CEO at The Crossroads - Challenges and Opportunities

It’s a late December afternoon 2021 in Belgrade, Serbia. I’m in a cozy rooftop AirBnB with my partner and our kids. The place is clean and warm. We have everything we need. Still, there is tension in the air. We are at the crossroads.. again.

Our family was often at the crossroads. My spouse and I both left our home in our teens because of powers beyond our control. Later, mainly driven by my curiosity and professional ambition, we moved with our three kids to the US. Two years later, we decided to come back to Switzerland because we believe it is the best place for us to raise our kids. The crossroads are merely branches of a path. One takes a decision and goes in a certain direction. What you make of your choice is what ultimately counts.

After returning to Switzerland, I focused on strategy work. My team was successfully managing the strategy implementation at the St?ubli Group. The strategic plan ahead of us was charted out to 2030. A couple of familiar faces approached me at the time. Acquaintances back from the student days at ETH in Zurich. The gentlemen had remarkable success with their enterprise – a software development service center. The business had existed for nine years and grew exponentially over the last four. It was reaching the scale at which it was becoming impossible for one individual to make all the decisions. After focusing on the subject of organizational design and its implementation over the last years, I possessed the competence needed to take InterVenture to the next level. The founders trusted me to be capable of doing it. I was offered the CEO role – CEO at the crossroads.

Ambitious and eager to prove myself, impatient to have more exposure to the culture that shaped me, I decided to accept the offer. Our family gracefully supported me, as always.

The Growth Trajectory

Impatient to chart the path ahead, our team worked on weekends carried by the energy of a breakthrough we all felt was just around the corner. We felt that the unique footing our Executive Team had in the Swiss market along with the outstanding operational performance of our middle management gave us the competitive edge. Knowing that the demand in key markets, Switzerland and the? US, significantly outweighed the supply we boldly projected the growth to continue at the same rate - doubling each year. Only several weeks later, the world turned upside down.

Russia launched an invasion on Ukraine on February 24th 2022. The world was caught by surprise. In the first weeks after the event we could not make out any significant impact on either supply or demand for qualified labor. Ukrainian and Polish talent pools were the most relevant for our industry in Europe and at the epicenter of the unfolding events. It quickly became clear that the Polish service providers remained online and unaffected. Same was true for the Ukrainian. The remote work routine practiced through the COVID19 pandemic likely helped keep the workforce operational.

The Market Shock

The demand side proved to be a different story. Our customers’ growth plans were put on hold. The uncertainty about the trajectory of the global economy grew stronger. The key interest rate, such as US fed’s, started inching up after a decade at near-zero level (LINK). Investors started demanding clear path to profitability from the tech start-ups. A practice that previously seemed only a nice-to-have.

The big challenge to realizing our strategic ambition was the financial uncertainty our clients were facing. The financial uncertainty translated directly to uncertain realization of service contract extensions previously considered done deal. We had to adopt an approach adequate to a quickly shifting market conditions. We were confident the fundamental demand still exists and in line with our capacity to provide a quality service. Hence, we knew the market will return to the growth trajectory. What we did not know is when.

The Path We Chose

We decided to stick to our guns. We knew the market will continue to evolve since it was not even close to an equilibrium. Hence we had to maintain our capacity to react rapidly to the upcoming shifts and the eventual growth. In the meantime, we had to make our operations as resilient as possible. To account for evolving market conditions, we adopted a two-pronged approach:

1.????? Maintain forward leaning posture

2.????? Minimize the operational risks

Forward leaning posture was underpinned by maintaining our ambitious growth targets. Surely, these would be more difficult to reach but we were confident even a slowing market had enough capacity for our growth (we were at 320 FTEs). We developed a simple hybrid project management approach with frequent interactions. To minimize the noise and increase our focus, we introduced the Key Account Management processes. We chose a very elegant and simple approach and ranked all our accounts considering their potential to grow and our capacity to win their business. I will dive deeper into the technical aspects in a follow-up article since Key Account Management remains a subject I'm highly interested in.

Operational risks were tackled by introducing customer risk-classification and updating the payment conditions accordingly. We pro-actively renegotiated prices and payment terms. In parallel, we reorganized the team to carry the newly introduced processes. Some of the team mutations were challenging. We mastered those challenges through open and frank communication.

The changes worked as designed. The team delivered to the best of our expectations. The market slid by 25% - 30% according to our analysis. We were able to hold the line, significantly beating the market.

We worked out alternative paths to growth. Developed a governance model (delegation of authority) that would allow the business to scale beyond current limits. The market remains feeble (LINK). The company is lean and on sound footing. The owners had no appetite for expanding into adjacencies and decided to take back the operational control. My job was done.

Lessons Learned & Conclusion

One must not rely on the long-term plans too heavily – “everyone has a plan until they get punched in the face”, Iron Mike Tyson. Instead, always be keenly aware of the underlying assumptions and understand the operational implications in case the assumptions need an update. “Float like a butterfly, sting like a bee.” The Greatest Muhammad Ali.

Understanding people’s motivations is key to accurately assessing their likely actions. It often helps to analyze the situation under the so called “Veil of Ignorance”. Take a step back, forget about your personal impressions or what people tell you. Observe how they behave. Identify the key characteristics based on observed behavior (e.g. age, relationships, lived beliefs). Develop the projection of likely future behavior based on these observations.

In conclusion, I remain grateful to the owners for offering me the opportunity for extraordinary personal and professional growth. I thoroughly enjoyed working with and learning from my outstanding team. To my team and all the other incredibly talented people we worked together with, a heartfelt thank you for enriching my life in all the fantastic ways! See you around ??