Jan 27 CEO Briefing Harry Debes


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Harry Debes, President and CEO of Lawson Software, presented this case study at MHTA's Jan 27 CEO Briefing on Lawson Software and the importance of effective leadership during corporate transformation

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Jan 27 CEO Briefing Harry Debes

  1. 1. Effective Leadership and Corporate Transformation Lawson Software case study Harry Debes President and CEO, Lawson Software January 27 2010
  2. 2. Roger Bannister May 6, 1954 One Mile 3:59.4
  3. 3. Transformation Requires 1. Vision of what is possible 2. Commitment to change in behavior 3. Attention to detail 4. Leading by example 5. Perseverance 3
  4. 4. Agenda Lawson Transformation case study The Lawson / Intentia merger – our quest for the 4 minute mile Leadership style to enable transformation 4
  5. 5. Lawson History IPO 20 Years: 1 st • Financials Internet • HR Application • SCM Established U.S. Various small Healthcare acquisitions Leadership Company Established Founded in Minnesota - 1975 NASDAQ IPO - late 2001 2,000 customers in healthcare, public & services industries 97% of revenues in Americas 5
  6. 6. Lawson Before the Transformation Lawson FY02–FY05 Revenue and Operating Margin US Non-GAAP 10 Minute Mile 1. Lawson: FY02-FY05 reported non-GAAP results. 6
  7. 7. Intentia History Integration of 40 IPO Stockholm country operations Exchange Symphony & Tennenbaum Company Major international investments Established Major international expansion expansion 1984 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 1,000 employees Java platform adopted Transformation Plan New management team BUT Transformation Plan did not Transform Founded in 1984; IPO in Stockholm, Sweden - 1996 2,200 customers in manufacturing, dis’tion, maintenance industries Number 2 mid-market player in Europe 83% of revenues in Europe, 11% Asia Pacific, 6% Americas
  8. 8. Intentia – Before the Combination Intentia FY02–FY05 Revenue and Operating Margin Swedish GAAP & IFRS 15 Minute Mile 1. Intentia: FY02-FY05 is company estimate of Intentia performance using Intentia reported quarterly results for CY2001-CY2005 excluding the hardware business converted to USD at average FX rate during annual period . 2. Intentia reported under Swedish GAAP in CY2001-CY2002 and IFRS in CY2003-CY2005. 8
  9. 9. Intentia Challenges Complexity 30 countries Poor Systems material weaknesses Old Products no new release in 4 years Customer Loyalty? renewal rate at 84% vs 95% Employees Loyalty? no raises in 3 years, 22% turnover Lawsuits 35 customer suits worth $80m Accounting Rules IFRS Culture / Laws European Financial Status no cash, losing $15m/quarter
  10. 10. Let’s Put These Companies Together! + = Is this going to work ?????
  11. 11. Rationale for the Lawson-Intentia deal Global balance and reach Broader product portfolio, more industries Bigger – size and scale matters when competing against Oracle, SAP and MSFT Platform for revenue and earnings growth
  12. 12. Let’s Review – Day of Acquisition We were bigger, but a lot more complicated Customer, employee, product & systems issues Financial weakness Different cultures Big (expensive) legal issues Customer & employee fear that we are an acquisition target Shareholders hate it – stock drops 25%
  13. 13. Now What? What’s the right leadership approach? Bureaucratic Great Man Charismatic Theory X / Y Autocratic Democratic Transactional Transformational
  14. 14. What’s the Right Leadership Approach? Transactional Leadership I know how to get things done. 14
  15. 15. What’s the Right Leadership Approach? Transformational Leadership I have a Vision for a new America. 15
  16. 16. What’s the Right Leadership Approach? Situational Leadership The last thing IBM needs right now is a Vision. Louis Gerstner JR Chairman & CEO IBM 1993 16
  17. 17. My Post-acquisition Game Plan Year 1 – FY07 Transactional Leadership Don’t screw this up (even more) Stabilize Integrate without negatively impacting customers Year 2 – FY08 and beyond Transformational Leadership Re-define the culture Change behaviors and thereby outcome
