Show Me the Money!

Gold Mark Rewards at Adam's Mark Hotels

Continuity programs designed to get repeat business and cultivate brand loyalty are pretty common in the hotel and travel industries. But when you only have 24 independent hotels in places as diverse as Memphis, TN; Mobile, Alabama and Indianapolis, Indiana you might have a tough time competing with much bigger chains. In addition, the promotional trend toward adding partnerships with airlines and rental car companies put Adam’s Mark at a disadvantage for attracting reward-seeking frequent travelers. Fred was determined to respond with CASH. His idea was to reward people reaching certain tiers of patronage money back in the form of a check. 3%, 4% and 5% levels could be reached within the year in which customers spending a lot of money with Adam’s Mark Hotels and get money back. The Gold Mark Rewards marketing fell to me. To make this long story short – it caused a research firm and its findings to be ignored, an advertising agency to be fired and lots of cash disbursements to customers who probably would have stayed at Adam’s Mark anyway. (No way to tell – the research firm was fired and there was no interest in hiring another one to measure the program’s success).

As a side note: FSK was delighted to feature a favorite word in a series of ads for Gold Mark Rewards - Fungible. 

HBE and the DoJ

Janet Reno, the Department of Justice and the Adam’s Mark Hotels & Resorts.

A lot of people would say that the FSK, for all his faults and gruff exterior, must be doing something right. Granted, the company has seen tremendous growth for the founder. Growth, however, that cannot be closely scrutinized because the company is private. The ups and downs of the firm are not as easy to spot as a publicly traded firm that must disclose indicators about its fiscal health. Nothing paints a clearer picture of the organization, perhaps than the reaction and events surrounding the charges in December of 1999 by Janet Reno, the United States Attorney General, that Adam’s Mark Hotels and Resorts have practiced discrimination at its properties. The Adam’s Mark Hotels and Resorts, in 1999 had 24 hotels in 13 states. Most were designed with large ballrooms and space ideal for group business. One of the larger properties was ideally situated in Daytona Beach.

Circumstances surrounding the Black College Reunion weekend in Daytona Beach, Florida and black guests at the Adam’s Mark Hotel in Daytona Beach who claimed the hotel discriminated against them during that busy weekend. The original complaints about treatment received during the weekend in June of 1999 – based on the facts of the case would have been dismissed a dozen times. The complaints revolved around, among other things, the hotel’s practice of asking hotel guests to wear wristbands and provide deposits if they were not paying by credit card. He could have admitted that his hotel employees could have been more sensitive to these patrons and that action would be taken to assure that the greatest care would be given to guarantee equal treatment for all hotel guests in the future. Instead, digging in his heels, Fred Kummer and his hotel chain became a good target. FSK insisted that the hotel had done nothing wrong. His very stubbornness allowed a class-action time and fuel to be joined by the NAACP and eventually the Attorney General of the State of Florida and finally the United States Attorney General. “It’s hard to believe that in this day and age that a pattern of racial discrimination can still exist…the Department of Justice is investigating the Adam’s Mark Hotel & Resorts chain…” The U.S. Attorney General, Janet Reno, gave FSK the equivalent of a hot foot! Reno’s remarks were broadcast and

rebroadcast on national television and radio. The charges had a devastating effect on business for the hotel chain. Groups stopped booking the Adam’s Mark and others scrambled to back out of their earlier commitments. No group wants to hold an annual meeting at a venue that may cause protests. No meeting planners want to deal with individuals that cancel their plans based on the charges of discrimination. It was a no win situation for meeting planners. So rather than deal with the flack – they selected another hotel. The hopelessly inarticulate FSK was stuck between a rock and a hard place. His dilemma was as twisted as the suspect being interrogated with the opening question: “Have you stopped beating your wife?”

Quickly, Fred Kummer scrambled to hire lawyers and crisis communications specialists, but it was too late. The case was too broadly known and the damage to bookings was too severe for Fred and his beleaguered hotel chain. By February 2000, HBE/ Adam’s Mark offered to settle the case with the Department of Justice (DoJ). The employee training and provisions of the settlement would cost upwards of $8 Million. Fred would admit no wrongdoing, lose a ton of business from the bad publicity and never fully recover from the charges. The original case was thrown out but once the settlement was in force Fred Kummer could not back out. Even with the Republican Administration and the new U.S. Attorney General (John Ashcroft from Missouri), Fred’s PR was too hot to handle. In spite of campaign contributions – John Ashcroft could not lighten the burden on FSK.

