A number of years back, author Jim Collins posed a question to the business community. He asked, “How does a company make the leap from good to great?” Together with his research firm, Collins investigated what makes the difference between mediocre and outstanding. After exhaustive reviews of thousands of articles and financial data analyses as well as conducting hundreds of interviews, Collins published his findings in a 2001 bestseller entitled “Going From Good To Great.” What were the secrets to success that he uncovered? Was it being in the right place at the right time? Was it having the right people? Did his findings apply to all aspects of the business world?
    Looking at the payment processing industry, it appears that the keys to greatness are simple in nature but complex in application. Whether its ISOs, MSPs, acquirers or manufacturers, the difference between success and failure can be found in corporate culture, the power that drives organizational engines, and the road maps they all follow.
    Take, for example, a successful acquirer in today’s marketplace, Retriever Payment Systems. Every senior executive of this ISO was mandated to read “Going From Good to Great.” Did it make a difference or did it just reaffirm a philosophy that was already in place?
    “The primary differentiator between success and failure in our business is knowing your customer,” says Joe Natoli, Senior Vice President of Retriever. “How do you become a great company and how do you succeed if you first don’t know who your customer is and what they want. How do you build an organization without first knowing where you are going.”
    According to Natoli, Retriever was never confused about who their customer is. That primary differentiator enabled them to build a solid structure and enhance their organization through a laser point focus that addressed the needs of their clientele. This approach seems very basic. So why do some companies make it and others fall by the side of the road?
    “Some companies don’t dedicate their energies to being great at just one thing,” says Natoli. “If you are great at something, you have the ability to bring in business at that level. If you do any kind of analysis of great companies, they are usually excellent at one differentiator and at least good at others. Wal-Mart is well known for being a low cost provider. They are not always the lowest but they give that impression. They don’t have to be great at service or depth of product like Neiman Marcus. If you take price, service and product offerings as the three elements of a company, you need to be great at one of them. You can never be terrible, but your customers will forgive you if you are good. If you try to be great at all things, you’ll never be able to sustain any of them.”
    This mirrors the “Hedgehog Concept” addressed in Collins’ book. The idea is to become the best at what you do. Otherwise, you will have a hard time gaining market share in any arena.
    “In the acquiring industry, if you focus on what’s important to sales groups, they will bring you the merchants,” says Natoli. “For example, when a sales group calls, they don’t want voicemail. They don’t want to go into a hunt group. They are calling to do business. Because of that, you need experienced people with the right answers to respond to their calls.”
    Is there a standard for successful business strategies in the bankcard business or is it an individual thing? Natoli sees a number of high levels of standards that transcend individual organizations.
    “Critically important to a successful business strategy is creating a foundation from a solid philosophy,” says Natoli. “If you are a culture-centric organization, then it is important that philosophy drives your focus. If your focus is technology, then that needs to be at your core. An ISO or MSP can be hugely successful in whatever way they drive their business if their philosophy is there. I personally believe in having good people over good technology.”
    Retriever made the leap from good to great on the backs of their superior staff. In fact, the people element is the primary secret to their success and the most important factor in their achieving stardom.
    “You must hire the right people and place them in areas of the company that empower them to succeed,” says Natoli. “You cannot have a great company without great people. Great people are the company. You also need a great leader with a clear message that is, above all, measurable.”
    Notwithstanding their employee resource, Retriever also invested heavily in technology in their quest for greatness because they recognized the need to give their staff the proper tools to succeed.
    “We believe strongly that you must give those great people to ability to do what they do best,” says Natoli. “Technology frees them to gather, report and analyze info quicker and easier. If you are a relationship company like Retriever, great people benefit from great technology. It allows them to do what they need to do most – spend time with their customers. Pouring technology down stream to the sales peoples gives them the time to sell rather than service.”
    Do partnerships and alliances play a big role in going from good to great? Are mergers and acquisitions the only real option for companies looking to go to the next level?
    “I think you need to have good partners because there are very few that do everything in our industry,” says Natoli. “You need to have stable, dependable partners that have a solid track record. We are lucky we have developed relationships over the years that are still in place today.”
    As for mergers and acquisitions, Natoli doesn’t see this strategy as the only viable option to growth and expansion. What he does see are three basic philosophies, namely acquiring, organic and a mixture of both.
    “I know this sounds simple, but there are three distinct skill sets,” says Natoli. “There are companies that have reached a size where they cannot grow organically and need to facilitate an acquisition to grow. The benefit of acquiring over the years of growing organically is that our platforms have been tested and able to absorb acquisitions with very little change. The best mix is a company that is primarily organic because you grow into your system and augment it with acquisitions.”
    The biggest mistake Natoli sees companies in the bankcard business making when striving to achieve success is lack of a detailed approach.
