The other day I met the CEO of a local software company for lunch at the Brookstreet Hotel. This was my first meeting with him to discuss consulting opportunities.
After introducing ourselves, exchanging backgrounds and discussing common acquaintances, we turned our attention to his company’s growth. His company was now owned by a large “billion-dollar company.” With ~ $15 million in sales, his operation’s contribution to overall company performance was at the far right of the decimal point in the income statement. Nevertheless, he sent a couple of million dollars to his owners every year, which they of course loved.
The real question was how could his company grow? How will he become a $100 million company? If we experienced a downturn, how could he remain strong as a company? His owners are located in Europe with limited access or presence in North America, but this firm is in Ottawa.
Recently there was a change at head office. A new person was now handling the affairs of this Ottawa subsidiary. The new direction was to “Keep doing what you have been doing and send the cheques. You will grow organically as you keep working your existing markets and customers.”
While our CEO was ambitious to grow, he could not find a way to convince his counterpart in Europe to approve investments in new technologies and markets. Or even consider the Ottawa company as a major stepping stone into the North American market for European products and services.
So my question to this local CEO was if the his head office still expected organic growth and million-dollar cheques to last after his counter part is no longer in its current position? In a lager company such position changes are imminent.
I know this kind of ownership structure, with only one person making such a decision, may not be common. But all too often, owners and senior executives happy with their current growth forget to think of what will happen three years from now if and when they run out of growth prospects in their current market, with their current product lines.
Instead, such considerations come too late as a knee-jerk reaction when sales and profits are already dropping. The key decision makers have failed to realize that new opportunities for revenue generation need seeding, feed and care before they can make any significant contribution to the top and bottom lines.
We at Keystep can help.
Peter Kallai, MBA, PMP