Annual Business Issue

Proactive vs. Reactive

Management

Predictive Leadership

Photography By Rich Smith

For most, today’s business environment can be characterized as evolving continuously. It is one where technology is changing quickly, competition is high, and markets are saturated, which in turn is forcing organizations to have sound business strategies and to operate effectively and efficiently. It is one where employers are challenged even more so to attract and retain the most talented and best-prepared employees as unemployment is low and the demands of the 21st century workforce are much different than just 10 years ago.

Much has been written about small and large business organizations being proactive, versus reactive. Business pundits and educators define proactive businesses (also called predictive leadership) as those that do not wait for success to come to them, but instead devise business strategies that aim at lofty goals while taking all necessary precautions to mitigate risk. They define proactive organizations as ones that see disruptive forces as unique opportunities to gain long-term advantages. They define a proactive approach as one that deals with expected difficulties in advance to improve every aspect of the business – from sales, cost of goods and marketing, to organizational design and employee relations. Through careful risk management, proactive leaders ensure the success of key projects by carefully monitoring and analyzing inside (people, politics, etc.) and outside factors (market, clients, suppliers, competition, etc.) to determine major risks in advance and then take steps to minimize potential damage.

Many leaders believe that their job is to resolve problems that arise in the most effective and expeditious manner, and most would agree that this is true. It is a leadership style that is much admired for being decisive and capable of developing innovative solutions quickly in the midst of a crisis. More importantly though, a leader’s job is to lead for what is to come – to prevent problems by being proactive and predictive. Read on to hear how local leaders prepare for the unexpected in their industry.

Darlene Brown

President/Founder, Real Estate Partners Chattanooga, LLC

How do you plan for expected and changing market conditions?
Our industry is completely market and consumer confidence driven. Real Estate Partners was founded in early 2007, and within months, our country was in one of the greatest real estate economic downturns in recent history. But we didn’t just survive – we thrived! We were small and operated very lean, and being locally owned and autonomous made us flexible and responsive to our market, and that was reflected in our planning and decision-making during those years.

What are the most difficult types of problems that your business can incur?
Real estate agents are independent contractors, so as a company owner, they are very much my “customers.” Couple that with the fact that as an industry we are aging – the average age of a realtor® is 53. As a company, we are tasked with the challenge of providing a work environment, systems, platforms, and a company culture that respects, supports, and celebrates our seasoned and successful professionals, but at the same time, it is vital that we attract and retain quality young real estate professionals.

How do you anticipate and plan for uncertainties?
Change is the only constant. We are now enjoying a booming local real estate market with low mortgage rates, but that will change. And we will adapt and change to meet the future market. From a business standpoint, succession planning is something that we are addressing. This is more than a company to us, and we feel a great deal of responsibility and gratitude to the people who are Real Estate Partners and to all the families who derive their income and livelihood from this company.

How do you work with your team to prepare for “the unexpected”?
We retooled and upgraded most of our technology and marketing platforms. We changed to reflect the needs of our clients and to respond to the influx of Millennials into the home-buying market. This planning is certainly also reflected in the design and location of both our offices – our new office in the Southside and our East location on Shallowford Road. The Southside location was designed with an urban vibe, open concept work spaces, and green practices, and the East office has a highly-functional, clean transitional design and is centrally located minutes from our area’s highest growth areas.

Can you share a situation where you anticipated a potential problem and planned in advance to address it?
A big “what if” scenario was answered when my son Ryan May joined us a year ago. As the company’s business resource and development director, Ryan led the build out of our new downtown office. We are now better positioned to serve the needs of our exceptional group of real estate professionals while being in a stronger position to attract quality young talent.

Billy Carroll

CEO, SmartBank

How do you plan for expected and changing market conditions?
We continually stay on top of trends in our business and we continually communicate with our team. Our senior management team has several strategy meetings throughout the year where we have roundtables and discuss things that are changing in our industry, as well as our clients’ industries, and talk about potential impacts and opportunities. I also challenge our associates to constantly read and research about new areas and trends that we can capitalize on.

What are the most difficult types of problems that your business can incur that cause you to change plans and approach your business differently?
In banking, the regulatory climate is one of the more challenging things we have to deal with. It’s outside our control, but reacting to regulatory changes can cause us to pivot and re-evaluate our business plan.

