turnaround stories

There’s a cautionary tale for sales people and a recipe for turnaround success in the story of Descartes Systems Group (TSX: DSG).
Descartes has gone: from (i) huge success, for once it was a high-flying stock that soared to $130 per share during the dot-com bubble; to (ii) almost total failure, where its share price plunged to penny stock status in a spiral of collapsing sales, accounting crisis, furious shareholders and analysts’ death watch; to (iii) turnaround success, for starting in 2004 it made key changes that enabled it to post 17 straight profitable quarters over the past 4+ years.
How did they do it? The answer is as follows:
The Board realized the company was threatened as a going-concern and they took responsibility to get the company’s results and position improved.
The Board sought informed, objective advice on their situation and what to do.
The Board hired a new CEO to address the problems and take the company in a better, more fundamentally sound direction.
The new CEO realized he needed to change the corporate culture from one of failure and self-orientation to one of being focused on solving important problems for customers and achieving success thereby.
The new CEO fired 98% of his sales staff while letting go 2/3’s of the workforce.
The new CEO insisted that the remaining staff drop the old culture of ‘selling customers’ and embrace a new culture of ‘serving the customer’.
Lastly, Descartes set itself to helping its customers save money, and only once that was achieved, did they book revenue, get paid cash, start saving the company, and get back to being on a growth track (revenue is now up 50% from 4 years ago and profits are 10 fold higher).
Clearly, Descartes’ results confirm how successful new CEO Art Mesher’s strategy and tactics have been. Maybe there is in this a valuable lesson sales people, marketers and senior management/owners can take away, which is: when you lose focus on delivering value for customers, who needs a salesforce and other staff, for the company has lost its way and it is in serious need of a refocus; one concentrated on the fundamentals of its business, its customers’ needs and the company’s economics.
So YES, many companies can be turned around, even when it might seem they are on death’s door. What it takes is responsible/insightful action, fresh fundamentalist thinking (as well as clear headed decision making), and stakeholder support (i.e. from customers, suppliers, lenders, and controlling shareholders to name a few). Importantly, it also requires time and accessible cash. If you are in a similar situation, act early, egolessly, and decisively and you too may survive and thrive like Descartes has done.
To watch an interview video with Descartes’ CEO Art Mesher and read in more detail about what he did to save this publicly-traded Canadian Tech Company, go to today’s Report of Business section of the Toronto Globe and Mail by clicking: http://bit.ly/lYh3q