their pride in having a first-rate design firm, then turn around and have designers create business cards and simple brochures -- only to scoff at such work a short time later. "What exactly are we supposed to be doing?" staff members asked at various times and in various ways. After seemingly endless discussions, they finally got an answer.
"We had always been very elitist about our work," Creel says. "We only wanted to do the cream of a company's design work." Left to its own devices, Creel Morrell would probably have dumped the business cards and other simple work. That was certainly the easiest solution to a vexing problem, and the quickest way to make it disappear. But Donnelly forced the Creels and Morrell to look at the consequences of such a decision, and here the outsider's perspective proved invaluable. Donnelly, who had studied the company's financials, demonstrated that those mundane jobs were what he called Creel Morrell's "bread and butter." They were extremely profitable jobs, bringing margins of more than 20%. If the company eliminated them, it would never have the retained earnings it would need in coming years to finance growth.
Convinced by Donnelly's logic, the staff was forced to grapple with a difficult question: how do we keep that very profitable bread-and-butter work without boring senior creative people to tears? Fortunately, Donnelly had a method for dealing with such challenges. At the end of each planning session, staff members were paired off and told to come back with potential solutions to problems that had been raised. The bread-and-butter problem fell to Morrell and Debbink. Their solution: create an intern program.
As it happened, this solution also addressed another problem, namely, the difficulty the firm had in persuading young designers to come work in Austin. Most of the major design work in this country is done in New York, San Francisco, L.A., or Chicago. By bringing in student interns, Creel Morrell would have a chance to prove to budding designers that tumbleweeds really don't roll freely outside its offices on Congress Avenue -- a major breakthrough in itself. But the interns would also be a source of cheap labor for the bread-and-butter jobs. Not only would that liberate the senior staff to do more creative things, but -- oddly enough -- it also ensures high standards on the smaller jobs. "The interns are so thrilled to being doing their own work," notes Debbink, "they make sure the quality on the cards and brochures is as good as it can be."
So what began as a discussion of the company's never-ending backlog led to the creation of a recruiting program, which may in turn help eliminate the turnover problem. With the new program up and running, Creel Morrell will be able to see how well interns handle the bread-and-butter work, and the students will learn how the company operates, reducing the need for training if they are subsequently hired.
The senior managers realized, however, that the intern program would not solve all of their staffing problems. They talked about that issue at a meeting during the summer, and again it was stated frankly: we are chronically understaffed. We need to hire more people. But who? And what should they do?
Up to then, the Creels and Morrell had done most of the hiring. They would define the job and then go out and fill it. The system didn't work very well, the group decided, because the company wound up hiring only after staffing problems had arisen. As a result, Creel Morrell never had on board the people it needed in order to grow.
The discussion convinced Creel that there were gaps in the organization. The question then became "How can we best determine where the specific gaps are?" The answer, he decided, was simply to have staff members come up with their own job definitions. "I just believe that people do the best job when they are doing what they want to do," he says.
Using this approach, they discovered, for example, that they needed someone to deal with vendors -- a gap they subsequently managed to fill from inside. "In a service business, how you deal with vendors is important," says Nancy Creel. "It affects your reputation. We had one designer who was absolutely terrific with vendors. She liked doing it, and it turned out that the other designers were more than happy to let her. So we made that her job, and she is happy about it. I think people are generally happy when they have input, when they have a little bit of control of the process."
And by having specific job descriptions, Wes Creel adds, performance reviews are easier. "You can point to what an employee is and is not doing."
So it went. The staff would identify a problem or a weakness, talk about it as a group, and come up with solutions either together or in teams. It was fundamentally a simple process, if not always an easy one. Few people, after all, like to face problems. The typical response is to ignore them in hopes they will go away. Donnelly forced the company to deal with them, by keeping the discussions focused and by demanding that attendees come up with possible solutions by the following meeting.
Creel's presence was also important, particularly when it came to solving the problems that were plaguing him personally. There was, for example, his ongoing exasperation with the day-to-day details of running a business. On the other hand, his managers complained over and over about his failure to delegate. Only he knew what was going on in the company, they said.
