A Manifesto for Taking Care of Business
I founded my first company, over two decades ago, on a couple of credit cards and a dream (at the time, we referred to it as a “wing and a prayer” - now we prefer to remember it as a “vision for global leadership”). After two economic cycles, three major rounds of financing, three business model changes and two “perfect storms”, I have reached the conclusion that success and failure are simply different points along the same continuum, and that every human being and business will eventually encounter both (probably many times!)
In retrospect, getting through all of these inevitable cycles wasn’t just about foresight, strategic vision, competitive strategy, customer relationship management, innovation, time to market or any of a number of factors that most business pundits focus on. Yes, all of these factors were important - but the one consistent ingredient required to survive and thrive, was to face each challenge with an act of will, and to rapidly adapt to anything that was thrown at us.
Winston Churchill probably said it best: “Success is not final, failure is not fatal. It is the courage to continue that counts.”
Look, everyone will applaud, remark upon and celebrate your brilliance when things are going your way. I propose, however, that you are defined by how you react when times are tough, when you don’t have momentum on your side, and when you wake up to a daily, weekly, monthly diet of adversity (which every company and every person eventually will encounter). Do you exhibit grace under fire? What does your leadership look like when things aren’t going your way? Do your people continue to follow you when you have to climb uphill? Are you able to take decisive, tough actions while continuing to hold the hearts and minds of your team? How do you keep all of your stakeholders informed and aligned to a common purpose, when all of the external forces are working to splinter your coalition?
The single biggest challenge for my company occurred shortly after we had just raised our third and last major round of financing in June, 2002 - the single largest private financing round for the tech sector in Canada after the tech bust. At the time we were almost 400 employees, growing annually at 50%, and 6 months away from an IPO - in other words, we were feeling pretty good about ourselves. Two months later, the impact of 9/11 hit our customers hard and the entire NA insurance sector (our primary customer base) went into a tailspin, going through the worst time in their history. Major IT programs were the first initiatives to get cut by our customers and prospects, as the insurance sector tried to conserve cash and reduce all discretionary expenditures, and we went from a market where we were winning 60% of the deal flow in our target market, to having no deal flow available in the market for the next 24 months. Instead of preparing for an IPO, we ended up facing a sudden major downturn in our business. Bad markets trump good management and great products. So what did we do? We took immediate action to conserve cash, restructure the company and hunker-down to ride out the market cycle and survive nuclear winter in our space. We undertook the toughest and most painful actions of my entire entrepreneurial career, exiting every major long-term obligation, shutting down all non-core operations, slashing expenses down to life support and dismantling over 90% of the company that I had carefully built up over 15 years.
We were fortunate - in spite of all of the pain that shareholders, customers and employees collectively shared, my management team and I received complete and continued backing through all of the tough actions that we needed to undertake. We outlasted the market cycle with our intellectual property and a small core team intact. We rebuilt the company from substantially the same topnotch employees whom we were forced to release during the downturn. The tough actions we had taken resulted in a very lean, efficient operating model, and a vastly simplified equity structure and balance sheet. This allowed us to reposition the team and the intellectual property for global leadership in our space, leading eventually to the recent, very successful sale of the company to Oracle, the world’s largest enterprise software company.
Bottom line: you do your best in the situations you control, and you make the best of the ones where you don’t, by making the best decisions given the data you have, being decisive and action-oriented, and honoring your obligations to your stakeholders. My main premise is that the key to sustainable successful business performance, is a determination to never quit, and an ability to constantly adapt. Having the tenacity to continue is the one thing that remains within our control, and by persevering you give yourself the opportunity to choose the nature and timing of the “Kodak moments” within the continuum, those moments that will determine your so-called “overnight successes.”