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Table of Contents............................................................................................................................ 1
Background..................................................................................................................................... 2
Financial figures........................................................................................................................... 3
Situation Assessment......................................................................................................................3
SWAT Analysis..............................................................................................................................6
What to do next?............................................................................................................................. 8
Organization mindset................................................................................................................... 8
Communication.........................................................................................................................9
Systems .................................................................................................................................13
Detailed analysis..................................................................................................................... 14
Conclusion .................................................................................................................................... 16
1
Background
Company XYZ is a family owned IT system integrator that was founded in 1978 with one branch
and head office in Kuwait. XYZ owners run real estate, automotive and other business lines. XYZ
represent 5% of owner’s portfolio.
With headcount of one hundred employees XYZ focused on sales and support of hardware
products including high end servers, storage solutions and end user equipment like laptops,
personal computers and accessories. In addition to that XYZ established a business unit to sell
engineering design products with focus on AUTODESK products. On opportunity basis, XYZ
extended its offerings to include professional services and software implementation projects.
XYZ sustained its revenue results with fluctuated profit margins during the last years.
Organization structure
General Manager
Assistant General
Manager
Financial and
Sales and Customer support
administration
Operations Manager Manager
manager
Sales operations
Assistants
XYZ main product lines were represented in the organization structure as a separate sales
department for each product line, with sales assistance to help in preparing sales quotations,
tender documents and coordinate with accounting department processing of required bank
guarantees and performance bonds.
Customer support and financial and administration functions are also directly reporting to the
general manager.
2
Financial figures
Diagram Below illustrates XYZ financial results for the last years
$7,000,000 8%
$6,000,000 7%
6%
$5,000,000
5%
$4,000,000
Revenue
4%
Profitability
$3,000,000
3%
$2,000,000
2%
$1,000,000
1%
$0 0%
FY02 FY03 FY04 FY05 FY06 FY07
Although XYZ managed to sustain an average revenue result of $5M, profit margins have been
fluctuation during last five years. Entertained profit margins still below 10% and were not
encouraging for additional investment.
Situation Assessment
XYZ general manager who is reporting to the board of directors is resigning due to sever health
problems. I have been appointed to be an interim replacement for three months minimum to run
the firm until the board decided on a new replacement.
Multiple factors are affecting my decision for next course of actions. These factors include:
- I regret the health problems that happened to our CEO; however I have to seize the
opportunity to show XYZ board that I am capable of running the firm with a clear strategy
towards more successful future.
- The situation is challenging as the board declared their intention to search for another
CEO and the assignment is only temporary for three months. This situation will make it
even harder to introduce major changes in the organization.
3
- Some of my colleagues and peers might not be so happy of this situation, and I should not
expect full cooperation from all members.
- XYZ previous CEO managed the company for the last seven years and he stayed with the
company for twelve years climbing different positions in the company, so that he got
enough credit from the board as well as from XYZ staff. This in turn will make it harder to
change the style of management he deployed all these years.
- It might be a good opportunity to hear a different point of view of running the business. In
addition to that if Myname managed to drive the business during this transition period,
then no need to introduce new CEO who may and may not achieve our strategic goals.
- In addition to that XYZ board will be willing to encourage loyalty and belongings by
promoting XYZ employees to higher management levels.
- Given that I had a peer relationship with some department managers and manager
relationship with others, I do expect that some of them will cooperate while others might
not be encouraged to entertain that approach.
- For other staff members, introducing me to this position might be in their favor in their
perception.
XYZ Assessment
Group Development perspective
a. Given the fair old age of XYZ (around 30 years), the organization as a group have
went through several stages from initiation, into exploration and stabilization. XYZ
operating financial results encourages a change. Since this change was enforced by
the health conditions of the CEO, a Re-assessment stage is recommended.1
Table 1
4
Sta Most observable Tasks Problems Management
ge characteristics implications
- No assessment is Evaluate the The history and Balance several
enforced unless necessity for inertia of the attitudes and
compelling reason change. group may behaviors
- When reason happens , prevent it from
some of them tend to Group must engaging in Force might be the
Reassessment
Considering the above listed characteristics, problems that will arise, a collaborative approach
might be a suitable approach to resolve the listed conflicts.
The key problem is to shift from only existence to a healthy ration between revenues, profits and
expenses.
Although as a group XYZ should pass through an enforced reassessment stage, XYZ as a
business entity still in Survival stage.2
Crisis of ?
Organization Size
X Crisis of
Y Crisis of red tape
Z Control
Growth
Crisis of through
Crisis of autonomy Growth Collaboration
Leadership through
Growth Coordination
through
Growth
Delegation
5 through
Direction
Growth
through
Creativity
Young Mature
Organization Age
Neil C. Churchill and Virginia L. Lewis in “Five Stages of Small Business Growth” defined Stage 2
as survival stage.
- The organization stayed in survival stage for the last five years.
To move from this stage into Stage 3 (Success Stage), some changes could be implemented
including:
- Structural changes that allow multiple divisions act on their own behalf.
SWAT Analysis
On a high level, the following SWAT analysis can be observed.
Strengths Weaknesses
Opportunities Threats
6
rates from vendors. - Ability to invest
7
What to do next?
Parallel moves in different tracks should be planned and carried out. These parallel moves will
consider two mindsets and perceptions.
Self mindset
One of the important preparation steps required for newly appointed managers is letting go of
the past and embracing the imperative of the new situation to get a running start. This will
require a necessary change in perspective.
