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No Way Out

Profile of an entrepreneur and the struggle to delegate within her fast-growing company.
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Four times Mary Lou Fox has tried to let go of the innovative, fast-growing company that her instincts created -- and four times she has failed. Has she finally found a strategy that will let her business thrive without her?

In the last two hours, Mary Lou Fox has smoked her way through nearly a dozen cigarettes. She shifts in her seat, her whale-shaped earrings dipping and diving. After all these years and all those failed attempts -- to acquire or promote or hire or invent a management team that could ease her burdens and carry forward what she had begun -- it has finally come to this: a showdown. She can feel it about to arrive.

If only Fox's business strategy drew less from a rich well of "childhood and life experiences" and more from dry textbooks, she might not feel so restless today. Despite a singularly unpromising start and a seemingly irrelevant background, she has guided Westhaven Services Co., an institutional pharmacy based in Perrysburg, Ohio, from zero to $18 million during her 15-year tenure as president and chief executive officer. The fast growth has resulted largely from what she describes as "dumb marketing," and her own quirky definition of customer service. Like most entrepreneurs, "the lady has gut instincts that no one else has," says Greg Lawless, vice-president of marketing.

He means it as a compliment, of course. But Fox, after all she's endured, may not see it that way. In fact, she probably feels as if the windows in her office -- the ones she wanted so she could peer into the plant or watch every move her marketing reps make -- might as well have bars on them. "If you pulled Mary Lou out of that company, it would fail," claims Lawrence Cryan, who served as controller for most of 1990.

The transition Fox has been trying -- struggling -- to make is hardly ever easy. Instead of taking pride in doing it all, she needs to gain satisfaction in finding and training others to manage the business. Intellectually, she knows that. But over the years, Mary Lou Fox has made four distinct attempts to let go, bringing in outsiders and boosting insiders, resting her hopes on poised professional managers and then on eager trainees. They come and they go, collateral damage of the battle she has been waging within herself. "To some degree, Westhaven is still a one-man show," confirms Rolf Schrader, who left in April 1991, after serving as executive vice-president. "But Mary Lou hasn't been sticking her head in the sand about the whole thing. She's really tried."

These days the wreckage of all those disastrous efforts, and the disappointment that has welled up inside her, bear heavily upon Mary Lou Fox. "I've spent years saying, How hard would it be to clone me?" she says. "I keep thinking, If I can do this, a high school graduate from an idiot town, why can't you?"

Somebody can. And somebody finally will. By facing up to the biggest, and hardest, obstacle in her way, Fox is convinced she will soon break free. "I've got to get out of here," pleads the 60-year-old. "I'm stuck."

* * *

Mary Lou Fox, CEO, is definitely living out a dream. Unfortunately, it is somebody else's. "I never meant to be in business," she claims. She has adapted admirably. Charging into her office at 10 a.m. -- fresh from four or so hours of "private thinking time" in her basement bunker at home -- Fox lugs a white wicker basket overflowing with mail she has "processed," affixing yellow sticky notes to each piece. "By the time she comes in, you want to be done with whatever you were going to do for the day," recalls Bob Westphal, who served as director of marketing and client development for about four years. "She arrives with legal pads flying and Post-it notes spraying everywhere, and you are hers."

Westhaven became hers almost by default. In 1976 Fox encouraged her husband to expand beyond his five pharmacies by serving nursing homes, a market she knew through her work as a paid staffer at the Red Cross. He hated the new niche. Nursing homes required a vast array of ancillary services: from special carts to medical-records systems to specialized consultant pharmacists who could review all drug regimens. One evening William Fox interrupted his usual tirade about the nursing-home market with an unusual invitation: If you think this is such a great business, he asked his wife, why don't you do it? "I told him I wanted absolute control," recalls Mary Lou Fox. "I knew I'd make instinctive decisions, and I didn't want to argue every point. He said OK."

What the "big Junior Leaguer" endured her first year alone would have transformed Mother Teresa into Leona Helmsley. After just three months a giant competitor sued her for $1.5 million, claiming she had hired an employee who was bound by a noncompete agreement. The suit eventually was dropped. Shortly thereafter Fox spent $70,000 on a computer system that landed her back in court when the manufacturer went belly-up and refused to service it. That time she prevailed. But there wasn't much of a victory party. On the morning of April 6, 1977 -- her 46th birthday -- Fox came in to find investigators from the state licensing board rifling through her files. Later she found out the group was acting on an anonymous complaint that Westhaven had been mislabeling generic drugs. It was cleared, but not before customers got edgy. "It was all harassment and politics," says Fox. "I was not a pharmacist, and the pharmacists hated me for it."

