Don’t hope, act” is the management maxim Nick Lambert puts at the top of his “things I’ve learned on the job” list. There simply wasn’t time for wishful thinking when he enlisted as managing director at IBM New Zealand. So he determined to turn the company’s $100 million losing streak into profit within six months.
He promptly shed executive fat, restructured customer relationships, and found new sense of coherence and direction. The result? Lambert hit his half-year deadline and IBM went into profit for the first time in three years. Last month, the company announced its third good year – this despite the global gloom still enveloping much of the dotcom industry.
Lambert’s recipe for decisive turn-around is packed full of classic management ingredients. His hard-nosed financial focus (concentrate effort where you get the best return) is blended with the so-called “soft” skills of people leadership – and the ability to act decisively.
The latter he learned by dealing with few “troublesome bits and pieces” in career largely spent in the IT industry in the United Kingdom and Austral-asia. “Once you’ve come in and made an assessment,” says Lambert, “you don’t just hope things will change. You get decisive and act quickly.”
The 40-year-old executive’s management style is “very people oriented, very outcome focused”, to use his own words. He has an easy open manner but thinks fast and talks fast, peppering the conversation with words like “focus” and “outcome”. Despite bad experience with fish dish that gave him food poisoning the previous evening, he was friendly, focused, and self aware when I arrived to talk. He rattled off the key elements of textbook turnaround with dashes of self-deprecating humour. “But some of this stuff is not surprise to you or Management” … “is there anything in this you can use?”
Outside work, when he’s not spending time with his wife and three children, he enjoys driving performance cars. He also enjoys the challenge of improving poorly performing business, no coincidence perhaps that both his job and his hobby require keen focus and rapid re-action. IBM New Zealand needed dose of both as the new century rolled round. It had gone through couple of bad patches during the ’90s, notching up losses of more than $200 million.
Lambert’s first priority was to “stop the bleeding”. Both structure and people came under the spotlight in the early assessments of where money was being lost. He promptly trimmed New Zealand’s weighty executive team from nearly 30 to eight. “We are now more productive, more outcome-driven in our meetings. Having the right people in the right roles and an executive team small enough to be decisive is important.”
The smaller-but-more-focused format was similarly applied to customer relationships.
New Zealand became one of the first IBM subsidiaries to withdraw from selling retail PCs, market from which it is hard to generate either profit or loyalty while boosting the 0800 ‘help’ calls.
Instead, the company focused on keeping top corporate customers happy. case of knowing what you do well and doing more of it. “We’re much better at running smaller number of good relationships and adding value for our corporate customers than having 10,000 different households with single IBM,” concedes Lambert.
The strategy is in line with Lambert’s contention that market share merits less attention than state of balance sheet. In other words, it’s not the quantity of the dosh that passes through IBM’s hands but how much of it the company gets to keep. As Lamberts puts it: “Having an enormous revenue is neither here nor there if you don’t make any money out of it. If we have strong balance sheet, we’re better able to invest in New Zealand and better able to provide good service to our customers.”
The simple test Lambert likes to apply to any transaction or strategic plan poses the question: “is it good for the business?” It’s management basic too many New Zealand companies overlook in the quest for expansion at any price. And the fact that New Zealand is price-sensitive market doesn’t help. “Every deal here is contestable,” says Lambert. “I think that works against us in number of areas.”
Companies, particularly in IT and tele-communications, risk fighting their way to the bottom of the financial food chain by attempting to meet the Kiwi quest for best deal on the day. “It gets very hard for companies to keep investing in markets where they can’t make returns. So it’s critical for us to generate the kind of returns the corporate expects from us.”
IBM global is, in Lambert’s opinion, well positioned to emerge from the dotcom doldrums in great shape. Strong governance has enabled it to invest in some strategic asset acquisition at good prices. “While competitors are having hard time, we’ve been focused on making sure everything we do is internally auditable. bit boring perhaps but it’s proved very successful global model through bad times.”
And besides, financial conservatism doesn’t preclude innovation. Strong investment in research and development has driven IBM from middle-of-the-road products to having best of breed in most of its product categories, says Lambert. “That didn’t happen miraculously – it’s been strategic decision.”
Financial pragmatism is key element in IBM’s recovery. But Lambert also moved to build more coherent culture, process he believes requires the same elements whether “you’re talking global behemoth or SME”. Set vision everyone can work to, put the right people in the right slots and ensure good lines of internal communication so everyone is working on the same page.
“People are inherently good and will strive to do the best job they can. But if they don’t know where they’re going, don’t have effective leadership and don’t have context for what they’re doing, then it’s very difficult for them,” he offers.
On the other hand, the right people can be given lot of latitude. “It allows you to build scale into management structures rather than having someone at the top pulling all the levers. I just don’t think that style works in the present day.”
His company may be keenly focused on financial measurements – “we look at how the financials are tracking on weekly basis” – but Lambert doesn’t take the same approach to measuring his people. In his opinion, some things can’t readily be measured and he puts more faith in his intuition than in metrics when making value judgements about people performance. “There’s lot more pressure on people these days and tendency to focus too much on metrics. If you start managing by metrics as opposed to managing people, you’re on slippery slope.”
Is the preference for reporting by numbers symptom of the excess of bean counters churned out by the education system, he wonders aloud and then suggests “a bit more training in life sciences” wouldn’t go amiss. His own background includes degree in biology, though he’s also completed the executive programme at Wharton, University of Pennsylvania.
So how did he get from bio to IT?
“Simple answer. There weren’t any jobs to be had in that area. Most of the people I graduated with have re-trained. I was offered place on Wang’s graduate programme when I was in the UK.” It was, he says, one of the best times of his life. He got paid to learn and was given high quality training and overseas experience. Which is why he’s delighted to be able to reintroduce graduate programme at IBM. It was canned in the late ’80s and recently re-introduced to help revitalise what risks becoming an aging work population. “We want some bright young things in our workforce because it provides different dimension,” says Lambert.
Lambert in brief
1961:Born in Wellington. Educated Hataitai School, Scotts College and Victoria University.
1984:Graduated from Victoria with Bachelor of Science in Biology
1984:Began career in IT with Wang’s graduate programme in London
1984-92: Held v
