1. I nT he Office
EXECUTIVE INTERVIEW
ext 00
The Danwood Group, led by turnaround CEO Steve Francis, has recovered after
a restructuring and rebuilding program to resolve issues of profitability.
Images courtesy of The Danwood Group
T
he Danwood Group is
a £270-million-
turnover business
owned principally by
private equity, the
founder and management. It
employs 1,200 people in the UK.
As the UK's only nationwide,
independent specialist in selling
and servicing print-related office
technology, Danwood maintains a
leading position in this fast-
changing channel to market.
Founded 44 years ago, by 2012 it
had grown revenues at over 19 per
cent per annum since 2004, largely
through a series of acquisitions. As
a result of OEM acquisition activity
around the globe, Danwood was
now the largest independent
player in the world with over
12,000 customers. Danwood had
developed strong OEM
relationships at holdings board
levels in Japan (Kyocera, Sharp,
Canon, Ricoh), Korea (Samsung),
and the USA (Xerox, HP). This
had contributed to driving strong
profitability. Unfortunately, by
2012, the business had outgrown
its family business origins and
founding values. While its
customers continued to receive
outstanding service, the business
had allowed the growth to get out
of control. The business had
stopped generating cash and its
relationships with key suppliers
had become strained. Urgent
action was needed to stabilise the
business and create a platform to
return the business to growth.
When Steve Francis was appointed
to the role of CEO to steer The
Danwood Group hack on a path to
success in October 2012, he was
faced with a challenging task. The
print-technology business turned
out to be in urgent need of
fundamental change. Alongside
chairman Bob Ellis (appointed on
the same day), he quickly got to
work to take control, change senior
management, and initiate a rapid
cost-reduction program. By May
2013, the business was cash
generative, and Steve had
commenced a top-to-bottom
review of customer contracts,
service levels and sales processes.
Steve and his team began to build
and implement a two-year strategic
turnaround plan that he hoped
would effectively set the
organisation up for a long and
prosperous future.
Urgent leadership change
Steve recalls, "The company was
absorbing cash and there were
many structural issues to be
addressed. A fresh start was
needed. Within a short period, I
realised that I needed to rebuild
the management team.
"I brought in new managers and
promoted internally in the weeks
before Christmas. Most of the new
team members, including me, came
in as interims initially and then >
The CEO Magazine - January 2016 67.

2. over time most decided to stay as
permanent employees. This
approach allowed us to move
quickly with lower risk as everyone
we brought in was, if anything,
over-qualified for the task. Most of
the team I had known in some
form prior to that, including COO
Wes Mulligan:'
Happy customers despite the
company's poor systems
and processes
"Fortunately, we retained the
loyalty of our customers through
those winter months. Our people
worked around the clock to keep
customers happy." Danwood's
business is essentially stable: a
service business which sells
long-term service contracts
supplying a basic business-critical
service (keeping photocopiers,
printing machines, and scanners
working day in, day out) to a
large fragmented base of over
12,000 customers of all sizes and
in all sectors of the UK economy.
"The company had inflicted most
of the problems on itself by being
overambitious and growing too
quickly. There was no single,
recognised Danwood way of
doing things. Despite this,
Danwood was able to provide a
great service. I was amazed how
happy our customers seemed to
be-our people on the ground
pulled out the stops every day for
our customers.
"Through the winter of 2012-13,
we worked hard to maintain the
confidence and trust of our major
suppliers, funders, customers,
and employees:'
Rapid cost reduction
Early in January 2013, Steve
quickly started a cost-reduction
program to restore profitability.
This was completed over two key
stages. Phase one was to cut down
the sales force. The initial intention
was to reduce the 500-strong team
by around 25 per cent but in the
end it was deemed necessary to
cut the number of staff by half. For
a sales-driven business, that may
be viewed as a very risky step, but
not to Steve: "I look at it the other
way-we had too many people,
often not selling with the skills
expected of large business. The
trick was to execute the plan with
speed, care for our people, and
professionalism:' To determine
who had to go, Steve began a
rigorous screening process.
Producing sound 2012 financial
accounts
The cost-savings program was
completed by May 2013, when the
company published its 2012
accounts. This was an important
milestone: the 2011 accounts,
which had been delayed, did not
make good reading and it was
important that any concerns were
put to rest not just by the numbers
but also by the tone of the report.
"Fortunately, we were able to
achieve that, and in a short period
of time. Our bankers were also
impressed, not only by the fact that
the company had been stabilised,
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but also by the speed at which it
was achieved."