  18. 18. Year 1 - Transactional Measures Focused on financial stability Set up weekly CEO team meetings Held people accountable for results Changed compensation plans to pay on company goals Changed management where needed Identified & crushed rocks in our backpack one by one Crushed Rocks
  19. 19. Year 1 - Transactional Measures Set Specific Goals
  20. 20. Year 1 - Transactional Measures Minutes Per Mile 12 Our Goal 6 4 2006 2009 Goal Time Measured Progress
  21. 21. Year 2+ Transformational Measures No good answer to the “Where are we going” question Trying to do too much Chasing every deal, even when it was not right for us Basic Problem: Lack of Focus ⇒ Poor Decision Making ⇒ Unhappy Customers ⇒ Dissatisfied Employees
  22. 22. Year 2+ Transformational Measures Enduring companies don’t exist to merely deliver profit – they have an underlying mission and set of core values which remain constant, even as the business goes through various evolutions. Jim Collins, Good to Great
  23. 23. A Simple Mission, Focused on the Customer To make our Customers stronger. By listening to them to first clearly understand their objectives By improving their business performance by • providing them with a comprehensive solution • streamlining their business processes • reducing their costs • providing them with a platform for growth • making their lives simpler • providing them with a superior experience 23
  24. 24. A Clear Vision To be the global ERP leader in each of our target markets. We will achieve this Vision by: 1. Focusing our development and go-to-market efforts in our target markets 2. Offering our customers a superior experience 3. Achieving world-class performance in each of our functional disciplines 24
  26. 26. Clear Core Values & Behavioral Expectations How do 4000 people in 35 countries make the right decisions ? Decisions are easy when Values are clear.
  27. 27. Clear Core Values & Behavioral Expectations 18-month inclusive process to define Core Values Passion and Commitment Integrity and honesty in all of our relationships Teamwork Personal responsibility for results A conviction that Simpler is Better
  28. 28. Operationalizing the Core Values WHAT you do is as important as HOW you do it What = Hall of Fame How = Hall of Shame
  29. 29. Operationalizing the Core Values Living the Values has become a hiring / performance / promotion criteria Measuring adherence is part of our performance review process LOTS of communication – Use symbols (rocks), Icons (Lars), metaphors (4 min mile), celebrating people who live the values, and many illustrations to communicate the mission, vision and values Core Values
  30. 30. What Role Does the Leader Play? Have a multi-year (or phased) plan Paint a vision of the future and include strategy and tactics that make it real Establish Trust - live the Mission, Vision & Values every day Set high but realistic goals and show people how they can be accomplished Core Values
  31. 31. What Role Does the Leader Play? Inspect what you expect. Transactional review does not end when you move to Transformational phase Spend at least 30% of your time with customers Coach, develop upgrade the team Communicate, communicate, communicate Core Values
  32. 32. Did it work ? + = ?
  33. 33. Return to License Growth 2nd Half 1st Half
  34. 34. Bottom Line Results – the Ultimate Yardstick (Non-GAAP) 1. FY’05 company reported result was 6%. 3% is company estimate of Lawson and Intentia performance for FY’05. Intentia acquisition closed in Q4 of FY’06. 2. FY’06 company reported result was 11%. 5% is company estimate of Lawson and Intentia performance for FY’06. Intentia acquisition closed in Q4 of FY’06. Pre full impact of Intentia acquisition 34
  35. 35. EPS Growth Pre full impact of Intentia acquisition +63% CAGR Non-GAAP EPS 63% CAGR in EPS between FY’05 and FY’09
  36. 36. Summary Transformation Requires 1. A Vision of what is possible Short-term / Long-term 2. Leading by example Role Model 3. Changes in behavior Moving Cheese 4. Attention to detail Transactional Leadership never ends 5. Focus on what matters Find the 4-5 KPIs 6. Perseverance Be right, then persist 36
  37. 37. The Lawson Transformation From this … … to this But we’re not finished … the transformation continues …
  38. 38. 38