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Challenge, Turnaround Strategy and Execution

Andy Lambrecht Management Consulting

Background & Challenge

I was promoted approximately one year after joining a new company.  I had been hired to build a third product line to improve the look for a desired IPO.  During that first year, I built a self-contained business unit within a larger organization that was relatively flat.  My manager liked having a strong leader and decided to reorganize functionally making me his Director of Marketing & Product Management and promoting my product architect to Director of Software Engineering.  A week or two later, a new GM was hired to replace the one who had promoted me.  Soon after, he challenged me to develop a strategy to double the primary business of the business unit which had been declining for several years. 

Solution: Turnaround Strategy and Execution

OK, what to do?  I started with the framework I have used in the past to develop strategy and execution.  This is fundamental and doesn’t really matter if it is a technology business or a shampoo business and comes naturally to me.  What are our strengths and weaknesses compared to those of our competitors?  What does the market look like?  What are the key trends?  Who are the main influencers and what are they doing?  What do the customers care about?  Where is a space in the market we can grow?  What is the vision and what is the strategy and execution to get us there?

There were three primary suppliers in a mature market and at this point, we were third in market share.  But we did have 100% of the mobile business of the largest customer (and 0% of their larger non-mobile business).  We had high product quality and strong customer service, which is what allowed us to maintain 100% with this customer.  The second supplier, another US-based business, had good quality, good service, and pricing that was a little more aggressive than ours.  They held 100% of the non-mobile business of our mobile customer and had strong positions in other brand name customers.  The third supplier, a Taiwan-based competitor with the largest market share, had lower quality, reduced customer support, and extremely low pricing.  This third supplier was the preferred choice of the contract manufacturers when they were allowed to make the choice.

There were two primary influencers and we had good relationships with both of them.  Another division of one of these influencers was a past customer.  We understood the features that the influencers wanted for the upcoming generation, and we had two products in development that provided the new features, but the development schedule was behind the well-defined annual product schedules of lead customers. 

The strategy.  We had a strong engineering team and technology.  We had deep relationships with the mobile team at the largest customer and had provided them with outstanding support.  We couldn’t compete with the Taiwan supplier on price and it was unlikely we could convince the contract manufacturers to pay more for higher quality.  The strategy in a nutshell, was to leverage our quality, support, and leading features to take business away from the other US supplier by focusing on the brands that cared about quality and support, or in some cases could be convinced to care, and cared enough to specify which products the contract manufacturers would use rather than allow the manufacturers to choose.  Strategy and execution does not have to be complicated and is better when it is not.

Also key was to understand how decisions were made within each customer and how we needed to approach each customer differently.  In some businesses, it was a technology specialist who was responsible.  In the product division of the influencer company, decisions were heavily influenced by the procurement manager, who was judged internally on her ability to get annual price reductions.  The reason that customer had been previously lost was an unwillingness to work with her in a way that helped her succeed.

My calculations were that we could double the business twice before we had to worry about competing directly with the Taiwan-based supplier to maintain growth (and I had ideas for that when the time came).  We would focus initially on 1) the non-mobile business where we had the mobile business, 2) the product division of the one influencer, and 3) winning at least one other brand.  After that, we would leverage new features at other brands, which included the second largest brand customer.  In the past, I had created product roadmaps, but in this case, the product line manager did an outstanding job engaging with influencers, customers, and the engineering team to define new features and new products.  I negotiated the intellectual property (IP) licenses needed to feed the roadmap. 

At this point, we were behind the schedules of the lead customers.  But, the other US supplier misjudged the importance of a key feature driven by the two influencers and within days of each other, both primary lead targets called for help.  Through a lot of hard and well-managed work by our design, software, and support teams, we squeezed our schedules, hand-carried untested product to their contract manufacturers and jumped through numerous hoops to get them through development and into production on schedule. In the meantime, a custom product developed specifically for a high-end, lower volume brand somewhat as an insurance policy, won a second high-end brand. 

In the first cycle, by giving ourselves the ability to take advantage of a competitive , misstep we achieved the goal of establishing presence in the non-mobile industry’s largest brand, the product division of the influencer, and two other brands. 

In the next cycle, we developed two new families of products working with the influencers and the large brand names.  These products allowed us to expand our positions with our now existing customers and get footholds with new customers, including the second-largest brand.

Results

There was certainly some luck along the way, but you have to be in the right position when the breaks occur to benefit from them.  Some issues arose during production that risked the supply of millions of products a month.  The team was able to manage the issues and juggle inventory and orders such that our customers never had any issues. The successful strategy and execution of the team resulted in two team members, who I hired shortly after being put in the role, being promoted to roles in the other business unit.

Approximately two years in, an unsolicited offer was made to purchase the product line.  As it turned out, the sale of the product line was critical to the survival of the company.  Did we double the business?  The calendar year that I was put in the role and challenged to double the business we did $X Million in sales.  The calendar year two years later was 2.5*X Million in sales.  This was in a mature market with three primary suppliers and one-year customer cycles.

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