How important is it for you to have contingency plans in place to systematically address these problems or unexpected occurrences that may arise?
Having a contingency plan or alternative strategy is very important to accomplishing our goals. At SmartBank we work to have at least a couple of paths in place to help us achieve our goals, running both of those simultaneously. If one path has a roadblock, we can rely on the other – if neither path has a roadblock we can outpace our original goal!

Can you share a situation where you anticipated a potential problem and planned in advance to address it when it occurred?
The best example happens frequently, and it reinforces why you “don’t put all your eggs in one basket.” We’ve had opportunities where we are looking at a deal that we thought had a high probability of happening, but we didn’t back off negotiating on other deals. The one that you think you have stumbles and the alternate one jumps up in priority. Fortunately, you’re already half way down the road to completing it. Not having to start from scratch on a brand new deal saves days and sometimes months.

Becky Farmer

CEO, Center For Sports Medicine & Orthopaedics

What are the most difficult types of problems that your business can incur that cause you to change plans and approach your business differently?
Health care is one of the most regulated industries in the United States. We are often faced with challenges related to remaining compliant with government regulations that have little or no effect on the quality of care our patients receive. For example, the implementation of electronic health records has been a cumbersome and expensive change in the way our physicians interact with patients. While there are some valuable communication opportunities with an electronic system, meeting the compliance requirements has placed major emphasis on what a regulatory board deems important in an office visit versus the opinion of the physician.

How important is it for you to have contingency plans in place to systematically address these problems or unexpected occurrences that may arise?
In the health care industry, it is imperative for us to be extremely agile in our delivery system. A single insurance company can change a policy that affects how a patient receives (or does not receive) care. We are dedicated to frequently educating and reeducating our staff to insure that our patients receive the best care possible while adhering to government and insurance guidelines.

How do you anticipate and plan for uncertainties and potential problems associated with your business?
I strive to remain closely connected with my colleagues in the industry. Networking with other CEOs in large orthopedic groups is my lifeline.

How do you work with your team to prepare for “the unexpected”? Communication is key with everything we do. Our senior team meets weekly to review our current and long-term goals. It is a very open and interactive meeting where constructive feedback is encouraged. One of the greatest gifts in life, and in business, is to have someone or a team of people who care enough about your success to be honest with you, even if it isn’t something that you want to hear. Once that trust and support has been established, it is much easier to adjust and help each other when “the unexpected” occurs. As we have grown and expanded our services the last 30 years, leadership and communication are the two elements woven through every portion of our strategic plans with the best possible patient care remaining our ultimate goal.

Dave Lang

CEO/Director, Atomic Films

How do you plan for expected and changing market conditions?
In the film and video production industry, we can truly state, “the only constant is change.” The end result remains the same but the process, equipment, and technology are constantly being reinvented. At Atomic Films, we work to stay ahead of the ever-changing market conditions while remaining true to the high quality production standards we have developed over 30 years. We always keep our clients’ needs first and foremost, and that never changes.

What are the most difficult types of problems that your business can incur that cause you to change plans and approach your business differently?
Our industry changes constantly due to ever-evolving technology. When we started Atomic Films, we were confident that our purchase of new cameras and editing systems would be cutting edge for a two-year period. Today, we see new breakthrough technology every week. Go online or open a magazine today and you will find a new editing or graphic program, a new advancement in cameras, a new drone that will shoot 360 degrees, etc. The question that I have to answer is what tools do we need to stay competitive and how long will it last before it becomes obsolete.

How do you work with your team to prepare for “the unexpected”?
In film and video production, it seems like the faster you run, the more behind you get. We will never outrun technology. We will never be the guys with the newest toy. But for 30 years, we have been the company that is dedicated to the highest quality film and video production in the region. Even in our changing environment, there are constants that will never change: high production standards, dedication to our local clients, and a “friends doing business with friends” mentality. We keep an eye to the changing landscape of our industry but never lose focus of the principle.

