The best way for businesses to plan
ahead is to revisit strategies that have
been successful in the past, says Ric Dillon, CEO and chief investment officer of
Diamond Hill Investment Group Inc.
With 35 employees, the Columbus-based
firm provides investment management
services to individuals and institutions
seeking to preserve and build wealth.
Dillon says his firm has successfully followed a strategic growth plan and has
increased revenue from $2.8 million
in 2004 to $31.9 million last year.
Smart Business spoke with Dillon
about how he relies on past experiences to lead Diamond Hill
Investment Group into the future.
Q: How can CEOs make good decisions regarding growth?
What we’ve tried to do is stay
focused and disciplined. Those two
words are as important as anything.
We’ve stayed disciplined to our
investment approach and focused
on just a handful of offerings. We’re
not trying to be everything to everybody, and we are true believers in
the way we do it.
Q: How do you stay focused on
offering your best?
Know what your own limitations
are. I don’t know about a lot of the
other different offerings, so how
could I possibly offer them?
Know what you know, and know
what you don’t know. Stick with your own
experiences, and hire talented, focused, disciplined people — that’s vital to your success.
Q: How do you hire the right people?
I hire people that I’ve known or worked
with for decades. Stick with what you
know, and that includes people, too.
When you do that, there is a lot of trust
immediately, and you can get more things
done quickly. You know people’s strengths,
and you can play to those strengths. You
can set up a situation where those
strengths can affect all of our equity strategies. You’ve got a knowledge base to work
off of, and trust levels have built up so it’s a stronger team. I’m sure you can get there
eventually with a bunch of strangers, but I
think it’s going to take more time.
We also get to know people through the
internship process. It gives us an opportunity to live with the person for a while and
get a sense for the type of person that they
are before making a decision. We’ve done
that on several occasions, and it certainly
works for us.
Jim Ware has taken some concepts from
the Jim Collins book, ‘Good to Great,’ and
applied them strictly to our industry. In the
book, ‘Investment Leadership,’ Ware
observed that successful firms in our
industry tend to be made up of certain personality types, so hiring those types of people is what makes sense for us to do.
We value independent thinking, but our
potential employee cannot think differently than us on the investment principles. I’m
not saying there aren’t other approaches to
investing; it’s just that we have an approach
that we believe. We’re appraising business,
and we want everyone who works for us to
approach the job that way.
Q: What is the most important ingredient
in a growth strategy?
A product or service that has genuine
value to the end customer. When clients
invest with us, they believe that the
results they get in their account will be
greater than if they chose an alternative
strategy.
They’re going to base their belief on
things like short-term performance —
which is probably not the best way to
do it — but that’s just human nature.
Once they’ve become a client, we can
educate them on what our value
proposition truly is.
Q: How do you communicate that
effectively?
You have to make an effort through
documents that you write and opportunities to talk with potential clients. You
have to educate them with a consistent
message.
There will be times when a company’s
results are below average, and that’ll
happen frequently over a short period of
time. If the message was implied that,
‘We’ll always be good,’ then eventually,
the client will leave you for the same reason they came to you.
Q: What pitfalls can prevent a company
from growing?
The first is arrogance. We believe that
we can always get better at what we’re
doing, and we’re always looking for ways
to improve. Even when we’re having especially good years, we don’t sit back and say,
‘That was sure a good year.’ We say, ‘Where
could it have been better, and how can we
get better?’
And, the second pitfall is complacency. At
a minimum, opportunities will be missed,
and at a maximum, things won’t get fixed.
When the improvement doesn’t come —
and things go the wrong way — it becomes
glaring and then you see the issue.
If you had been looking for it, you would-n’t have to wait until the problem made it
painfully clear.
HOW TO REACH: Diamond Hill Investment Group Inc., (614)
255-3333 or www.diamond-hill.com