The great poet, Annie Johnson Flint once wrote:
Have you come to the Red Sea place in your life,
Where, in spirit of all you can do,
There is no way out, there is no way back,
There is no way but through?
My oldest daughter hanging from the ropes in the picture above inspired me to write this Blog. She recently returned from a 12-day trip to Costa Rica with her high school Spanish class.
Strategic Advisors are great! They are direct, forthcoming with great feedback, full of fresh new ideas and the TRUTH! Several weeks ago, two brilliant women strategists spent several hours with us engaged in a conversation that provided us with laser focus clarity. There Is No Turning Back! If you lead with truth, your passion focused on accountability, and your vision is clear, any feedback – positive or negative will always be welcomed.
As a leader, it’s easy to second guess your decisions. Right or wrong, good or bad; most decisions will affect others positively or negatively. Those of you who have made tough discussions in your professional career will appreciate this story.
In early 2007, a CEO asked me to assess the current state of the business to help him determine new ways to improve the company’s overall performance. For ten years, the company had been stagnant. Wall Street and the Board of Directors were putting enormous pressure on the CEO to hit profitability and grow the bottom line. The company had been in business for 25 years, selling old technology, which was being fiercely challenged by four new competitors for the first time .
The Need for Change
After four months of assessing the business, the recommendation was made to divide the sales organization into two separate business units. The team was stretched. People were not in the right positions and productivity levels were low. The group had several major challenges: limited product and procedure knowledge, large geographies, multiple call points, and limited strong physician relationships. For those of you who have spent time in the medical device industry, you understand how challenging it is to call on Electro -Physiologists (EP), Interventional Cardiologists (IC), and Cardiac Surgeons (CS) let alone cover all their cases in one day. Einstein would have been challenged.
Wall Street analysts were relentless, competitors were aggressively taking market share, and the CEO and Board of Directors were under pressure to make a strategic decision. The company’s decision to split the organization was a calculated risk with uncertainty. In order to grow, they needed to make a drastic change to build the core businesses.
In the summer of 2007, they decided to conduct a “Pilot Program.” They gave me the okay to hire seven sales professionals, “A” players. In their words, it would “get the ball rolling.” So, from July to September, I hired a full team of the best of the best in the industry. At the end of the fourth quarter 2007, our team grew $1 million dollars over Q4, 2006. The team exceeded all revenue projections and expectations!
The quarter ended. I was completely exhausted after extensive travel, hiring a new team, and rebranding and remarketing the division. A single mother of three, I finally got to take my kids on vacation – a surprise trip to CABO!
January 4th was a day I will never forget. My boss called me midday in CABO to share some exciting news. He said, “You know that six month strategic plan we put in place to spin off the Lead Management Division?” “Yes,” I said. Complete silence and then, “Well,” he said, “While you have been on vacation, the CEO and Board made the decision to go live January 15th to let you spin off the two divisions ….so congratulations!”
I remember standing at the edge of the pool deck, staring out at the ocean in complete shock. I couldn’t believe it. All I could say was, “Are you kidding me?” He said, “No, I am serious.” What he didn’t expect was what I said next. “What is our communication strategy? What happened to our strategic plan? How are we going to transition customers and how do you plan on compensating the sales team during this transition? I am sorry but this is a huge mistake!” He quietly said, “We will figure it out when you get back…it will be fine. You will figure it out!”
The CEO made the decision to move forward. He was confident of our team’s ability to continue building from our “fantastic Q4 results.” The “Pilot Program” had proved to be a solid business model and, in his mind, was the right direction for the company, Wall Street and the investors. So… while I was on vacation, they pulled the trigger!
Change creates uncertainty. Lack of communication creates PANIC and people get upset! That is exactly what happened! Our original plan went out the window. The team didn’t understand how the new split was going to affect them, their business, compensation, or their physician relationships.
Change is never easy for any organization but if communicated properly and executed flawlessly, the results are rewarding. However, I came home to a beehive! Not only was the company in a state of shock but so were Wall Street analysts. The CEOs communication strategy to the company and the Street was unclear. Analysts stated during the Q4, 2008 earnings call, that, our strategy was ” WEAK and will never work.” I was listening attentively to how the Executives were positioning the new strategy and I was excited and proud. I knew that once they shared our sales results, it would calm concerns and get their attention.
I remember feeling anxious as negative comments flew from every direction. There were comments such as , “why did your team all of a sudden decide to divide the two sales divisions?” I just shook my head in frustration, knowing that if we had followed the original plan, this conversation would never have occurred. Investors saw the split as a profitability issue – not as a growth opportunity for the company.
After the earnings call, I was fired up! The management team became more determined to “wake up” Wall Street and prove our strategy was solid. My competitive nature kicked in. The team was on a mission to exceed all expectations for Q1, 2008! That year, we built on our 2007 successes and each quarter exceeded all revenue goals.
During the October 27, 2010 investor call, the company reported to Wall Street the following; “Lead Management revenue once again leads our growth. This was partially offset by weakness in our Vascular Intervention revenue, which reflects the challenging economic and competitive environment. Lead Management continued its strong performance, generating revenue of $10.6 million or growth of 8% versus last year. Recall that last year’s third quarter is a difficult comparison, as we benefited from unprecedented interest in our lead extraction products in May 2009.”
When the two divisions split, the annual revenue was $22 million. In two short years, revenue growth was up $18 million, finishing 2010 over $40 million in sales. The important decision to split the two business units proved to be the best strategic business initiative for the company.
The lesson I learned from this experience was the power of FLEXIBILTY. Once a significant decision is made by the top leaders, embrace it and empower your team to execute! The results will be rewarding! After reading the positive comments the company and Wall Street made in 2010, I feel fulfilled that my team stepped up and executed. The Tap on the Shoulder…stay tuned.