Thinking inside the box – fighting parochial decision making.
A large and well-established enterprise software company was experiencing years of declining revenue and persistent losses. The decision was made to bring in a Transformation Advisor to quickly evaluate strategic options for the business. As a result, revenue began to grow in the company, and it returned to significant profitability.
No industry is more affected by rapid disruptive change than technology. The business was part of a larger conglomerate whose core business was not software. The management team had been in place for some time and was generally capable. There was little oversight from the parent and the continuing losses, while significant, were easily absorbed by the much larger parent. A change in the leadership of the conglomerate prompted a review of all businesses in the portfolio highlighting issues at the software company.
The decision was made to bring in a Transformation Advisor to quickly evaluate strategic options for the business.
After a brief period, the Advisor determined:
- The focus of the management team was on effective internal operations including personnel, customer support, events etc. Customer support was actually very effective, resulting in high customer satisfaction at the user level.
- The software platform was based on old technology but was very stable. There were many new entrants to the market offering leading-edge technology. The management team relied almost exclusively on industry reports for their view of the market. Virtually no discussions took place with decision-makers within existing or prospective customers. As a result, significant investments were being made in the development of new products for which there was little demand and had virtually no prospect of success. Key customers were making decisions to move to their competitors based on the assumption that no new development was taking place.
The Advisor assembled a cross functional team with key company leaders. Using several innovation techniques, including scenario planning, the team developed several very innovative and inexpensive solutions that could move the technology to the current era. Also, the team developed a series of ancillary services that could augment revenue from the existing customer base. Following this the Advisor and a few senior executives visited with the senior decision-makers with each key customer and communicated the plan. As a result, revenue began to grow in the company, and returned to significant profitability.