It was an issue that had often been raised in the past. This time, however, Donnelly was chairing the meeting, and he gave the group a month to find a solution. Working in teams, the senior staff came up with an organization plan that called for Cinda Debbink to be appointed chief operating officer, and for Creel to farm out more of his financial responsibilities to his assistant, who was promoted to the newly created position of controller.
None of that would have happened if Donnelly had not made the company devise solutions by specific dates -- or if Creel had not been a willing and active participant. Such problems seldom get solved unless the boss is involved. Then again, Creel had every reason to get involved, since he was desperate for solutions that would make his life easier. That, after all, is why he had brought Donnelly in.
And his life did become easier as a result of the meetings. For one thing, he and Nancy spend more time with their two daughters these days. That's possible because they now have a small office less than a mile from their home in Houston. The idea for the office grew out of a discussion in which staff members complained about Wes and Nancy's habit of popping up unannounced at the company's different offices -- there are now five -- wanting to kick ideas around. Employees never knew how seriously the Creels took these ideas, and the visits kept them from doing their jobs.
Again, the issue was on the table. Again, a deadline for a solution was set. It turned out to be the Creels' own office, where they could focus on the company's long-range concerns without being caught up in everyday details. At the same time, they would eliminate their two-hour commute, have more time with their children, and spare the field offices the disruption of frequent visits. Everyone was pleased.
Looking back, the Creels are amazed at how simple and logical the process was. To figure out where you want to go -- which is the ostensible purpose of a business plan -- you have to know where you are. And the only way to figure that out is to ask the most basic business questions of all. What is happening in our business right now? What are we good at? What don't we do well? And, finally, what business are we really in?
But obvious though those questions seem, they are ones that Creel Morrell had never truly answered. There had been previous "planning" meetings, usually held over pizza and beer, but nothing had ever come from them.
That's typical, says Donnelly. "Nothing gets done at meetings like that because no one can be objective." He has reason to toot his own horn, of course, but the truth is that Donnelly did bring objectivity to Creel Morrell's planning process. He repeatedly explained that the company's problems were not unique, and -- contrary to what the Creels thought -- they were not all that difficult to solve. In addition, Donnelly imposed a discipline that not only allowed the Creel Morrell staff to ask the questions, but demanded that the questions be answered.
In developing the answers, the skeptical Creels came to understand what remains unlearned by many far larger companies: that the process of planning creates the plan. By resolving outstanding issues, Creel Morrell gave itself a new, clear focus, even before the company ever implemented a formal business plan. For the first time in the company's history, it has a large enough staff to handle the workload, and there is a general agreement on the company's direction. Now Creel Morrell is ready for the next stage: developing its strengths and exploiting its opportunities -- the S and the O of the SWOT analysis.
That analysis helped the staff to understand that, despite its problems, Creel Morrell was still larger and more profitable than most of its competitors. As a result, the company is looking at the possibilities of growth by acquisition, buying its smaller, struggling competitors, instead of opening its own offices in new markets. The staff also took note of Creel Morrell's strong ties to clients, which could make it easier for the company to more into related fields. Builders, for example, often ask Creel Morrell's designers where signs should be placed. If the company is already helping to determine one aspect of a building's outer appearance, the staff wondered, why not do all of the industrial landscaping? Again, Creel Morrell is considering an acquisition.
It will, of course, take time to integrate new divisions, but even so the planning process has already produced some stunning results. Wes Creel, who is far happier and has taken up running, has lost 50 pounds. He and Nancy now have time for vacations; they are expecting a third child; and business has never been better. Sales are projected to increase to $6 million this year with net profits rising to nearly 15%. Says Wes, "The business is fun again."
The question is: Can it remain so?
Creel is happy mainly because the company has eliminated the nagging problems that kept cropping up as it grew. If the company were planning to remain at its current size, there would be little to worry about. But the company plans to grow. Indeed, all the work with Donnelly has merely prepared the way for Creel Morrell to implement an ambitious expansion strategy. Now the company has to execute the strategy efficiently. In other words, it must make the transition from emerging growth company to established firm. To do that, feeling good is not enough.
Can the company make that transition? While the signs are encouraging, vestiges of the old Creel Morrell remain. As a goodwill gesture, the company designs date books that it sends to customers and friends. A visitor who spent some time with the Creels was pleased to find his copy of the 1987 diary in the mail. On January 23. A second one arrived in early February.