Jim Osborn, MD MSPH

Chairman, Austin Hatcher Foundation | Orthopedic Spine Surgeon | Asst. Professor & Director, Adult & Pediatric Spine Surgery at UT College of Medicine | Owner, Chili Pepper Ranch, LLC

Photo by Amy Jo Osborn

How do you plan for expected and changing market conditions?
Change is inevitable. For me, it doesn’t matter which business or organization, I must always establish a long-range goal, and as we see where the market goes, I can adjust the plan as necessary. If you know what you want when you see the market changing, it can help you determine if something is an opportunity or distraction.

What are the most difficult types of problems that your business can incur that cause you to change plans?
Downturns in the economy are always difficult. I have to make allowances when it happens, but the most difficult is staffing changes. You can expect ebb and flow in the market, but consistent staff is hard to predict. You can’t predict when a staff member has to leave due to relocation, career changes, or medical leave.

Do you plan “what if” scenarios or create scenarios around which contingency plans are developed?
Yes, always. For my ranch, we think through how to fill demand if we have a boom in business. Or if sales fall, what would we do to utilize them to the fullest. For the foundation, we were able to maintain and continue serving even through the 2008 crisis when donations were down nationally because we prepared. As a surgeon, for every procedure, we do “what if” case scenarios prior to operating, and it’s a concept and thought process we teach orthopedic surgery residents to work through.

How do you work with your team to prepare for “the unexpected”?
We have routine meetings with board members and consultants to discuss scenarios. Your idea may be a rough cut jewel, but you pass it around until it becomes a beautiful gem. You must be able to discuss and take input in order to prepare for the unexpected. And, if your partners are passionate and committed towards your goal, you are better prepared for what’s to come.

Todd Dyer

General Manager, Marshal Mize Ford, Inc.

What are the most difficult types of problems that your business can incur that cause you to change plans and approach your business differently?
If there is a major shift in the economy, we have to make quick adjustments. Chattanooga fortunately doesn’t experience the drastic declines that have happened when the economy slows, but we still have to adjust multiple facets of our business, including advertising and inventory levels.

How important is it for you to have contingency plans in place to systematically address these problems or unexpected occurrences that may arise?
We are fortunate to have been in business for almost 40 years. Operating with our knowledge of the Chattanooga and surrounding markets that we service, we have procedures in place to make adjustments. Having an ownership and management team working together means most unexpected occurrences can be addressed smoothly with employees and consumers not even noticing changes that have occurred.

How do you anticipate and plan for uncertainties and potential problems associated with your business?
In our industry, you have to keep pace with the ever-changing market. Fortunately, I have had the opportunity to serve on several committees that forecast the future of the automotive industry. Working with some extremely knowledgeable people, those “what if” scenarios are played out on a quarterly and sometimes monthly basis. We look at scenarios involving: consumer shift in demand, how consumers’ purchasing cycle may change, future product offerings, consumer finance options, ride sharing, and many more. It has provided a magnitude of insight and consistently has our team looking for ways to improve for today and tomorrow.

How do you work with your team to prepare for “the unexpected”?
Consistent and constant communication. Our staff has daily meetings looking at the normal activities and trends. Monthly we perform detailed reviews with management staff to see trends and have discussions about opportunities, concerns, and suggestions of how to make the experience better within our dealership.

Hiren Desai

CEO, 3H Group Hotels

How do you plan for expected and changing market conditions?
There are always different factors that impact a business, from competition to operational issues and more. We try to prepare for the unexpected by using our experiences as well as learning from others to create contingency plans for any potential “what if” scenarios.

How important is it for you to have contingency plans in place to systematically address problems or unexpected occurrences that may arise?
The level of service that we are able to provide on any given day is largely driven by our ability operate to the standards and procedures that have been set for each of our hotels. Sometimes unexpected events occur that disrupt normal operations – such as the weather or water, phone, or electrical service interruptions – so it is critical that we have contingency plans in place to provide the expected level of service when these events occur.

How do you work with your team to prepare for the unexpected?
To prepare for the unexpected or to address unforeseen events, our executive team comes together to assess the situation, problem solve, and establish direction for our operations. Yes, we do develop “what if” scenarios and from these, we develop plans to address potential new developments that can positively or adversely impact our business.

Can you share a situation where you anticipated a potential problem and planned in advance to address it when it occurred?
A good example is Airbnb and its platform. Their development made us focus even more so on our amenities and services that cannot be offered by Airbnb. And in doing so, our hotels have continued to operate at a high level.

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