    “You need a focused plan to grow,” says Natoli. “You can’t just wake up one morning and say you want to be great. If you concentrate just on growth and not focus on how to support that growth, it will be short lived. It’s not about what your customers want, it is how to deliver on it. The biggest challenge is having the necessary talent and then insuring that every one of those talented people share the same message as to where they are going. Achieving greatness is a lot easier if all are united in their goal.”
    So how did Retriever achieve their greatness? Or are they still a work in progress, like so many other successful organizations?
    “Retriever will always feel that we have more work to do,” says Natoli. “Nevertheless, in a nutshell, our sales organizations are great groups. Our average tenure is over eight years. We have an advisory board that gives us great suggestions. We also have an open door policy where employees can speak their mind and whether we agree or disagree, we do it professionally and for the betterment of the company. For us, it is people that made us go from good to great. We are honored and lucky to be working with such well-respected and experienced people in our industry. If we are committed to providing a good product to our distribution channel and a great work environment, we need to all work together. My senior and middle management team knows they can come to me and suggest a better way of doing something. They know they can freely discuss new ideas and disagree with them. We are very open-minded. We listen. Retriever has very talented people doing work on a daily basis and we take great confidence in their suggestions. That makes us great. And if you want to be great, pick what you want to be great in – whether it is price, service or product. Focus the entire company on that particular initiative and measure everything against achieving that goal. Get great people and let them do their job.”

    Another organization that has made the transition from good to great is Clear Commerce. A leading provider of payment and risk management solutions since 1995, Clear Commerce downsized after the dot.com bubble burst in 1999. They rolled up their sleeves and made the commitment that they were going to beat the odds. Today, over 80,000 merchants in production use their solutions. They obviously beat those odds.
    Julie Fergerson, President of Clear Commerce, attributes the success of her organization to a number of factors. One of the primary differentiators that made her company outshine the competition is rooted in personal contact.
    “Customer service and being able to answer the phone with a live voice is the difference between success and failure,” says Fergerson. “My customers always tell me that I am so reachable. Some companies have a main number that just makes people mad. It may seem so basic but what we do differently is answer our phone.”
    Fergerson doesn’t believe there is one business standard that encourages greatness. Rather, she believes the companies that are truly successful build solutions that serve customers and not current trends.
    “A lot of companies come up with the latest and greatest product without thinking it through,” says Fergerson. “The attribute you find among companies that make it is that they do what they say they will. If you can’t do it, don’t say it. It is all about delivery and execution. There are too many people in this industry who over commit and don’t understand what they are committing to. It is more about the metrics you establish for yourself and whether they are achievable than the market you have chosen.”
    Fergerson sees common sense—or the lack of it—as the biggest mistake companies make when trying to go from good to great. They’re doing what sounds good rather than what makes sense.
    “There used to be a company that wanted to differentiate so it partnered with a biometric company and started selling new solutions,” says Fergerson. “Their efforts got them sizzle but didn’t get them revenue because there wasn’t a big demand for it at that time. Some of the projects we are working on right now are from research done with our customers. We find needs and address them, rather than what seems to be hot. The big challenge is staying focused and not getting distracted with other opportunities”
    Like Retriever, Clear Commerce is a company that acquired greatness not through technology but through talented personnel.
    “Staffing is critical to going from good to great,” says Fergerson. “Yes, anyone is replaceable but, that being said, if your team doesn’t think outside the box, it makes a huge difference—whether it’s your A or B players. Technology is a tool to greatness, but not the primary factor.”
    Again, like Retriever, Clear Commerce made the leap to stardom through a merger. It joined forces with etrade. However, Fergerson feels the space each company works in determines whether or not mergers/acquisitions is the only option.
    “It depends on what market you’re in,” says Fergerson. “For us, it certainly worked but I don’t think it is the only option. Your partnerships are just as important. Clear Commerce was very strong with First Data. They were one of our largest distributors of our solutions and definitely helped take us to the next level. What made us go from good to great was our focus and drive. The thing that personally drives me and our company is taking care of the customers. What’s most rewarding is concentrating on what we can offer our customers.”
    The key to Clear Commerce grabbing the gold ring is obviously that passion. Fergerson stresses that creating a passion among the team creates momentum and gets you that much closer to superstardom. The other key to greatness—thinking smart.
    “Do what you say your are going to do and do it in a thinking way,” says Fergerson. “Do it smart. Don’t analyze things to death. Forget putting together a 300-page business plan and piles of spreadsheets. You don’t need anything over 30 pages. If you can’t say it in a shorter manner, you’re not being concise and focused.”
    When it comes to being concise, smart and focused, there is one acquirer that epitomizes those qualities and, as a result, has achieved undisputable greatness—Total Merchant Services.
    “When I look at ISO success, at the end of the day it comes down to execution,” says Ed Freedman, President/CEO of TMS. “I think we all know what to do. It is not rocket science. What makes us execute better is IT resources, automation, technology and building a back office from the ground up. It is a race to get a piece of the payment processing pie. We all know what needs to be done. It is how well you get your business model in place that makes the difference. It’s getting the right product out to our sales partners. It’s getting it done and done right.”
