2011 Pinnacle Award Winners' Roundtable Discussion
Honorees in nine categories were recognized at the 2011 Pinnacle Business Awards presented by BB&T where nearly 600 members of Knoxville’s business community helped celebrate. A silent-auction sponsored by WSI Oak Ridge preceded the awards ceremony, which was emceed by WBIR-TV’s Russell Biven. Additional event sponsors included Bandit Lites, Greater Knoxville Business Journal, EnergySolutions, Aqua-Chem, Covenant Health, Partners Development, LMBC, UT-Battelle, Knoxville News Sentinel, Prestige Cleaners, and WBIR-TV.
Successful Knoxville businessman Jim Clayton received a standing ovation as he accepted the 2011 James A. Haslam II Leadership Award. The award is given annually to a business leader who exhibits strength of character, resolve, commitment to the community, and success in business. As founder of Clayton Homes, Clayton built the company into the largest producer and seller of manufactured housing in the U.S. He is now vice chairman and principal shareholder of Clayton BanCorp. Inc. Joining Clayton on stage for a celebratory toast sponsored by EnergySolutions were representatives of the night’s other winners: Covenant Health (Impact Award), TrakLok Corporation (Innovator Award), Oak Ridge National Laboratory (Business Excellence Award, large company), Pershing Yoakley & Associates (Mid-Sized Business Excellence Award), HME, Inc. (Minority-Owned Business Excellence Award), Sword & Shield Enterprise Security, Inc. (Small Business Excellence Award), The Tomato Head (Woman-Owned Business Excellence), and Pyxl, Inc. (Young Entrepreneur Award).
Following the gala, the Chamber held an in-depth roundtable discussion with winning-company representatives. Among the topics was this region’s current business climate, why each of the companies chooses to locate operations in the Innovation Valley, and overcoming obstacles. Chamber Senior Vice President of Membership Mark Field and Chamber Vice President of Policy and Public Relations Garrett Wagley moderated the discussion.
Field: Folks, thank you for being here today. First of all congratulations on being 2011 Pinnacle Business Awards’ winners! There were more good applications and more good nominations this year than we have ever had in the seven years we have been holding this awards gala. Let’s start out by asking each of you about the unique things about East Tennessee and the Knoxville-Oak Ridge Innovation Valley that keep your businesses here?
Jim Vandersteeg, Covenant Health Chief Operating Officer: I think the Knoxville area has some unique advantages for Covenant Health or anybody who is in health care here. One of them is the ability to have trained staff. I don't know if a lot of you have any reason to really keep up with what is going on with health care across the country, but one of the biggest challenges any health care system has is finding trained staff, nurses, therapists, etc. In the Knoxville area, we work with 13 different schools and institutions that help provide staff, help find physical therapists, nurse practitioners, nurses, and so on. This is one of the things I think is an incredibly unique advantage for those who are in health care in this area.
One other thing I will mention. One of our challenges is recruitment. The Knoxville area has a certain quality of life and a certain standard of living. It's beautiful. We're very, very successful, and I say that in a humble way, at being able to recruit people, both physicians and other people in the community. These two things are really unique advantages that we have here in Knoxville.
John McNeely, CEO Sword & Shield Enterprise Security: I will add to the community aspect. Early in the creation of Sword & Shield my partners and I talked about the work/life balance of our people. We have been in Chicago, Atlanta and northern Virginia/D.C. area, and talked about relocating there, but we just felt like we couldn’t get the same work/life balance in those places like we can here in Knoxville. Imagine commuting an hour to work every day and another hour back. That's just not something we want to put our people through. Knoxville is home for us and being in the technology field, we saw it would be very easy to be headquartered here and stay here, use technology and not have to worry about relocating to a big market.
Doug Yoakley, Co-Founder, Pershing Yoakley & Associates: We're in the accounting and consulting business and therefore our most important resource is our people. We continue to hire great people because we feel this area is a great place to recruit to for many reasons, including it’s a great place to raise a family. Also, this area is centrally located in the south, which helps us serve our clients that we have in over 30 states across the country. It's pretty easy to get anywhere in the upper south from right here. But again, I think people are what make any business and that's important for us to be able to recruit great people here. It’s easy to do because people just love to live and work here.
Field: Jim, you’ve had the ability to move your manufacturing facilities or expand your business into multiple markets. Why did you stay here?
