Business transformations – A formula for success
Could your business do better? Did early successes suggest a future that hasn’t materialised? Has organic and acquisitive growth failed to deliver imagined outcomes? Have you failed to keep pace with market growth or meet profitability expectations? Then perhaps the time has come to strategically reassess your operation.
With the right formula, external guidance, new leadership and/or investment, perhaps you can re-invigorate your business; even re-invent it in order to secure a better future or exit.
I’m currently leading my fourth tech business transformation. That’s the role I like the most. I love the challenge of a complex business environment with huge potential for upside. For each assignment, I was approached by founders and their chosen investors, venture capital firms (VCs) and private equity companies (PEs), to enter as CEO, define a new future for the business and lead it to success with a great team.
Currently I’m CEO of Forterro. It’s an ERP software company backed by Battery Ventures. I’m driving the 1,200 employee business and its multiple localised brands across Europe. It’s a great business with great people. Forterro brings business efficiencies to 8,000 small and midmarket manufacturing companies, while vendors like SAP, Oracle and Infor focus on traditional enterprise scale clients.
Forterro has historically operated under a group structure of independent brands, but now we see a great opportunity to leverage our scale. I’ve led three other transformation success stories: Primavera (sold to Oracle), KDS (sold to American Express) and CoreHR (sold to the Access Group). I brought significant growth and stimulating new opportunities to each company and its employees and in total over $1bn in added exit values to founders and investors.
Transformation – signs of opportunity
I’ve found that for businesses to gain most from a transformational shake-up, they need to be in a growing market, perhaps a shifting one where fortune favours the brave. They also need to have an innate potential to do better than is being realised by the existing leadership.
Often the skills of the entrepreneurial founder and their team lie in product or service innovation, or in startup and early growth phase businesses. Then as the enterprise grows to tens, hundreds and perhaps thousands of employees, they struggle with the complexity of business strategy, organisational structure, management, people leadership and maybe compliance matters.
Steps to success
My formula for success covers these essential steps:-
Have the dream: The starting point for any transformation business plan is to first have the imagination to see something more; to review the mission and picture the ‘desired state.’ Where are we now? Where could we be in three, five, seven years time? Be reasonably specific about what the future could look like.
If you’re currently making rocket engines, is that where you want to stay? Or is your dream to have a space business that takes people into orbit? At Forterro, our mission isn’t simply to sell software for a profit. It’s to grow by helping SME manufacturing businesses succeed when the biggest ERP software vendors serve mainly larger manufacturers.
If you can picture a new future, roughly what it might entail to get there and think there’s a chance of doing so, then you must another question. You must ask ‘why’?
Know your motivation: What’s your motivation? Is it strong enough to get you through the challenges? Typical drivers for founders and their investors are growth, improved sales and profits, better outcomes for a good cause, or a more lucrative exit. Certainly the PE firms I’ve worked with tend to invest in businesses with latent potential in existing or changing markets and their usual motivation for injecting capital is a transformation pursuant of a profitable exit. This is great, but the motivation should be to solve a problem that you care about…and can continue to care about.
Know the ‘big bets’: What essential but potentially difficult and/or expensive changes, hires or investments would need to be made? Scope the costs and assess funding. What obstacles lie along the way? Assess the risks and determine how you might mitigate them. Can you begin to align some of the funding and clarify some of these big bets before committing? I’ve found that being courageous in your ambition is part of what gets staff and customers excited about your direction.
Design your top team: Critical to any transformation will be your executive team. Will the current team excel or be mortally challenged? Does it have the skill sets for the new mission? If you need to assemble a new team, is it reasonable to expect that you’ll find the people you need? At one of the companies I was hired to transform, management culture was terrible. People just didn’t bother turning up to meetings. A shake up was needed. In most cases I’ve had to hire some new top talent to help me carry the transformation through.
In a business of hundreds or thousands of people, you can’t expect to command major change without hiring significant talent to support you. You’ll need people you trust, you’ll need domain expertise and you’ll need a team that will spread enthusiasm amongst your workforce. I always focus on building teams that are better than the mission at hand. Extraordinary people achieve extraordinary things.
Get granular – write a 100 day plan: Now it’s time to plan who, what, how, why and when in detail. What would your first 100 days of the transformation look like in terms of decisions, activities, budgets and goals? How will you measure progress and outcomes? Define the timeline. How will you communicate with and enchant investors, inspire your leadership team and employees?
Present the plan: In presenting the plan, be sure to assert why it’s special. What will the new mission mean for each stakeholder group; investors, employees and customers? Why is it good for them? Why will it make them more successful? When pursuing stakeholder buy-in, be sure to communicate, communicate and communicate. Also think about different forms of communication as people consume information in different ways. Use written, video and graphical formats. Mix communications between detailed overviews and brief, bite-sized summaries.
Refine the plan. Launch the journey: Once you have investor backing, then it’s time to get into really detailed planning and to get underway. Begin to assemble your executive team. Refine the plan together. Firm up on, prepare and make those early big decisions.
As the transformation gets underway, you’ll learn new things. Your business environment may change. So it’s important to have check points and make adjustments to your plan as things progress. I’ve found it critical to define my check points before the mission starts as you cannot change to emerging market trends, or new unforeseen situations daily. It’s important to stay the course long enough to know if something is truly working, and if not, why. You can’t build this understanding if your strategy and plan is constantly changing.
Talk with and inspire employees: This is my favourite part of the journey, seeing the reaction of employees who’ll have to drive the change and of customers. You hope they’ll react positively. If they’re not excited by your plans then perhaps something is wrong. Ultimately they’re on your side.
Get out and talk with your department heads and team leaders. They’ll be critical to making your plan work. Talk too to some of those at the coal-face in product development, finance, HR, IT, marketing, sales, support and more. Also speak with a few close customers in confidence. You’ll be encouraged by the high level of support you’ll get for good ideas. Your eyes will be opened to new possibilities. And in doing the walk, you’ll share your enthusiasm and win the buy-in of your employees.
Give people clarity. Help them understand what’s in for them and try to be specific. Recognise that different people have different motivations. What drives sales people is very different from what drives customer support staff or product developers for example.
Business transformations are complex and sure, there are many other factors to consider. But I’ve learned that with vision, a trusted executive team, detailed planning, engaged investors and motivated employees it’s a journey that can be successfully navigated to great outcomes.