I recognize that I have been promoted because I might did well in my previous assignment,
however keep doing and thinking the same way I used to do will not grant success in the new
one.3
I also recognize that I am in a transition period and overriding goal in a transition is to build
momentum by creating virtuous cycles that build credibility and by avoiding getting caught in
vicious cycles that damage credibility.4
Organization mindset
For each individual who transitions, there also are many others- direct reports, bosses, and
peers- whose performance is negatively affected. In a survey of company presidents and CEO’s,
done by Michael Watkins, their best estimate of the number of people whose performance was
significantly compromised by the arrival of a new midlevel manager, on average was 12 people.
In effect, all the people in the “impact network” of the transitioning manager are in transition
too.5
Strategy Level
In a very competitive market, XYZ experienced difficulties entertaining same profit margins on
hardware and software product sales. Since the market have dramatically changed during last
five years and now many players have been penetrating the market with very competitive prices
and slim margins, XYZ should move into different market segments, product and service
offerings.
Introducing different products or services will require several organization structure changes,
systems to follow up and control the expected change of operation mode as well as skills to run
this show.
- Customer focused strategy that accommodates doubling revenues from current business
lines within next three years and introduces new business line that can generate as much
revenue as today’s revenues after three years.
8
- Flawless operations execution that accommodates for decreasing cost of operations by 5%
annually. This can be achieved through using better systems to control inventories and
logistics process as well as project management practice to insure better projects delivery
with maintained costs.
- Performance oriented culture by introducing new reward schema that encourage good
performers and accommodate for relating employees salaries to company’s performance
and objectives.
- Fast and flexible organization that encourage front liners to take immediate customer
satisfaction decisions.
This approach should be accomplished by a buy-in from different stakeholders, board members
as well as senior level management who will execute or fail that change. To secure the required
buy-in, communication on a collaborative mode can do the job.
Communication
Formal communication:
I will initiate a series of formal meetings with different stakeholders to discuss the strategy as
follows:
• Board meeting to secure a common understanding for the long term objectives.
During these intensive meetings and business reviews I will open discussions for the following
topics:
- What is the best organization structure to run the business now and in future?
To start from somewhere, I will be ready with some proposals to be discussed in these
meetings.
Once we framed a strategy I will call for a board meeting to review and approve team
findings.
Informal communication can turn into gossip and rumors hurting the company and can as well
used as a parallel communication channel to ease working environment, raise the moral and
declare strategies.
Recognizing the effect of informal communication, I will encourage social gatherings, speak-up
policy and I will create the events to collect feedbacks regarding the future.
10
CEO
Assist
ant
CEO
Sales Custom
Operation Project Invento
Presale er Procurem
and Managem ry ent
Execution ent s Suppor
Control
assistant t
- Separate sales functions from delivery and logistics tasks to maximize their customer
focus.
- Separate sales function per product line (different customer base, different offering cycle,
and different competitive advantage)
- Professional service department will be responsible for presales and pricing, project
management and execution, as well as after delivery customer support. This will create a
pool of technical competencies that can be used in presales support as well as in delivery
and customer support.
- Check and balance is created between different department will create a sort of functional
conflict8 as follows:
11
• Sales departments will focus into getting more business and customers based on
XYZ value proposition rather than price competition since pricing is professional
services responsibilities.
- Other functions including business development and marketing were not introduced at this
stage in order to maintain the cost, however will be introduced in later stages.
- Human resources function and treasury functions were omitted as it was a shared service
granted at the group level.
12
Sales Managers Develop sales strategies, sales Sales target of
plans, and sales targets core business
line.
Acquire and maintain current
customers Contracted Gross
Profit
Stock level from each product.
Obsolete stock
value
Systems
Planning, reporting and reward systems are important tools that should be elected and
implemented carefully.
For planning and follow up I would suggest introducing and improving the following reporting
instruments:
- Projects Review
- Revenue forecasts
In addition to the listed, I would discuss and introduce having a reward system that assure target
setting at quarter level and tie part of employees’ benefits or salaries to target achievement.
Although this system is as important as or even more important than other systems, the
introduction and implementation of this system will not be practical on the short term.
Detailed analysis
Other strategy meetings openers that will be used in meetings will be the “Portfolio analysis of
existing products and services”, as well as “Fit vs. Attractiveness - new business”9
14
Market Size, Expected Growth, Industry
attractiven Performance, Entry/Exit Barriers,
ess Expertise Management
Human Capital
Recognizing that all the above plans and initiatives will only come to reality by encouraged,
dedicated and skilled human capital, I will propose a program to collect current knowledge assets
and analyze the required gap to fulfill required business growth; accordingly a continuous
training and development plan will be developed to fill this gap.
This continuous development will not only address technical skills, but will also include
management skills for departments’ manager.
15
Conclusion
This is an opportunity and a challenge that may not happen too often in one’s career so I will
make sure to seize the opportunity to maximize the return. I will invest more time planning and
learning details, communicating formally and informally with company’s staff as well as
company’s board.
I will capitalize on the enforced change due to former CEO’s health conditions and initiate series
of small changes.
I will make sure that these changes will be well studied with all departments and stakeholders
and approved by the board. These changes will address Human capital skills and morale, current
and future business, systems, organization structure, and I will communicate clearly with peers,
subordinates and bosses about this vision.
References
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1
The developmental dynamics of small group – Darden Business Publishing – UVA-OB-0270.
2
The Five stages of small business growth by Neil C. Churchill and Virginia L. Lewis – Harvard
Business Review
3
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
4
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
5
Critical Success Strategies for New Leaders at All Levels, by Michael Watkins ISBN 1591391105.
6
What Really works, the 4+2 formula for sustained business success by William Joyce and Nitin
Nohria.
7
Change without pain by Eric Abrahamson- Harvard Business Review
8
Managing conflicts in organizations – Darden business publishing- UVA- OB-0743
9
Both models were used by KPconsulting, www.kpconsulting.in