Building the foundations for
long-term growth
Phase two was to turn the company
into a more professional, integrated
business enterprise with appropriate
processes, disciplines, reporting
ystems, and training schemes in
place. Steve notes, 'We wanted to
create a 'Danwood way' of doing
things''. Steve spent the next two
years putting all of that into action,
while simultaneously investing in
better IT systems, continuing to
reduce costs, and bolstering the
team. He also introduced new
graduate and mentoring programs
to attract and retain talent.
~By June 2014, the business was
back to sustainable profitability
and an £8-million program of
investments was rolled out which
would underpin the profitability
and provide the basis for longer
term growth. In the period from
March 2013 until September 2014,
we were able to produce a steady
and regular improvement in profits
according to plan. From a financial
performance perspective, we had
become 'reassuringly predictable'.
This was really important as it gave
everyone the confidence to believe
we Were now ready to grow again."
Investment in people
·'Really successful businesses, be it
private-equity owned or otherwise,
theceoinagazine.com
tend to have happy employees;'
Steve says. "They tend to have
employees who go to work for
something more than a pay cheque
because they like being there and
the company is nurturing them.
Pretty much from day one I
emphasised the importance of
shared values: 'Why do I work for
this company? Why do I work
with these people? What draws us
together?' With that in mind, one
of the key elements was to give
people a sense of career; let
them know that they are going
to be trained, that they are
going to be developed, that they
are going to be given interesting
job opportunities, and that they
are going to have the
opportunity to do lateral moves
across the business:'
To create that environment, which
has taken a couple of years and,
Steve admits, is probably in some
respects still a work in progress,
graduate and apprentice schemes
were introduced. "I think it's
critical because in current
economic conditions there are so
many outstanding graduates and
school leavers yet so few good
opportunities for them;' Steve says.
"So it was in our self-interest to
have an expanded graduate
scheme and to start an apprentice
scheme. Our geographic home and
our geographic local responsibility
were two things that drove a lot of
our thinking. We are one of the
largest employers in the Lincoln
area of the UK so it was important
for us to give something back and
to be seen to be stable, well
managed, and farsighted:'
Strategic partnerships with key
OEM suppliers
While focusing on the internal
operations of the company, Steve
and his team were also working
closely with Danwood's supply
chain. Steve quickly adopted the
view that the best way to bond
with suppliers was to operate
with full openness and as partners.
He made it his mission to take
regular overseas trips to visit the
chief executives and board
members of the likes of Kyocera,
Samsung, Xerox, and Hewlett
Packard to maintain that element
of transparency. >
"Since Danwood's restructure three years ago, KYOCERA's relationship .
with them has strengthened greatly Their approach with us is a partnership.
Danwood understand KYOCERA's indirect sales strategy and as such their
customer centric sales approach matches KYOCERA's philosophy perfectly·
- Peter Lunn, Dealer Channel Sales Manager, KYOCERA Document Solu/Jons
UK Ltd
The CEO Magazine - Januan 2 16 69.

3. "These are £10- to 20-billion, or
in some cases £400-billion
businesses, and they would give
us significant time at a board
level in forming and building
trust, as well as forming joint
strategies. To them, a
partnership with Danwood is
uniquely valuable because they
don't have anyone else in the
world that can tell them about
12,000 customers in an SME
marketplace. We are able to give
a very broad picture through
our experience.
"It's a two-way street, though. We
give them a very detailed picture
of the marketplace, what
customers' needs are, and that
includes giving them advice on
what their next product range
should and shouldn't have, and in
return, we cooperate on
dedicated product launches and
promotions. Our attitude to our
suppliers is that they are actually
part of our business. One phrase
that I use a lot is 'glass supply
chain'. We are totally visible to
them and we like them to be
totally visible to us so that we
operate as one team, rather than
at_a_n arm's length. It is absolutely
cnucal to us to build and work on
those partnerships."
70. The CEO Magazine - January 2016
Consolidating suppliers and
products
When Steve inherited the business
as CEO, there were about I00,000
machines being serviced by
Danwood across about 26
different brands. He says it was a
complete plethora without any real
focus or differentiation between
partners. "From pretty early on in
my tenure, we went through a
formal process where we had our
executive board and the entire
local executive board of each
supplier spending half a day
talking about their strategies and
our strategies, their values and our
values. Then we got into the
details of the support they could
provide to help us achieve our
key goals:'
The next part of the process was
looking at typical procurement-
products and services,
competitiveness, pricing, what they
were like to work with
operationally, and what types of
technology they used. "We
completed the process again in
early 2015 and from that work we
were able to confirm our three or
four key strategic partners. We
were quite open in our detailed
and objective feedback to them,
which they found both
uncomfortable and valuable! We
used the scoring criteria to build
joint improvement programs to
improve their scores for mutual
benefit. These strategic partners
tend to have dedicated teams just
for us, given our scale:'
Investment in big data
By having strong relationships
with key suppliers, Danwood is
able to better serve its large
customer base. This, combined
with its continuing investment in
big data technology, means that
it can deliver the best possible
products and services to the
marketplace. "We realised that
our biggest asset should be the
way we capture, analyse and
exploit the huge amounts of daily
data we collect about I00,000
offices throughout the UK
economy, a unique opportunity;'
Steve observes.