    As one of the most outspoken and committed players in the acquiring space, Freedman is quick to share his knowledge, expertise and opinions with the hope that he can help other companies go from good to great. He believes architecture makes the difference.
    “People criticize me for telling secrets but achieving greatness is not about money,” says Freedman. “Big venture capital firms have come into our space and offered a ton of money but you can’t buy success. You have to develop it, one product layered upon another. Total Merchant Services wouldn’t be successful today if we hadn’t built a strong database, put in the right plumbing and the right automation on top of it. You have to have the infrastructure first. Otherwise, you’ll never keep up with the execution. Companies are coming up with great ideas for new business but not thinking through how they are going to successfully support those great ideas. They jeopardize their quality brand by not having their ducks in a row before they come out with new programs.”
    Freedman sees the market being the dictator of policy and procedures.
    “In our business; the standard is set by the marketplace,” says Freedman. “What used to be a standard one week changes the next week when a company comes out with a new standard that everyone has to adopt or be left behind. Take merchant approval. Turnaround used to average 5 to 7 days. Then someone figured out how to do it in 5 to 7 hours. Now, everyone needs to meet that standard. Whenever a new bar is set, that becomes the new standard. Innovation sets the standard for success in our industry. Look at free terminals. It was innovative last year. Now it has become the new standard. However, it is delivering on that standard that is critical.”
    Freedman believes that some companies achieve greatness while others crash and burn because their infrastructure can’t match the constantly evolving standards.
    “Companies fail because they facilitate a major innovation but can’t keep up with the growth,” says Freedman. “Make sure you can deliver and maintain the quality associated with your brand when meeting the new standard. Wait six months, build out your infrastructure and then meet the standard. You’ll set a new bar by doing it well.”
    According to Freedman, focus goes hand in hand with execution supported by solid infrastructure.
    “When you lose focus on your core business, you go from being really good to being extinct,” says Freedman. “Deciding what your business is and what drives your market is extremely important. I know what my business is. I know exactly what I am doing in that space and what it takes to move my numbers forward. I don’t do things outside of my box. Some say I am not a visionary and have tunnel vision, but I say knowing how to move your numbers is critical. I sit down and do nothing else but focus on that. At the end of the day, this is a for-profit business. Without focus, you’re working with a blindfold on.”
    Ever outspoken, Freedman believes personnel is critical as well, but not essential.
    “For me, staff is not as important as technology,” says Freedman. “I hate to say people don’t matter but technology matters more in our business. My management team is vital to our success, but our systems are so good that I could plug anyone in to run those systems. We try to take as much human greatness out of the equation as possible. I definitely have people critical to my business and couldn’t run it without them, but if you have a great business, you can take anyone out as long as your technology is there. Look at the list of CEOs of successful companies that leave and those companies remain great because the systems are great. That is the reality.”
    How important, then, is partnerships and alliances to a company who believes that execution and technology precedes talent? According to Freedman, it is paramount.
    “In this business especially, you can’t do everything on your own,” says Freedman. “You are only as good as your weakest link and if my vendors and partners are doing a bad job, I am doing a bad job. Your processor and vendors are vital. The quality of your partners is critical to your success. If they perform well, you perform well. We’ve been through a minefield of bad vendors who almost blew us up. The partners I have today are great and have helped us become great. I am very appreciative of them. We’re doing the same job we have always done but our customers think we are doing so much better because our alliances are better. I don’t look for the best deal with vendors and partners. I look for the fairest deal. You have to make it win-win for your partners to go from good to great.”
    Being an organization that acquired two major companies in the last two years, Total Merchant Services embraced the premise that acquisitions is a way to go to achieve greatness. Nevertheless, Freedman believes it is not the quintessential factor.
    “Mergers and acquisitions don’t insure greatness,” says Freedman. “It all goes back to execution. While mergers and acquisitions could mean a grand slam, it could also result in an in-field single. Pure numbers don’t guarantee success. You have to successfully incorporate those acquisitions and maintain sales. It is not the only way to grow but it can change your business overnight. If you want to grow and can’t move your numbers any quicker, then acquisitions may work. But you have to do it with someone who has long-term experience in the industry. It worked for us because we found reliable, established organizations and we did it seamlessly and without risking loss.”
    Freedman’s advice to all those companies looking to make the leap to greatness centers around Collins’ original concepts.
    “Know what you are good at and stick with it,” says Freedman. “Remember what got you where you are. If your core is sales then structure a relationship where you are doing sales. Don’t spend millions on becoming an operation center. Stay within your niche and align yourself with partners that complement your ability. If you are great in the front office, find someone to do back office. Otherwise, you’ll go from good to bad. I am really proud at what we accomplished. We do what we do best and maintain our core competencies. For everything else, we outsource. That is what made us great.”