Featrued in Smart Business cover story

Here are some highlights of how we helped this client build an engaging culture while they experienced 100% annualized growth for 5 straight years.

Survivor, Real World, Fear Factor, The Bachelor.

Reality television is currently a hit, so we thought an episode of Real World business lessons would appeal to today’s leaders.

A bounty of theories of Organizational Change exists.  However, for this report we will throw away the theories and share a real world success story of leading change.  As Yogi Berra said, “In theory, there is no difference between theory and practice.  In practice, there is.”  He is right!

No theories – just the facts.

Setting the Scene

This is a story of success in progress, not a story of perfection.  So, we will share success factors and lessons learned.  The story features Crosstex Energy Services (NASDAQ:  XTEX and XTXI).  Barry E. Davis is the President and CEO.  Crosstex was established in 1996 and distributes and treats natural gas for its customers (primarily gas producers and large industrial users).  The following chart illustrates Crosstex’s growth:

1998 2001 2003 2004 2006
Employees 10 45 125 280 600
Pipeline Miles  80 879 1,700 4,552 5,000+
Natural Gas Volume(mmbtu/d)* 10 155 561 1,225 1,792
Revenue ($ million)  $1.7 $115 $452 $1,000+ $3,000+

* millions of British thermal units/day

Barry Davis embodies the kind of Adherence to his plans that is described in our book, Sticking to It:  The Art of Adherence.  The ultimate goal for Davis and his team was to create a story of significance for their employees, customers and shareholders.  When The L Group started working with Crosstex, their business challenges were to:

  • Sustain rapid growth,
  • Maintain company culture,
  • Improve operational efficiency, and
  • Build industry reputation.

Crosstex kicked-off numerous initiatives to achieve these objectives.  They are shown in the timeline below.  The initiatives fall into three key areas:  data, culture and planning. This report highlights a snapshot in time.  However, like any journey toward greatness, the Crosstex journey is ongoing.

Data – a Leader’s Gauge

Davis, like other high-achieving leaders, makes data-based decisions.  He wanted to gauge Crosstex’s readiness for its projected growth.  We started with a 5 Point Check-up,and assessed the five key organizational components – systems, processes, skills, roles and structure.  We assessed the current condition of each component and the required condition to achieve their growth goals (i.e., a gap analysis).  The results gave Crosstex data to help them focus their efforts on the highest return on investment (ROI) initiatives.

There were three other key points of data collection.  First, an Employee Opinion and Training Needs Survey helped create a baseline for employee satisfaction and define parameters for an employee training plan.  Second, a Customer Satisfaction Survey provided important customer input and also set Crosstex apart from its competitors by simply asking their customers for feedback.  Crosstex has subsequently been rated #1 in their industry for customer service by an independent survey.  Third, we created and trained managers on a simple, structured approach to interviewing and selection.  Davis himself championed the importance of this initiative and ensured that no hiring decision was made without using the standard tools and process we implemented.  In light of their projected growth, Davis and his team wanted to ensure that each newly hired employee reinforced the Crosstex culture, something they viewed as a competitive asset.  They wanted to minimize the chances that new hires would dilute their culture.

Culture – a Leader’s Mirror

Davis understood that – like a mirror – his Company’s culture would clearly reflect the actions of its leaders.  Therefore, a primary objective was to maintain the culture that they had worked hard to build.  The culture embodied teamwork, respect and accountability.  The paradox is that it took significant effort, time and change to ensure the Crosstex culture remained the same through its growth – no simple task.

Crosstex leaders lived their values before communicating them to their employees.  After they had established a definable culture they articulated it, packaged it, shared it and reinforced it at every opportunity.  Their company values are called E4:

  • Excellence
  • Employee-centered
  • Ethical
  • Enthusiasm.

You did not see fancy plaques on the office walls or laminated wallet cards with these values on them.  However, you did see and hear these values consistently woven into everything Crosstex leaders did and said.  They walked the talk…….that’s what counts.

Since Davis viewed the Crosstex culture as a competitive asset, he created the Crosstex Culture Committee (C3) to be stewards of the culture.  The C3 is a representative committee of employees with a very active executive sponsor, but they leave all titles at the door.  During their meetings they are all stewards of the Crosstex culture.  The committee’s charter goes way beyond “fun” initiatives to identify substantial ways that the company can reinforce the E4 values while achieving its business objectives.