She was also not, by anyone's loosest definition, a businessperson. "I didn't even know what revenues were," she says. But though it took an accountant to walk her through cash-flow statements -- she didn't need to learn about actual profits themselves until year three -- Fox intuitively understood how to attract customers. For her first direct-mail piece, she handwrote 25 letters, a personal touch she had used in fund-raising. Inside, she stuffed a 50¢ lottery ticket, playing off the phrase "Do You Want to Be a Winner?" "That way," says Fox, "I could make a follow-up call and ask, Did you win?" Nobody did, but quite a few nursing-home administrators came to the phone.

Surely, none of them had ever received much in the way of marketing materials, beyond the standard fruit basket at Christmas. Institutional pharmacies generally touted prices, not prizes, to bring customers in. But not the prices of drugs; because most patients relied on Medicaid to pay for their drugs, pharmacies couldn't charge much beyond the reimbursement rate for the medicine itself. So they competed on the prices of their services: medical carts, forms, in-service training, even software. Given the newness of the industry itself, most of the institutional pharmacies were young, community-oriented, and unsophisticated at marketing. Mostly they relied on sales calls, there being no advertising vehicle that covered each particular area efficiently. Seeing possibilities for glamour where no one else had, Fox brought what one employee refers to as "the dazzle" to every Westhaven service. She markets forms, for instance, under the brand name WINS, an acronym for Westhaven Integrated Nursing System. And her clever brochure ties with a bow. "Mary Lou was, by far, the most marketing-oriented of all the pharmacies," notes Brent Cousino, partner in a nearby accounting firm that specializes in nursing homes.

Fox's marketing focus, however, didn't arise from a sober analysis of the industry's pizzazz shortage. "She used what she knew," says Westphal. "And she knew how to entertain." Having been inside nursing homes, Fox also knew that they were dreary places; anything she could do to distract administrators from the overbearing regulation, or nurses from the low wages, might earn their affection. Around Christmastime, Fox bought 450 poinsettias and sent one off to each resident of the five nursing homes she was servicing in her first year. Even now, serving 140 nursing homes, she sends some sturdier sort of trinket -- for example, a pen that hangs around the neck -- to every nurse. "It says, We are thinking of you," explains Fox. "The best way for us to deliver quality care is for us to be in good communication with the nursing staff." In other words, the nurses might actually pay attention the next time Westhaven bawls them out for ordering incorrectly.

Fox's legendary parties, the icing on Westhaven's marketing effort, grew partially out of her childhood love for birthday parties. At trade shows she earned the nickname "Chocolate Bunny" for her candy-clogged bashes, and she sometimes treated clients to parties at which every element tied into a central theme. "The energy and the elegance she brings to her marketing really sets her apart," admits Phyllis Wilson, president and CEO of Nursing Center Services Inc., a competitor. "Folks call Westhaven 'Mary Lou's pharmacy.' She is very, very visible."

Funding those outings, Fox claims, simply requires shaving Westhaven's bottom line and, to offset it, continually pushing for greater volume. The parties offer tangible payoffs. Any nursing-home administrator thinking of changing drug vendors will undoubtedly find some Westhaven event stored in his or her memory bank. "Because of those parties," says Wilson, "she is known to people." Her clever direct-mail campaigns have also helped her expand beyond Ohio, into Michigan and Indiana. "She just thinks this stuff up," says Westphal. "Every six months she'd come up with a direct-mail piece that was incredibly creative." Westhaven now fills more than 3,000 prescriptions a day.

Fox knew what she wanted her customers to feel, and she used her life experience to design ways to make them feel it. To inspire confidence, she launched daylong seminars not unlike the educational ones she had begun as founder of the Toledo Opera Association. And when she decided to focus on nursing homes in rural areas -- where competition thinned out -- and needed to assure the homes that Westhaven could still provide 24-hour emergency service, she set up a network of drugstores and hospitals modeled on the Red Cross blood-distribution system. In designing Westhaven's computer system, Fox produced a never-ending customer wish list that took more than two years to satisfy. As a result, her customized software checks each incoming prescription against 77 variables: allergies, drug interactions, frequency of orders, and others. She was blessed, she says, in that she "had no preconceived ideas about what people did in business."

So she did whatever she had to do to keep customers. Sometimes, for instance, she'd offer marketing tips to the nursing homes, even sending out banners, table favors, and balloons. Cryan says, "She tried to price each nursing home separately."

