Opportunity
In November of 2000, when I accepted the role of CFO, Text 100 was a global technology-focused public relations firm with over 400 employees in 23 offices across 15 countries worldwide. We had just spun out as a standalone company under our publicly traded parent. We were having our best year in company history, with accelerating revenue and profit growth. We knew we were still in the early innings of a technology revolution that would change the world, and Text 100 was well-positioned to ride that wave of growth.
Challenge
Within weeks of my appointment, it was increasingly clear that the bursting of the dot.com bubble was accelerating, which would negatively impact us as the technology industry contracted. The company’s organic global growth strategy over the past 20 years had saddled it with a large and expensive operating platform, as each country set up its own operations infrastructure. Several subscale offices would struggle to reach profitability as the tech shakeout accelerated. And each office was left to its own devices to create compensation strategies, creating misalignment between local and global success. As a result, we were not well-positioned to navigate the economic downturn that was rapidly approaching.
Solution
We quickly developed an action plan to ensure the agency could weather the storm and prepare for the next leg of growth. First, we designed and implemented a shared-services operations platform for our three regions, North America, EMEA, and APAC. Each shared-services team provided accounting, HR, and IT support from a central hub. The launch of shared services allowed us to eliminate local operations teams, dramatically reducing the cost of operations across each region while improving productivity and the quality of work.
We closed smaller, unprofitable offices and launched a new framework for expansion in smaller markets that enabled us to establish a presence in Korea, Taiwan, Finland, and Latin America through licensed affiliates. This new approach dramatically lowered the cost and risk of global expansion.
Finally, we developed global compensation strategies, aligning all staff with company-wide financial and strategic objectives. These changes strengthened the connection between financial rewards and individual performance while increasing the bonus potential for our highest performing employees by more than five-fold.
Results
The restructuring lowered our cost of operations across the company by more than 25%. Our newfound global alignment on compensation and operations led to the development of sales strategies that improved our pitch-to-win ratio by 65%, culminating in the appointment of Text 100 as IBM’s global agency of record in 2001. Even with the impact of the bursting of the dot.com bubble, we were able to deliver 43% revenue growth, a 212% growth in operating profit, and a 120% increase in operating margin over the next several years.