Jim Clayton: I ended up at the University of Tennessee because I couldn't get an engineering degree at Memphis State, and I immediately liked the diversity of lifestyle, the accommodations that we have here, the mountains, and the lakes that we didn't have in Memphis. You know, God placed me in the right place as we started to build housing. Knoxville is right in the middle of 80 percent of the market for factory built housing. To say that differently, one day's shipping from here in any direction allows us to reach 80 percent of the market. And so who would want to be in a better location than that.
Wagley: Let's switch gears a little bit and talk about what, if anything, about your business keeps you up at night.
Vandersteeg: Health care reform. I don't know if you all have read the recent health care reform study that’s some 2000 pages long. There are a lot of things in there that are good but there are also things in there that are going to be very, very challenging for the health care system across the United States. Trying to figure out how to be successful, which Covenant has every intention of doing, in a world where health care providers take on more of health care’s financial risk responsibility, is part of what keeps me up at night.
Mahasti Vafaie, The Tomato Head owner: I have constant insomnia. I am always awake. I wake up at 4:00 a.m. every morning thinking of a lot of things I could be doing.
Tom Rogers, Oak Ridge National Laboratory Industrial Partnerships and Economic Development Director: We're the nation's largest science and energy lab. One of our responsibilities is to make sure that all that research gets to the marketplace. One of the things that keeps me up is figuring out ways to do that. It's still a challenge to be able to get the right technology and the right person at the right time and to be able to get it to the marketplace. We're doing a lot better. We have a great relationship with the Chamber. We're with Doug and Rhonda (Chamber Vice President of Economic Development Doug Lawyer and Chamber Executive Vice President Rhonda Rice) all of the time visiting with prospects. When I was at the Oak Ridge Chamber, I would have given my left arm to have the relationship with the Oak Ridge National Laboratories, and the collaboration of the Innovation Valley partnership, that we have now.
Henry Perry, HME Inc. President and CEO: How can I say it? Nothing keeps me up at night. The reason why nothing keeps me up at night is because I have come up with a system that works for me. I guess dividing my time during the day where I have so many hours that I'm looking for new work, and so many hours I am minding what I have already done. Like she said I get up at 4:30 in the morning to get an early start. I can finish my day at maybe two o'clock or 3 o'clock. And the other time is float time where I go back and solve or work on problems that would keep me up at night. By using that method of spacing of time, I am fine.
Clayton: I think I need to talk to you.
Field: What is the best business decision you ever made?
Yoakley: Ed Pershing and I co-founded our firm back in 1983. Prior to that both of us had been with Ernst & Whinney here in Knoxville. At that time Ed had been there about ten years, I had been there six years. When we made the decision to start the firm we started as two guys and a secretary; and now between affiliates and us, we're about 165 people. So for us the best decision was starting the firm, absolutely. Since that time we have had blessings of having, I guess, about 20 partners with us. We have made good decisions along the way and we have had great people come along beside us, so I think going back to 1983 would be our best decision.
Mahasti Vafaie, The Tomato Head owner: I think for us it was to decide to give better customer service. When we initially opened we were really just preoccupied with being “cool” and having something totally different in Knoxville, and didn't really care too much about the service we were providing. And it was kind of chaotic in there. We started to get really, really busy and we didn't have a host, people just sat themselves. We weren't really too concerned about what the customer was experiencing. We just cared about the food and that it was hip and cool. At some point I think when I met my husband who has an MBA, it was like why don't you change a few things.
Clayton: I think one of the best business decisions I ever made was to learn to fly an airplane at 19 years old. I saw that being able to get around could be very meaningful. I would be on an airplane headed west in the morning at six o'clock a couple of days every week. I was able to get out and back. I have been an active pilot since 1953.
Field: Jim, your son Kevin mentioned your passion for young leaders during a congratulations video that aired during the Pinnacle Business Awards ceremony. Any of us that have watched you over the years have seen that as well. Why did you decide that you really wanted to mentor young leaders in our community and inside your organization?
Clayton: I wish I could say that it was part of my belief that we should learn. And if we learn maybe we can earn. If we can earn we definitely should return. I wish I could tell you it was because of that, but I really think it was pretty defensive. I don't think there's any real noble motivation to start down that road. But when you recruit a 20-year veteran you bring a mind set, you may bring debris, and I just did better with young people in their formative years who were cheaper, maybe more eager, and would subscribe to the developing culture. And that works to this day. The average bank around town has 50 to 60-year old commercial lenders and they have $12 million or $25 million loan portfolios. And I have commercial bankers in their late 20s that have $50 million, $75 million, one hundred million dollar portfolios. Now, we have to provide them with support and better systems, but that's really, really working.
