In our latest episode of ECI’s podcast, Building Successful Businesses., we chat with Colin Tenwick about turning around dot.com failure. StepStone and what it taught him about business transformation.
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Fiona: Colin Tenwick took his first CEO role to turn around dot.com failure, StepStone. I ask him what that process of transformation taught him about business and how it impacts his approach to decision-making today.
Colin: If I go back to look at StepStone, you know, that was my first CEO gig. Probably no other person would’ve taken it on because reputationally the business was bankrupt, it was pretty much dead in the water. So for me, the decision to get involved in that was very much wanting to say, well, okay, what’s the downside here? I spoke to a number of colleagues, I also spoke to a number of headhunters in the marketplace, and their view was, “Well, Colin, everybody thinks this business is dead. So, if you actually can turn it around, then it’s going to be really quite remarkable.” And is it going to cause long-lasting… “No, it won’t cause long-lasting damage.” So, for me, reputation was important, and being able to forge a reputation in terms of turnaround.
Now, the thing that struck me was pace. You have got to move very, very quickly. You have to be very decisive, and you have to be in a situation where you’re prepared to make a decision without having all the full information. When a business is bleeding that much and is literally on the verge of calling in the receivers, then you’ve got to move quickly. You have got to be able to have very quick support from a few people, financial backers, shareholders, or whatever. Very painfully that can be devastating and damaging for existing shareholders. But then what you realise, and this is the, I suppose one of the key things I take with me, is that you can do a hell of a lot in terms of restructuring a business without that business falling over. You can always do more, cut more, cut back more, and more aggressively earlier on.
Everybody says that they wish they’d done things deeper, sooner, etc. But the reality is you can actually do that to a business, and you can then start to rebuild. And the key thing then becomes do you have enough cash runway to start to execute the pivot of the restructuring. You know, we cut loose hundreds and hundreds and hundreds of employees, it was awful, I mean, absolutely awful. But it wasn’t me or the shareholders’ responsibility for that. It was the response of the prior owners, of prior management, who had got the business into that perspective. So you have got to have a bit of a thick skin. You’ve got to be clear in terms of demonstrating the vision, what you’re trying to achieve, and being ultra-transparent with everybody. I think that’s the other thing, people will put up with a hell of a lot if they believe that you are being open, fair, and transparent. As you know, we then built the business back, scaled the business and successfully sold it.
Fiona: It sounds like a bit of a baptism of fire as your first CEO role.
Colin: Oh, I mean, it really was. But, you know, when you look back on it, what we actually achieved there was pretty much an A to Z of restructuring and running a public company and keeping it public. But it was a classic dot.com situation. We could see, I think, you know, some parallels today with overvalued businesses, overscaled, too fat, not focused on the core things that are important, etc.
Fiona: In terms of that role as CEO, it sounds like, you know, setting vision, running at pace, very hands-on. How did you then find the transition when you went from CEO roles to chair? Because that’s often very different. You’re obviously one step removed. Have you developed effective strategies for becoming a good chair?
Colin: What’s important, and somebody gave this a piece of advice, is if you want to be a good chairman or NED, it’s absolutely critical that you’ve scratched the itch of being a CEO. There is nothing worse for a CEO than having a chairman that wants to be a CEO. And there’s nothing worse for the board of having somebody that thinks they want to be a CEO. So, that was a very good piece of advice.
The second thing, I was very fortunate having a guy called Jan Stenberg as my chairman at StepStone. Jan was one of the most…sadly, he’s no longer around, but he was one of the most experienced Scandinavian businessmen. He was CEO of SAS Airlines, he was a president of Ericsson, and a very experienced man. I worked with him for a number of years, and he was always fair, tough, and supportive to the point when he said, I wouldn’t be supportive type of thing. So transparent, open, but a really, really good chairman for me to work with. I think, again, when you look back at your experiences, they are things you pick up. And then you figure out are they things I can work with? Does my personality allow me to do that? I’m not, but life is all about, I think observing and figuring out, are there techniques and things here that work for you and work for the businesses you’re involved in.
Fiona: Colin Tenwick there, discussing the art of the possible when it comes to business transformation, as well as the strategies to being a good chair. In our next episode, we discuss taking tech companies overseas and how to build a successful digital marketplace.
Listen to the next episode here: