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BMC turnaround a lesson in corporate leadership

Rob Enderle | Oct. 20, 2014
Company turnarounds are a big part of what I cover. There's clearly a process that seems to work far better than others. Based on what I saw at BMC Engage, the first BMC conference this decade, and have learned over the last year of executive meetings, Bob Beauchamp and his team have done an impressive job. If it weren't for the fact that BMC plans to go public again – I can hear Michael Dell in my head, screaming, "Don't do it!" – I could easily say this turnaround is complete.

Going private should go down as a best practice, as both Dell and BMC have demonstrated far faster progress by not being public. Both firms throw off massive amounts of cash now, allowing them to pay down the debt that going private creates. (Generally, you end up with far fewer investors and far more debt.) Going private also focuses executives on long-term goals, not quarterly results that place sales ahead of customer retention. The latter pays off, but it takes years. Sales will help you hit quarterly numbers at least until customers start leaving faster than they join.

Build a Loyal, Supportive and Qualified Team

It amazes me how many CEOs step in and don't immediately change out much of the executive staff. CEOs don't run companies; they manage them. The executives in place are likely more the reason that the company needs a turnaround than the prior CEO is. In addition, you can't fix loyalty issues and culture clashes unless you change the executive staff. People who wanted the top job but didn't get it tend to bushwhack the new CEO. We saw that happen at HP with CEO Leo Apotheker and Todd Bradley. Apotheker was gone in less than a year and things didn't work out well for Bradley, either.

Beauchamp went out and attracted the best people he could find from a variety of companies. These people are loyal to him, with no agenda other than BMC's successful future, and they have a high regard for their boss and each other. A few years back, at an analyst event similar to BMC Engage, it was clear that two of the top people hated each other so much so that I'm surprised they didn't get into a physical fight. That company isn't with us any longer; in hindsight, that internal animosity was a clear warning sign.

Appoint a Chief Customer Officer, Avoid Doing Stupid Things

When I first started in the technology market, I joined ROLM, largely because it had a Great Place to Work department. It made a huge difference; the guy who ran it, Leo Chamberlain, did incredible work and earned everyone's love.

When IBM bought ROLM, it believed every manager should want to make the firm a Great Place to Work and eliminated the group. This was one of the moves that turned a company making nearly $1 billion a year into a company, with the same expenses, making $250 million a year. The top people in most divisions left. This taught me an important lesson: If something is everyone's job, it's actually no one's job.

BMC doesn't have a Great Place to Work department I hope this idea resurfaces someday but it does have a Chief Customer Officer, Paul Avenant, who ensures by proxy that the customer sits at the table for executive decisions. (I once pitched a similar idea to Microsoft, though I called it a Chief Don't Do Something Stupid Officer. I think BMC's choice for a title is far better.) Most firms argue that this is every executive's job. That means it's really no one's job.

 

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