At one point Fred Kummer asked me to find him a writer who could help him tell his story. Indeed, he would have an interesting view of the injustice of the situation. Unfortunately, he abandoned the project in favor of trying to rebuild his hotel business.

Sales Management 101- the HBE Way

HBE has 9 territories for healthcare sales. These “hospital sales” guys are well compensated for success. A top earner can pull down $500,000 in a single year. Unfortunately for most, the ability to prospect and successfully pull in business for HBE is a unique skill and balancing act. Wayne, who covered western territory was the top producer for several years running. He seemed untouchable. Jim had modest success and David has been marginal in his efforts. The fates of these three individuals only illustrate the unpredictable nature of FSK decision-making. Privately held companies tend to be reflections of the founders. HBE is no exception. Fred Kummer will periodically find himself heading the healthcare sales team of 9 because for whatever reason, he has dismissed yet another EVP of business development. In the three years between 1998 and 2001, I saw one on the way out, one kicked out and one hired and eventually kicked out of that top position. Fred has an old fashioned model for sales and business development. He believes that sales people need to hit the road and get in front of healthcare CEOs – when they have building projects in the works, regardless of what stage of development. He believes that, given the opportunity to review existing plans, it is highly likely that his company and his interdisciplinary team will be able to find a better solution. Better for the hospital. Better for the board and the community. Better for HBE, too. Sure, he’s demonstrated it time and time again. HBE knows what to look for and how to deliver the most cost efficient “no-frills” product there is – for many the very best VALUE. “So what are we selling?” was the challenge FSK put to the sales force in a series of high-stress meetings orchestrated by the “maestro” over a period of several months, while he was figuring out how to replace the EVP he fired suddenly.

As a marketing person, I am more than happy to oblige a sort of company self-analysis and brand audit. I know such academic exercises can be very helpful for organizations to fine-tune their messaging and understand the positioning of the company for which they work. But FSK is not good at leading this type of process. He is abrupt and judgmental in his words and body language. Instead of creating a forum for openness and honesty, he creates an atmosphere of fear and anxiety. So, as a result of FSK taking the helm on marketing direction for the company: Nine sales guys sit around listening and trying to avoid participation in the process. “What are we selling?” is not some sort of rhetorical question in the spirit of Theodore Leavitt’s famous Harvard Business Review piece on Marketing Myopia. Fred isn’t interested in the sort of epiphany that railroads are not in the “railroad business” but rather the “transportation” business.

Not at all. What Fred appears to want is a sort of monolithic force of drones – all singing the same tune. He wants the sales guys to find opportunities – and do it by reciting only the gospel according to Fred. This Might be okay, except Fred Kummer doesn’t speak in complete sentences. It seems that his mind is following several trains of thought at the same time. He often starts a sentence in one place and ends up in another place entirely. “Twenty years ago, yesterday, ya know we haven’t done a very good job identifying the benefits of our approach….” No kidding – that’s they way he talks! While it seems unfair to single out just three sales guys, they are dramatic illustrations of the function as is has been designed by FSK himself. He’s only looking for “opportunity finders” to kick the door open. He doesn’t want these guys to “build relationships” or do anything after the client has signed a simple one page letter of agreement to work exclusively with HBE on their particular healthcare design and construction problem. Wayne, David and Jim are just three of dozens of hospital sales guys (and they have been – with few exceptions - men) that have parked their briefcases at HBE’s 11330 Olive Boulevard headquarters – The “big house on Olive Boulevard” as I like to call it.

“Wayne, when was the last time you went to Utah?” Fred challenged Wayne in a meeting. Wayne had been more successful than any other salesman over the past three years. Now Fred, in this public flogging – in front of his peers, Wayne is asked to rope-a-dope with Fred about his travel itinerary and his focus. It just wasn’t a fair fight. Wayne did the best he could to defend his concentration on business outside the state of Utah but this confrontation with his top guy seemed to mask his “not so well hidden agenda” to root Wayne out and send a message to the remaining 8 hospital sales people. In one sales meeting, Fred summarized the recent actions of Jim and Dave: Jim presented an idea to a healthcare system involving HBE doing a master plan for a facility. He hadn’t cleared this notion with Fred and the maestro wanted no part of planning without a commitment to build a facility. Fred didn’t want to waste the company’s energy and resources. On the other hand, Dave had a client who was looking for information, for which Dave didn’t have an answer. In Fred’s judgment, Jim and Dave were both guilty of something and ripe for public humiliation. “Jim is dishonest and David is just stupid. I’ll take stupid over dishonest any day,” Fred reasoned aloud. What became of Jim and Dave? The scales of Fred Kummer justice resulted in the dismissal of Jim and the retention of Dave. (Eventually Dave left as well.) Rightly or wrongly – Fred determined that Dave was trainable and Jim was not worth any additional coaching. Today, in addition to its status as a leading design-builder of healthcare facilities HBE is also a major force in the design build of financial facilities (banks, credit unions, etc.) and the parent company of a chain 24 upscale hotels.

