Marketing Turnaround Case Study: A Technology Company


In 1998 the info storage business began displaying speedy development because the Web and different digital elements drove up information storage calls for exponentially. This $100 million producer of analog IBM storage merchandise, primarily magnetic tape, was experiencing a big slowdown in gross sales development as newer and higher storage merchandise from opponents emerged.

In 1998 the father or mother firm, Anacomp, was a $460 million California-based doc administration firm that manufactured and offered microfiche plus associated companies for the info heart. The corporate had simply emerged from chapter and needed to divest its information storage division to boost money for growing an Web-based doc administration answer.

Sadly with declining merchandise throughout the board and no money to spend money on the newer storage technis, the info storage division attracted no consumers and appeared to have little selection however sundown its merchandise and attempt to optimize earnings because it rode the curve down.

How company mismanagement led to the issue

Though it had practically $600 million in revenues in 1995, Anacomp was a poorly managed firm. All through the 80’s and early 90’s the corporate’s leaders took it on an acquisition binge that drove the corporate into chapter 11 in 1994. It emerged from chapter in 1996 having divested itself of a hodgepodge of unhealthy companies. Anacomp had existed for many years as a sales-driven microfiche and doc administration firm, beginning out in Indianapolis and later shifting to San Diego. The corporate’s flagship product was pc output to microfiche (COM), itself a declining product. At Anacomp, strategic advertising and marketing was thought of unimportant and the corporate had explicit issues innovating new merchandise.

Anacomp had acquired Texas-based Graham Magnetics in 1994. Graham’s manufacturers included Memorex and it was the world’s largest producer of reel-to-reel tape. On the time of its acquisition, it was one in all three corporations dominating the enterprise magnetic information tape business. The opposite two had been 3M and German chemical firm BASF, every with way more energy than Anacomp. Every competitor managed its magnetic tape enterprise as a money cow.

The Graham acquisition was poorly deliberate, one made with out foresight into the speedy modifications beneath approach as information storage switched from analog to digital codecs. By 1998, with out the capital wanted to remain aggressive, the division was taking a look at sure speedy decline and eventual closure. Nevertheless with $100 million in worthwhile gross sales, it was hoped the division may entice a purchaser.

Complicating every part was the corporate’s emergence from chapter, a direct results of company extra and unhealthy acquisitions.

Subsequent steps

The newly appointed Magnetics Division President, an Anacomp gross sales veteran and ex-IBMer, understood that the division wanted technique and advertising and marketing assist. He employed a advertising and marketing VP with profitable turnaround expertise in electronics to assist create a knowledge switch service enterprise for promoting information conversion companies to the corporate’s spectacular listing of shoppers.

One in every of Anacomp’s core strengths was its blue chip shopper listing, primarily corporations in banking, finance and credit score. One other core energy was a worthwhile hidden useful resource: the staff’ collective data of how information heart operations labored.

That is what occurred subsequent:

  • The brand new supervisor assembled a staff targeted solely on the brand new information conversion enterprise. The brand new staff included energized advertising and marketing and gross sales individuals from each inside and out of doors the corporate.
  • Advertising and marketing staff members had been sequestered for 2 weeks and given the project of researching and understanding the division’s most worthwhile alternatives, each current and new. The staff adopted this format:
  • The brand new companies enterprise was headquartered in a leased Atlanta, GA facility, removed from company headquarters in San Diego and the issues there.
  • The brand new companies line was refined and quickly gained proof of idea at buyer information facilities. Further companies had been added.
  • Merchandise and coaching had been added to promote clients in-house information conversion.
  • Focused investments in advertising and marketing and gross sales for the brand new services and products had been made together with promoting, direct advertising and marketing, web advertising and marketing, telesales and different areas.
  • Buyer acceptance was close to speedy.

The outcomes

The turnaround took six months to ramp and obtain respectable market penetration. On the finish of the primary full 12 months of operations, the companies enterprise had added $5.1 million in worthwhile gross sales, at a lot greater margins than the tape enterprise.

A non-public fairness agency turned conscious of the reinvigorated division and made a profitable provide of acquisition. The division was offered and its headquarters remained in Atlanta. At present it’s a thriving standalone firm nonetheless doing information conversions and promoting a bunch of associated companies and merchandise.

Anacomp epilogue

Anacomp, in the meantime, continued its decline. It filed once more for chapter in 2001 and its inventory worth (pink sheets) as of July 2011 was $0.20. The corporate has not filed monetary statements since 2008.

Key Classes Realized

1. Many corporations have hidden belongings that may be become earnings.

2. New product improvement is the lifeblood of most corporations.

3. A tradition of innovation and strategic advertising and marketing should exist to remain aggressive.

4. Gross sales dominated corporations are at a aggressive drawback. Gross sales depends on what’s working at present and is seldom compensated for creating the long run.

5. Dangerous administration will get unhealthy outcomes.

CMO, Technique, Advertising and marketing
San Diego, California

Mike is founder and Principal at Harris Consulting LLC, a advertising and marketing and administration consulting agency. He works effectively in difficult company and business conditions and appears for initiatives which are of explicit concern to the CEO and/or VP Advertising and marketing. His latest work contains serving to a multi-billion greenback European firm set up advertising and marketing in China and the Far East for a client merchandise division. He additionally helped a big industrial merchandise firm enhance its advertising and marketing worldwide together with hiring new expertise, putting in new processes, leveraging advertising and marketing expertise and hiring companies. Michael Harris He has served as the highest advertising and marketing and enterprise improvement govt for corporations or divisions in client electronics, software program, information storage/networking and others with revenues as much as $120 million. He has additionally served as a company officer and head of investor relations for NASDAQ:NM corporations. He’s a former administration guide with the predecessor of PriceWaterhouse Coopers. Michael Harris He holds a B.S. from the College of Tennessee and an MBA in Advertising and marketing and Finance from Vanderbilt College.

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