Crosstex instituted quarterly employee meetings to ensure the leadership team stayed connected with their growing teams of employees.  Also, they always answered the four things employees want to know:

1. Where are we going? (Strategy)

2. What are we doing to get there? (Plans)

3. What can I do to contribute? (Roles)

4. What is in it for me? (Rewards).

Planning – a Leader’s Compass

After the 5 Point Check-up, we realized that there would have to be several initiatives in motion simultaneously.  Crosstex needed an organizational compass to maintain a clear direction and focus.  As a result, the E4 x 5 Plan was born.  The objective was to make significant strides toward living the E4 values by the time Crosstex celebrated its 5th birthday.  The Plan objectives and measures of success were clearly defined.  Packaging the initiatives this way achieved two important goals.  First, we needed to provide a framework for all of the initiatives so employees would easily understand how each initiative was connected to other initiatives.  The framework would also help employees see how each initiative was designed to support the company’s growth.  Second, it created a sense of urgency and limited time frame to complete the initiative under the E4 x 5 Plan.  Although it was clearly communicated that the E4 x 5 Plan was the beginning of a journey, it was important to create some momentum and successes upon which to build.

As significant changes began to take hold and a new leadership team evolved, Davis decided that it was time to step back and create a new plan for the future of Crosstex.

The keys to planning lie in the details of your plans and how they are “cascaded” down the organization.  We used a simple format to support the leadership team’s adherence to their plans.  Below is a sample page from the annual planning tool.

The result of the planning process with Crosstex was a clear focus on where to spend resources (time, money and energy).  Just as important was a conscious decision to STOP doing certain things.  The Crosstex team was savvy and realized that saying “Yes” to one thing by default means saying “No” to something else.  They understood that employees would be making these decisions everyday if their time, energy or financial resources were limited, and they preferred to make those tough decisions in advance and as a consensus, to help their employees stay focused on the tasks with greatest return for the company.

Davis holds quarterly business review that focus on a look back and a look forward.  His team uses the form shown above to keep their discussion focused and to maintain accountability for agreed upon actions that support the Crosstex strategy.

Lessons Learned

As with any journey you learn about yourself and others.  Learning from these lessons creates the foundation for future success.  Here are three lessons that Crosstex leaders learned about leading change during the course of their journey:

1. Manage your organizational digestion.  If you have many projects going on at once (who doesn’t?) and limited time, energy and money to allocate to them (again, who doesn’t?), you may experience organizational indigestion – you just can’t swallow it all.  Sequence your initiatives based on available resources and the impact on your business.

2. Focus on results, not the process.  Sometimes large projects can create a lot of activity and a life of their own.  This can result in a focus on activity and lull you into thinking that activity = results.  Wrong!  Keep focused on the impact to your business.  If it’s not happening, make adjustments or scrap the projects – better sooner than later.  Ensure that your projects are being driven by market or operational needs.  Anyone else’s needs should be secondary or invalid.

3. Balance offense and defense.  Get the right balance of skills and perspectives on your team.  All great business teams have a strong Offense (creative, making new deals, looking for new market opportunities) and a strong Defense (considering operational/customer implications, deliberate analysis, ensuring you can deliver on your promise).  An imbalance of perspectives can lead to “blind spots” or less-than-optimal decision-making for any team.

Success Factors

These five keys facilitated a successful journey for Crosstex:

1. Keep one agenda. The Crosstex leadership team was willing to face the facts about themselves and their business to reveal potential blind spots.  They were able to constructively address areas of concern without defensiveness because there was only one agenda operating – what was in the best interest of the business.  The goal for the leaders was always to build a great company.  In fact, they viewed their recent IPO simply as another means to finance their growth (like going to a bank) and continuing to create their story.  They did not view the IPO as a cash-out or exit strategy.

2. Balance working in the company and on the company.  We call this stepping off of the treadmill (the day-to-day, reactive mode) and into the eagles’ nest (the strategic, proactive mode).

3. Align intentions of all employees. Davis says, “I want all of us thinking about the same things as we drive down the Tollway to work.”  This is much more than just putting a bonus plan in place.  This is about engaging the mind and hearts of your employees.

4. Select employees with rigor.  Getting this right is half the battle.  You will solve and prevent a host of other challenges by doing so.  As your culture gets stronger, your selection process improves because of the clearly understood values of those interviewing – a positively reinforcing cycle.  Occasional bad hires are quickly identified because their performance is so obviously outside of the norm, making performance management easier and faster.

5. View your culture as a competitive asset. Identify, nurture, invest in and reinforce your culture just like you would for any other mission-critical asset. This requires a real investment of time, energy and money – a leader’s time being the most important investment.

Sticking to It

That’s our Real World success story.  It is less about taking a fancy or sophisticated approach to leading change than it is about being focused and sticking to it!

The results of sticking to it, or Adherence, can be compared to the results of planting a special type of bamboo seed.  When this seed is planted and nurtured it can take up to two years for sprouts to break through the earth.  Once it does, it can grow over 100 feet in two weeks!  This accurately describes the journey and benefits of sticking to it.

Barry Davis and his team at Crosstex have applied the principles of Adherence to help create their success story.  You can too, check out Sticking to It:  The Art of Adherence – a practical guide to help you consistently execute your strategy.