The company is still run by its fearless leader. The stories of Wayne, Jim and Dave are not atypical. Very few escape the long arm of the law at HBE. The town sheriff keeps order with his quick draw and the townspeople just assume the relative prosperity and safety is attributable to the sheriff. God help you if you are a Hospital Salesman, a Financial Facilities Salesman or a General Manager of an Adam’s Mark Hotel. High profile and high casualty rates in all cases. Those positions are always in the line of fire and no-one can reverse the outcome of a sheriff with an itchy trigger finger.

Three Young Architects

HBE is a design-build firm. What that means is that HBE accepts sole responsibility for architectural and engineering, design and construction on behalf of the prospective client. Instead of assigning the architectural design duties to a separate entity (i.e. an architectural firm) and, upon completion of those plans, bidding the job to general contractors for construction HBE can, though its single-source, approach theoretically do more “value engineering.” The company and its design-build approach is ideal for a young architect. An architect just starting out will have the opportunity to see a project from design through construction.

Three such individuals were asked to meet FSK at Jetcorp, where Fred keeps his private Lear Jet. These three architects were engaged in a complex “model building” assignment and Fred wanted them to travel with him. Being young and somewhat inexperienced the three were nervous. They were scheduled to fly from St. Louis to Eagle, Colorado (just west of Vail). Departure time was set for 6AM, (“wheels up”) but when the time came only one of the three young architects managed to show up on time. The two “late” architects were carpooling together and one overslept. In a stroke of poetic justice, our hero, Fred Kummer yelled at the guy who was on time. He kicked him off of the plane with instructions to tell his colleagues that they should be on time and that 6AM means 6AM.

Furthermore, Fred commanded the prompt architect to get the keys to a company car and collect the other two and drive the 600 miles to Eagle Colorado from St. Louis. These three architects were convinced that once they got to Eagle, Colorado and completed their assignment that they would all be fired. Thinking they were “toast” they did as they were commanded. The road trip was, no doubt, a bonding experience for the three amigos. Much to their surprise, Fred Kummer did not take any further action and the three architects continued to work at HBE. Meanwhile the story of the late architects spread throughout HBE in just a matter of hours. It was the stuff of legends. It was months before the young architects could laugh at the experience.

Too Many Armoires

Tom was an important guy to FSK. It was Tom’s job to see to it that the Hotel construction initiatives were managed properly and with Fred’s full approval. I can’t fully explain Tom’s role but it is clear that Tom was important to a cost efficient operation of the hotels. Tom’s story is a nearly perfect example of the swift justice of the system FSK routinely applies. His crime? Tom was aware of what was nothing more than an honest mistake, a clerical error. It seems that an interior designer in the HBE/Adam’s Mark system filled out some paperwork improperly and ordered 418 armoires instead of 48. Now in most companies, this type of error would be handled early by someone admitting to the mistake and after admitting the error, action would be taken to correct it. Not at HBE/Adam’s Mark. The “fear of Fred” factor sets in and you have a fiasco of gigantic proportions. Tom, for whatever reason, became a part of the cover-up to a point where he authorized the delivery of 418 (instead of 48) armoires in the hope that the hotels would eventually absorb the furniture. Well FSK can’t be everywhere and the logic might work because the hotels are large enough to accommodate massive orders (banquet chairs by the thousands, night tables, dressers, etc.) How does Tom get busted? FSK gets the invoice for storage and begins a small investigation (more like a witchhunt) that explodes into the immediate firing of Tom. (The interior designer also lost her job to this SNAFU). I know, some readers of this story are saying well “sure, he deserved to be fired because he was keeping information from collect the other two and drive the 600 miles to Eagle Colorado from St. Louis. These three architects were convinced that once they got to Eagle, Colorado and completed their assignment that they would all be fired. Thinking they were “toast” they did as they were commanded. The road trip was, no doubt, a bonding experience for the three amigos. Much to their surprise, Fred Kummer did not take any further action and the three architects continued to work at HBE. Meanwhile the story of the late architects spread throughout HBE in just a matter of hours. It was the stuff of legends. It was months before the young architects could laugh at the experience. his boss that was costing the company money.” To you I say, that is why it is such a perfect example of an FSK story. It seems fair that Tom should be punished. But if you talk to the people who lived in and around this true story you begin to find out that there are plenty of conspirators and individuals equally as culpable. It just happens that Tom faced the music. He told Fred what happened too late. Tom left promptly and the next day the goons in personnel were loading his personal affects into brown boxes.