Wagley: Covenant Health received the Impact Award. Jim, Some people say we're coming out of it what’s being called the “Great Recession.” How have you changed the way you conduct your philanthropic activities?
Vandersteeg: It hasn't changed that much. Most people who go into health care feel some level of giving, they want to give. They want to help us be a healthier community. In fact, we started new programs the last couple of years in the middle of the recession to educate people on how to take care of themselves and to educate people on how to recognize cardiac issues. In all honesty I would say we’re actually doing more the last couple of years than we did three or four years before. So it's interesting, while clearly I am not asking anybody to feel bad for us, a couple of years ago we made a decision not to take raises at the leadership level. And you would think that would have corresponded with less philanthropic activities by our leaders, but it's actually resulted in the opposite. I think a lot of it flows out of the mission of the organization and the type of people you attract. In health care it's people who want to give to other people.
Field: Doug, PYA won a Business Excellence Award, and has experienced tremendous growth during its history. How do you balance rapid growth and maintain core values and customer relationships?
Doug Yoakley, Co-Founder, Pershing Yoakley & Associates: I think it's about the people. We have had great hires. Some of the partners we have now started with us back in the '80s. I think every year we try to identify the up and comers for the firm that will later become partners. Having people that want to assume responsibility and seek growth for the firm is essential. Every five years we set some pretty aggressive goals and we have been able to meet those. And we have set pretty aggressive growth for the next five years, and I think we're on our way to do that.
Wagley: Henry, you won the Minority Business Award. What were the biggest diversity hurdles you had to overcome, and how did you address these?
Henry Perry, HME Inc. President and CEO: My biggest challenge was trying to convince other people to see my vision. And really, I never did. But maybe because I’m an ex concrete superintendent and I exhibit a life attitude similar to how concrete sets. When the concrete truck pulls up, you have 90 minutes to do whatever you're going to do, after that, the concrete’s going to start to set up. I didn't have discrimination challenges. I have always been the type of person if I see something I want and I think it's a reasonable deal, I will go to the bank and walk in the door and say, “Hey, does this make sense?” I have done that many times. If a problem came up, I dealt with it. I didn't go in thinking, “Well, I’m a minority and I’m not going to get this or that.” I looked at it as if it was a sound business deal, it should work. I looked at the glass as half full and thought the reasons for why things may have not had gone my way had nothing to do with the fact that I’m a minority. If I had a good deal, I knew somebody would want it.
Field: Tom, ORNL continues to figure out better ways to get technology transferred out of the lab and into the public. How is that going to affect our region in the next five years?
Rogers: Well, as you know Mark, about three years ago Innovation Valley, Inc. developed an economic strategy document that focused on the areas of technology here in the region that we could really benefit from. Prior to that I think most of the local chambers were simply recruiting any industry looking for a location. The recognition that technology is a real differentiator here in Oak Ridge and Knoxville, with the laboratory, the Y-12 Security Complex, the University of Tennessee and all of the brain power that exists here, had major influences on the strategic plan that now targets four or five target areas. On top of that, Innovation Valley hired Jessie Smith to be the director of technology, which has been a huge benefit to all of us. Plus, the many chambers and the area’s economic development support system have a much tighter link now. When Chamber Executive Vice President Rhonda Rice or Chamber Vice President of Economic Development Doug Lawyer have prospects that visit East Tennessee say something about energy storage, solar energy, light rated materials or about transportation technology, we have not just connections, but relationships. We have found the right people at the Lab and at the University who are committed to this kind of stuff and will take the time to meet with companies. Oftentimes we have great scientists who are doing great work here but they don't often understand specific market applications or where the market is going. So the real potential here is to connect with companies and with entrepreneurs who have a vision for where the market is going. On multiple occasions I have heard a company official ask a researcher about potentially implementing a certain process. The researcher has often responded that he had never thought about that particular processes implantation but thinks he could make it work. I think we're in the connections business and the Knoxville Chamber, the Innovation Valley, all of the chambers in the area, the entrepreneurs that we reach out to, and the work that Tech 2020 does, allows us to connect with more and more people to find more and more opportunities to get our technology to the marketplaces.