Well, something was bringing customers in and keeping them aboard. By the end of year one, Westhaven had amassed sales of some $400,000, with losses near $125,000. By year two Fox had broken the $1-million mark with anemic profits. By 1983 sales had shot over $3 million. There were no losses -- except if you count sleep. Any start-up takes its toll, but hers had been especially painful, given her lack of experience. "I was drained," Fox recalls. "There was so much shock, so much fear, so much emotion in those first two years that I developed a tremendous amount of control. I couldn't cry for a few years. I was trying so hard to just survive."

Westhaven had become a heavy, and lonely, burden. And in the spring of 1983, Mary Lou Fox thought she had found someone who would share it. Never in the world could she have imagined the truth: her search was just beginning.

* * *

Had Mary Lou Fox been a businessperson -- someone who identified a niche and set out to dominate it -- maybe she wouldn't have such difficulty maintaining an identity separate from her business. When she grew tired, she could have looked at the numbers, patted the two Mercedes in her garage, and quietly returned to civilian party giving. But she was too close to her business. "We're willing to operate on a lower margin than our competitors," she says, "because this business is a lot about the kind of person I am."

And one kind of person she is not is a failure. Which is why, in August of 1986, Fox decided she could not live with the pact she had signed three years earlier.

She was halfway through an earn-out plan that would have had her surrendering her remaining 30% of the company to its majority owner, a large local hospital. She had sold it, recalls Garth Tebay, an accountant and top adviser, "because she wanted more management strength and financial strength." What she got, mainly, seemed to consist of a lot of windy talk about how the hospital would transform $5-million Westhaven into a $57-million company within five years. In came experienced vice-presidents, flashy salespeople, and company cars. "They didn't know this was a customer-service business, and it wouldn't happen in the real world," says Fox.

What they didn't know nearly killed Westhaven. After hearing that it was hemorrhaging at the rate of $75,000 a month, Fox marched into a meeting and denounced her partners as "a bunch of jokers." With Tebay's help, she secured a $1.2-million loan and bought Westhaven back.

Rather than chase new customers -- an expensive proposition, given that it costs some $25,000 to bring a nursing home up to speed -- Fox spent the year returning Westhaven to its formerly darkened shade of ink. To regain the company's innovative luster, she snapped up the suggestions of her new adviser, Dennis Roth, whose Cleveland law firm specializes in health care. Roth had helped her negotiate Westhaven's discharge from the hospital. In 1987 he suggested she set up a special quality-assurance division, which would help nursing homes comply with new and complex federal regulations. Westhaven soared to more than $8 million in 1988, with profits of about 5%.

Fox had no trouble turning to outside consultants like Roth for advice, but her experience with the hospital had convinced her that the people who could best manage Westhaven worked inside the company. So in her second attempt to create management, she set out to build her own managers -- starting with herself. At a weeklong management seminar in Boca Raton, Fla., she says, she "learned the language of business."

She returned with a clear head and a concrete mission. To groom executives, Fox decided, she would anoint Westhaven's "star performers," who were mostly pharmacists. They already understood what the hospital higher-ups had never been able to grasp: the product Westhaven was selling consisted of service, not drugs. In accordance with the seminar's advice, these new disciples would implement departmental objectives that would support Westhaven's corporate goals. To make sure all the star performers were reading the same prescription, she whisked them away to a retreat on the banks of Lake Erie. "It was truly inspiring," recalls Suzanne Neuber, who served as vice-president of operations.

Inspiration soon drowned in perspiration. Almost immediately upon returning, recalls Fox, "they got into day-to-day fire fighting, and their backs broke." Within a couple of years, every one of the hopefuls had quit. "They couldn't delegate," she says. "They worked until they self-destructed."

Oddly enough, Fox's attachment to her customers may have been part of the problem. "If she asked you a question about a particular customer, then you had to give an answer," recalls Neuber. "Then she would ask you another question, which meant another answer. It went on like that. Others learned to blow her off until they got three yellow-stickys from her." Todd Herzog, one of the original foursome of "star performers" and now owner of a computer-consulting firm, recalls, "You get so much piled on you that you cannot survive. It pulls you to the bottom of the pond, and you can't release enough to get back to the top."

Distressed that the star performers "didn't make life any easier" for her, Fox decided the problem was lack of training. ("But I figured, Who trained me?" she says.) After thinking about it, she decided that "they might have been taught to delegate, but they weren't given the time to learn." The truth was, with sales exploding, Fox didn't have the time to teach.

Quite logically, then, her best chance to succeed at building managers was to find people who could catch on without any training. "I needed people with professional management skills," says Fox.

Aided by a headhunter, she began hiring experienced managers in earnest in late 1988. She had already brought aboard Tebay, a partner in a local accounting firm, as chief financial officer. He survived for a couple of years but finally succumbed to the same mysterious symptoms as his less experienced predecessors. His weight dropped to 160 from 194, and even Fox noticed "he looked like a gray ghost. People kept asking me whether he was sick." He wasn't. "I burned out," he says. "Mary Lou creates an exciting environment, and I didn't have the capability to say no to a problem."