"We get a live feed online from
each of our machines, something
like 60 per cent of our active
machines, which tells us every day
how much they have been used, if
they are working okay, if they need
a top-up of various drums, or if
they need new parts. We then give
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-teve expands on that notion with
a rypical example. "We track daily
page usage across the country and
because we are an independent,
,,e do it across all manufacturers
and all sectors:' Last Christmas,
Danwood noticed that the public
,ecror downed tools on roughly 5
DeceJDber, and the large corporate
businesses started slowing down
on 15 December, and the smaller
businesses similarly. Then, after
ChristJDas, it took the SMEs about
a week to be active and the big
corporates started to be active only
by 19 January. They found that the
pu blic sector didn't really get
going until towards the end of
January in terms of page volumes.
'1'hat sort of data can be used for
all sorts of things;' says Steve.
"Obviously, to help us help the
people manage their paper usage,
and also see activity levels, but
furthermore, it is an invaluable tool
to make our services more efficient
because if we see a problem with a
machine then we can send out
someone immediately or we can
do a remote fix. We don't have to
wait for a phone call. We also
develop new products and
services, each tailored to the
customer. For example, we are now
promoting customer online
self-help: they are able to generate,
review, and pay invoices as well as
conduct system diagnostics. This is
a win-win, saving costs and time
for both of us. The use of that data
and technology is on the back of
an £8-million investment
program we started just over a
year ago. It is a new thing we are
doing to add to our service quality
for our customers:'
"Companies
like ours,
service
businesses with
tens of
thousands of
customers, only
exist because
they provide
excellent
service."
- Steve Francis
"Danwood is our largest partner in the UK. We work very closely with them to
help customers intelligently rethink their approach to print so they can create
a connected workplace, and migrate to digitisation, mobility and cloud within
their organisation." - Mark Ash, Head of Print, Samsung
theceomagazine.com
Despite all of the turmoil when
Steve was first appointed as CEO,
he acknowledges that the
fundamental position of Danwood
was, is, and always will be, as a
company which provides a
high-quality service to its
customers. "Throughout
everything, our major customers
have stuck with us and we have
invested a lot of time in keeping
them loyal. We have ended up
with even more loyal customers
than before:'
Excellent customer service
"I think that is probably the most
important message: Companies like
ours, service businesses with tens
of thousands of customers, only
exist because they provide
excellent service. The thing that
has remained constant, and
hopefully has improved over the
last three years, is that we have
provided very strong service to
customers and they have stayed
loyal to us. Our loyalty levels are
higher now than they've ever been
as a result:'
Smooth succession
After a dynamic three years,
Danwood is back in the black
and Steve has chosen this time to
step aside to leave the company in
the capable hands of right-hand
man Wes Mulligan, who will
continue to lead it on a positive
journey forward.
"A turnaround CEO is different
from a CEO in normal
circumstances;' Steve concludes.
"You have less time to act and to
make fundamental decisions.
Wes came in as my number two
and he has done a fantastic job.
I credit him for a large part of
our 30-per-cent improvement in
core productivity since we
arrived. The sign that it was time
for me to move on was when in
meetings I was less and less
required, and if I was to make a
big intervention then I would risk
squeezing down on Wes' space
and not allowing him to develop
his career. It has been a natural
evolution. I have had a very good
dialogue with private-equity
backer Bregal Capital and with
the chairman throughout."
On Steve's departure, the
chairman stated, "The board
would like to record their deep
appreciation for Steve's decisive
and successful leadership of the
company, leaving it in good health
for future growth."
Unusually for someone who had to
implement a fierce restructuring
program, Steve's impact has been
widely praised across the industry.
A representative from Printing
Solutions Business, Samsung, said:
"Our relationship with Danwood
has improved beyond measure
under your leadership and the
turnaround of your business has
been equally successful. The
reputation of Danwood within the
UK market has grown substantially
and our local team are continually
impressed by the improvements you
have made'.'
To Steve, the most valuable
feedback was a comment by James
Dalziel, his Group Sales Director:
"You built a team, generated
energy, determination, self-belief
and enthusiasm, whilst
simultaneously leading the
complete rebuilding of Danwood.
You set examples of decency,
honesty and integrity and
reminded Danwood's employees,
customers and suppliers about
doing business properly-how it
should earn and deserve loyalty
and support. Well done for
achieving this transformation
in a very short time:' o
The CEO Magazine - January 2016 71.