Field: Fair to say, and I think we have seen it recently, the relationships that happen as a result of that are economic values that have no boundaries in regards to economic development. But the problem is the government still sees those boundaries. So, you know, it's still very difficult to get it to understand that we're recruiting jobs to the area, just not in Knoxville but these jobs we're recruiting helps Knoxville. Tech Transfer will help our region and not just Knoxville.
Rogers: Absolutely.
Wagley: Mahasti, risk is an inherent part of being a small business. In 2007 you expanded to Maryville. What was it like taking that risk right in the middle of the recession? How did you deal with it?
Vafaie: Well, we haven't really been impacted by the recession all that much. I think our food is in the mid-range price level. I think the higher priced restaurants are the ones that were affected more by the recession. We had always been thinking about opening another business, not necessarily another Tomato Head. We had a Mexican restaurant here in 2000 on Market Square that had not done well, and since that closed we were always looking for other opportunities. We have a friend who really wanted to show us some property in downtown Maryville, and I thought why would I open a restaurant in downtown Maryville? We looked at the property. It was an old building, an old clothing store. The building we're in on Market Square was an old clothing store. We made several trips to Maryville and its farmer's market and it seemed like the right move. It's been a great place to do business. It reminds me a lot of the early days on Market Square. It's a small, close community and our customers know all of the waitresses and the waitresses know them. It's a good place to be. It's been great.
Wagley: John, how much of your business is government based and how much of it is private. In addition, what are the differences between those two markets?
McNeely: Probably over 95 percent is federal but the volume of product re-sales that we do to the federal government mainly drives that. If I am looking at the consulting side, more of a people side, recently it's shifted to the commercial, and it's probably 60 percent commercial 40 percent federal on the consulting side. So it's hard to keep track of sometimes because these things keep vacillating back and forth. So that's kind of the breakdown. In terms of trying to handle both of these markets it's definitely been a challenge for us. With the federal side it's definitely a different process, definitely a longer slide, and very RFP driven. We learned very early on the front end of the RFP take scare of everything that comes at you. We have a lot of good relationships on the federal side. As we built our brand and credibility within the government space we have a number of government clients that now come looking for us, which has been a plus. Commercially it’s very different. It's a faster cycle and more engagement oriented. You have to stay on top of things because a customer can like you one day and not the next. We have to stay on top of our customer experience and service to make sure we're delivering there. That makes it interesting in a small business where the same person may be wearing multiple hats, dealing with both types of customers, and that's been a challenge. As we grow we can maybe begin to separate those functions out with more people handling them.
Field: As you guys know all the Chambers in the region set themselves up as central business resources in our communities. We’d like for each of your to leave us with some final thoughts and advice that you would give people doing business in this region or thinking about starting a new business.
Perry: Well, I would say invest your time before you invest your money. Look before you leap.
Vandersteeg: I think there’s a great quality of life here. Knoxville just has a combination of many things that make it a great place to live.
Yoakley: I would say to anybody that is thinking about starting a business to realize there a lot of resources in this town. There are a lot of people that will mentor, that will help you answer questions, give you advice, and it's usually for free. Additionally, there's just a lot of synergy in this community. The business community gives people a lot of help if they will just ask for it and seek out the right people. The Chamber believes in that.
Vafaie: I think Knoxville is a great community and there's such a great sense of friendship and community here that you can't find in most other places. The quality of life is great. I can't remember what year, but the year we were doing construction and our wall was compromised and cracked, there was such an outpouring of people helping and trying to get us relocated. We were offered a space across the way for free to relocate our business. I don't think those kinds of things happen just everywhere. It's really a great place to do business.
McNeely: I will say you can make it work here. And I really feel like the best place anyone starting a new business is Knoxville.
Clayton: We have two board development lunches hosted by our bank and foundation every quarter. Very interesting people from very mature well-known and start-up businesses attend these meetings. We also have a lot of entrepreneurs that come with really super ideas that we can really relate to. One of the things I talk to entrepreneurs about a lot whether or not they should keep their businesses self-contained. I talk to them about A or B. A is go slow, conserve your cash, focus on cash, not earnings, focus on cash, not growth. And keep control of your business and keep it at home. And it may take you longer to get there. But you know it's amazing how many entrepreneurs have never seen a compounding curve. They never did a chart or graph that shows what happened if you grow 15 percent per year, how big you get eventually. A is grow it, own it and keep it. B is shoot the moon, get the venture capital and really go for it. And to recognize what the risks are with either model, and see which one is really best for you. I love to have those conversations and it's pretty easy to get an entrepreneur that is very young to go out and scratch and shake their head and smile.