Managing for Fox, as Tebay and others would find, meant dealing with problem after problem but never having the time to prevent them from happening again. The opposite of most entrepreneurs, Fox remained glued to the little picture, reacting to everything as it crossed her desk. She was, remarkably enough, too detail-oriented. "Big projects don't get done," recalls Herzog. "You get too wrapped up in day-to-day problems. There's a fire, and Mary Lou needs to throw a liquid on it right away -- even though it might be gasoline."

By 1990, with Westhaven's sales at nearly $14 million, Fox was fielding an all-star lineup of fire fighters, including Cryan, who had jumped from a Big Six accounting firm to serve as CFO; a vice-president of business development who had moved over from Baxter Travenol; and a new vice-president of operations, Rolf Schrader, hailed in Westhaven's newsletter as a nationally recognized expert in the institutional-pharmacy industry. "Mary Lou had built that business from nothing, and she was still used to having everybody come to her to make the decisions," recalls Schrader. "I knew that wasn't going to change overnight, but that's not to say it didn't drive me nuts at times."

Something drove them all nuts, sooner or later. And the arguments over what went wrong echoed Fox's earlier fiasco. "Mary Lou has a tendency to give a fair amount of responsibility without any authority," observes Westphal. Fox complains that the professional managers just weren't enough like her. "They should have had common sense -- because that's all I had -- and I expected them to have innate problem-solving skills," she charges.

Their weaknesses didn't hobble Westhaven's top line, though Cryan asserts that Westhaven, because of high turnover and capricious pricing, "was not nearly as profitable as it should have been." Fox, for her part, "worked harder and harder to keep it moving so that at least it wasn't a disaster," she says.

Of the four topflight professional managers Fox had brought in, there was one survivor, Nancy Bucci. Bucci had actually joined Westhaven in 1988, founding its Division of Quality Assurance. But she didn't move up to vice-president of quality assurance until January 1990. "Mary Lou comes across as dizzy and going in a million directions," says Bucci, 41. "Men come in thinking they are going to run this company. They just want to take care of the little lady. But Mary Lou is not going to turn the company over to someone from the outside whom she doesn't really know."

After her experience with bringing in professional managers, Fox had just about had it with outsiders. And with so-called managers, for that matter. Why not have the people who actually do the work, and who don't tend to turn over as much, uphold Westhaven's closeness to its customers? she figured. So last year Fox became inspired -- by what, as usual, she can't exactly identify -- to split Westhaven's key people into four teams, each led by a marketing rep. The teams would each pay special attention to 35 or so nursing homes, making sure each one got the feeling "that we know who they are and we care about them," she says.

The teams met monthly for nearly a year, and then -- oh, do we really need the grisly details? Suffice it to say that half of the four team captains, and all the teams, disappeared. "We had little authority," recalls vice-president Greg Lawless, who left Westhaven last April, when he was a team captain, but has since returned. If a team member, for instance, failed to carry out an assigned chore, there was little a captain could do about it. "At best," says Lawless, "we could just report to Mary Lou that so-and-so wasn't contributing."

If Fox ever meant to share any of that authority -- and she claims she did and always has -- she wasn't inspired to do so once she saw the teams in action. The difficulty was, she says, nobody solved problems the way she would have solved them. No one understood, for instance, that when a nurse prefers the original copy of a certain form, you don't just send it to her. "You send it to her with a note that says, I know you want to see this," explains Fox, rolling her eyes.

It all seems so clear to her. When a nurse complains that the medical cart Westhaven provides needs to have a bigger section for liquids, it ought to occur to somebody that the home might be ordering the wrong size bottles. And the fact that Westhaven is getting similar complaints about billing Medicaid patients as private paying customers seems like enough to inspire a Westhaven employee to create a better system for updating billing changes. "I just don't feel the teams 'got it,' that they understood how we wrap ourselves around our customers," says Fox. "The frustration is how to take something that's emotional and make it a permanent part of the business -- that's what 'it' really is."

By last May Mary Lou Fox was back in a familiar, frustrating position: alone again, unnaturally. "I've had people say, 'Why bother making a decision? She'll just change it. She'll have a better idea,' " says Fox. "I take what they say seriously. I watch myself. But all I see is that I want everyone to be pleased with what we do.

"This business is a reflection of me, and I personally care about what our customers think," she adds. "I'm not a businessman, and I'm not a pharmacist. What I know isn't hard to identify. But it takes time to mold it into something I can give away. Maybe it's just too tough. Maybe I just can't leave. Maybe I'll die here."

