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

1. Effective Leadership and Corporate Transformation
Lawson Software case study
Harry Debes
President and CEO, Lawson Software
January 27 2010

2. Roger Bannister
May 6, 1954
One Mile
3:59.4

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. Agenda
Lawson Transformation case study
The Lawson / Intentia merger – our quest for the 4 minute mile
Leadership style to enable transformation
4

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
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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.
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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. 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.
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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. Let’s Put These Companies Together!
+ =
Is this going to work ?????

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. 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. Now What?
What’s the right leadership approach?
Bureaucratic
Great Man
Charismatic
Theory X / Y
Autocratic
Democratic
Transactional
Transformational

14. What’s the Right Leadership Approach?
Transactional
Leadership I know how to get
things done.
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15. What’s the Right Leadership Approach?
Transformational
Leadership I have a Vision for
a new America.
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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
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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. 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. Year 1 - Transactional Measures
Set Specific Goals

20. Year 1 - Transactional Measures
Minutes
Per Mile
12
Our Goal
6
4
2006 2009 Goal
Time
Measured Progress

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. 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. 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
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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
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25. A Focused Strategy
Growth Markets
EQUIPMENT
FOOD & PUBLIC
FASHION SERVICE & HEALTHCARE
BEVERAGE SECTOR
RENTAL
STRATEGIC HUMAN CAPITAL MANAGEMENT
General Industries
MANUFACTURING
SERVICE INDUSTRIES & DISTRIBUTION
INDUSTRIES

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. 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. Operationalizing the Core Values
WHAT you do is as important as
HOW you do it
What = Hall of Fame
How = Hall of Shame

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. 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. 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. Did it work ?
+ = ?

33. Return to License Growth
2nd Half
1st Half

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
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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. 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
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37. The Lawson Transformation
From this … … to this
But we’re not finished … the transformation continues …

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