FSK

Chapter Twenty Six

Great Man - The Maestro (FSK)

HBE is an incredible Horatio Alger story. Fred Kummer started the company as a young man. Just 30 years old, Fred started a construction company with little more than a dream. His wife, June, is an architect. The two of them must have been thoroughly convinced they could make a go of it. June and Fred met at the William B. Ittner architectural firm in St. Louis. Fred was fresh from the University of Missouri at Rolla and June was a graduate of Washington University’s architectural program. FSK has been known to compare himself to Fidel Castro, as they both came into power at roughly the same time. The funny thing is, like Castro, many of the people whose lives he effects secretly hope for his overthrow or perhaps even his demise. I didn’t meet Fred until he was over 70 years of age. I was hired to head up his marketing efforts for design-build divisions in 1998 at HBE. In the three years I worked at HBE, (the first time – I did two tours at HBE), I learned a lot about FSK. In 2005 I returned to HBE as Vice President of Marketing and picked up where I left off. (Fred, still running the show, grilled me and eventually made me an offer - to return to the company.) Fred has a unique approach to how he and his company apply design and construction as a single product bundle. The company Fred started, it seems to me - after some ups and downs in the first ten years, began to see the value of narrowly targeting the healthcare field. Throughout the 1970s and early 1980s the company really took off. (Along the way the company also built a division devoted to the design and construction of financial facilities. AND the company built a chain of owned and operated Hotels – Adam’s Mark Hotels & Resorts) The real story of Fred Kummer can hardly be told without an appreciation for what a colorful character he truly is. And it’s hard to get a good handle on it without talking to some of the various people he has placed in responsible positions within his firm. As the Maestro of the design-build process, FSK proudly installed a statue of an orchestra leader in front of his office. The Maestro is a perfect allegory for Fred himself, as he sees himself, coordinating and signaling every note from every musician in his band. (The company has over 500 employees – highly educated and technical people – architects, engineers, etc.) Indeed, those in his organization learn quickly that this is his show.

Fred is a great man. His rumpled genius persona is not a function of age. By all accounts FSK has been the master builder and final word on every structure for as long as he’s been in business. He is feared by even his highest-ranking lieutenants. That doesn’t explain his personality, his success and his peculiar charm. He is an enigma. Like a rattlesnake, he hisses quietly luring you into his office. “Come in. Sit Down. Hissssssssss” and then - without a moment’s notice he strikes as

if for no particular provocation. It is inexplicable. 

This is the an excerpt from the book that can be found in downloadable PDFs on website www.morganstudioeast.com

Mark Twain and the Comet

I just got finished reading Mark Twain’s Autobiography (well, actually I listened to it in an audio book consisting of 20 CDs). I’ve long been an admirer of the man but this book reminds me that so often those we see as tremendous models of success in life are also well acquainted with failure and disappointment.

Mark Twain (Samuel Langhorne Clemens) lived 75 years, November 30, 1835 – April 21, 1910. He is perhaps most noted for writing Adventures of Huckelberry Finn (1885). In his life he was a printer, a typesetter, a riverboat pilot, a gold miner, a journalist, a reporter, speaker, author and  humorist. He made a great deal of money from his writings and lectures but squandered it on various ventures. He invested heavily in the Paige Compositor (a typesetting machine which was rendered obsolete by the Linotype machine). He declared bankruptcy. He lost money in publishing in spite of enjoying initial success selling the memoirs of Ulysses S. Grant.

The autobiography is part of a larger project that tries to reconcile his many attempts to share stories of his life. Mark Twain had a good many business setbacks and personal loss too. He didn’t want his audiobiography published until after he had been dead for one hundred years. Twain, himself was born during a visit by Halley’s Comet. He predicted that he would "go out with it" as well. The comet is visible every seventy five years. Rare indeed.

The comet's periodicity was first determined in 1705 by English astronomer Edmond Halley after whom it is named. Halley's comet last appeared in the inner Solar System in 1986 and is expected to appear again in mid-2061. No-one can predict when the world will see the likes of Mark Twain again.