* * *

Or maybe, just maybe, she'll face up to that showdown at last. "I know what I have to do," she says.

In the aftermath of her four failed handoffs, Fox vows to finally confront the one obstacle to developing management that she has never really challenged before: herself. "I will change things," she says. "I know that the only thing I really have control over is me."

With hardly any experienced management left, and a company too big to run by her lonesome, she does not have an overwhelming number of choices. "Mary Lou has a lot of fortitude," observes Schrader, "but you have to wonder sometimes whether it is just wearing her down." It is. Fox will never admit to the pain of having all those managers -- the good ones she hired -- leave. But she can't ignore it anymore, either. "There comes a point when you've got to let go of the reins," says Cryan. "I don't think she's been trained to do that. She hasn't been exposed to mentors to see how they've done it."

Just as Fox built Westhaven in her own, difficult way, so she is disengaging from it. Part of what pushed her -- whether she's aware of it or not -- seems to have been the death of her husband last spring. And age. Hitting their sixties, most entrepreneurs feel the pull of the "heritage motive," according to Eric Flamholtz, a professor of management at UCLA who has studied how founders let go of their companies. "You begin to know that you won't go on forever, and you start tidying up your life." Clearly, events in Fox's life have given her some new distance and perspective. "I'm living this place, and I really don't want to be," she says bluntly.

She has begun to let certain responsibilities trickle down. For instance, Fox won't hire anymore. "I'm no good at it," she says, "and that's a fact." Six months ago she handed over to Bucci her duties as head of the Med Error Task Force, which examines mistakes on a monthly basis. Bucci widened its membership and renamed it the Quality Assurance Committee. Bucci has also started the Team Management Circle, a group of a dozen or so employees who have tackled various issues, from planning parties to setting up a suggestion system.

Most of the people around Fox would probably worry if she gave up her party planning; letting go of everything at once is almost a surefire way to a backlash. But those who know her contend she is actually evolving. "Mary Lou looks at her managers differently," confirms Suzanne Neuber, an original star performer who agreed in July to return as a consultant pharmacist. "She's giving them authority. She no longer looks at them as her little children." Fox, Neuber says, no longer intervenes in every customer problem but asks managers to keep her informed through written reports. Vice-president Greg Lawless says he senses that "lessons have been learned. Mary Lou, I think, is looking sincerely at building a core of management that can carry this company forward." Fox, he says, now wants to build an actual sales force, with people making calls and meeting quotas. Astoundingly, most Westhaven business still comes in by word of mouth.

Fox has other management plans as well. She plans to revive her concept of splitting the company into teams. This time she'll choose the team captains more carefully, for their leadership skills, and offer some formal training. She is also pushing new management tools that, rather than consolidate her control, "reduce caring to a system." Fox plans to go to meetings, rather than dominate them, and simply "share the philosophy of this company."

She's not sure exactly what she'll do with Westhaven when the time comes to part from it; she's been collecting information about employee stock ownership plans. That may not be the exit she's been searching for -- although she fears that if she sold Westhaven to someone else, the new owner "will want me to stay, and I won't work in a situation where I don't have control" -- but she needs some future for herself. "I need a step two. It's fearful to do it any other way," she says.

Most entrepreneurs need to replace the company with something else: family, philanthropy, another company. Fox has thought about starting a sales-promotion company. She seems on the verge of accepting that there might be a different, though not necessarily better, way to run Westhaven. "You've got to settle for 90%," Fox says. "No one can do it the same way you can." She sounds resigned when she says this, remaining either unwilling or unable to consider the possibility that someone could make Westhaven better than she has. She continues to make that most congenital of entrepreneurial mistakes: assuming that anything done differently than she would do it is by definition done less well. But perhaps just by beginning to tolerate differentness, she has taken a step toward recognizing that others' ideas can be as valuable as her own.

Who knows if Fox will really be able once and for all to successfully confront her need for control? Like most entrepreneurs, she deeply fears not being needed. Even with all that's going on, says Lawless, "you can't be blind to history."

In truth, you can't miss it. One recent morning Fox was giving a tour of the company when she came across a lab coat a technician had carelessly tossed over a chair rather than hung up. Fox grabbed the jacket and instinctively went through the pockets. Finding only car keys -- no drugs, thank goodness -- she handed the coat over to a supervisor. "Tell this person that Mrs. Fox found the coat. That ought to scare him," she said, running off to her next meeting.

"After all," she added with a touch of self-mockery, "I am the boss around here."

Last updated: Nov 1, 1991




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