In 2006 Steven Koles was hired
as the CEO of CSI Wireless. The high flying Calgary-based
company, which once boasted a share price of $8.65 in 2000,
was then in dire straits and in the midst of dramatically
reorganizing, selling divisions and focusing on the GPS industry.
Over the past two years the firm has seen a dramatic turn
in its fortunes. Re-branded as Hemisphere GPS the company's
stock price has moved from a low of $1.19 in Dec 2005 to
over $4.50 currently. In its most recent quarter the company
delivered a profit that was greater than any annual profit
in the history of the company.
Paul Hudson sat down with CEO
Steven Koles to discuss the firm's tremendous turnaround..
You were hired by the board to execute
a turnaround strategy. At a very high level can you speak
a little to the challenges the company faced?
The company had been created through a series of acquisitions
and we had a number of organizations in different locations.
These companies had not fully been integrated and a number
had even retained their original names. Several of the companies
had been customers of other divisions so we had historical
client supplier relationships inside the organization. We
had misalignment of interests, conflicting cultures, and
disparate location issues. Having come through a couple of
challenging years, including the divestiture activities,
there was also a degree of limited trust between employees
When the decision was made to divest many of these divisions
in favor of streamlining and focusing the business, everyone
looked forward to what was hoped was going to be a better
tomorrow. But exiting and divesting businesses proved to
be a lot harder and took a lot longer than we expected. We
found it very difficult to plan through all the potential
variables and to manage the process gracefully; especially
when it was tough to predict what was going to happen next
with the divested businesses. For example, we had warranty
obligations, customer relationships, and supplier contracts
in many of the businesses we wanted to divest which complicated
matters. These divisions were embedded in their markets so
it took a long time to untangle them and the market reactions
Was the decision to exit several businesses and focus on
GPS technology made before you arrived and if so how did
you feel about that?
The board had already made the decision to focus on the
GPS business and academically as the CEO I would have liked
to have been part of that decision. But from a practical
perspective it was a good decision and the process was a
little further along when I arrived. That helped with the
socialization of the change and the fact that the will to
make those changes already existed. The team knew that there
were going to be significant changes and were prepared for
the type of things that needed to be done and some of the
divestitures had already started so in some ways it was an
advantage. It did not take much of my own research into GPS
to realize that was the right way to go. The telematics business
was interesting and may have been interesting to retain but
the economics of that industry are just so difficult that
it didn't make sense to keep it.
Can you speak a little bit
about your first 3 months... what
did you focus on and why?
My first priority was to learn and analyze the business.
I met everyone and asked a lot of questions. I was soon able
to figure out what was working well and what needed to be
fixed. The second priority was to build a new strategic plan
and get it socialized to all levels of the company. We did
the development of the plan very inclusively with the senior
team and really underscored the process for subsequent planning
cycles. The third priority was to execute on the key elements
of the strategic plan. For us, this included building more
maturity into the business in order to scale it for growth.
This had been a very entrepreneurially managed company, but
if we executed we would need scaling so we introduced processes
and systems to make sure this would be possible.
Once you decided what needed to be done, how did you break
down what to do first?
We prioritized elements of the plan which were revenue producing
or growth related. We needed to get on the right trajectory
with some revenue wins. The elements which were more efficiency
and profitability related came next.
There was a lot of pressure during this period to spend
time meeting the investment community and marketing myself
to shareholders and potential shareholders. We have some
large institutional shareholders who were keen to meet and
talk and analysts who were very keen to understand our new
story. For the first three months we put an embargo on investor
relations activity so we could focus on the business. Some
people were irritated but most understood. The board was
very supportive and encouraged me to focus on the business
and not the investor community. Even now as a public company
CEO, investor relations could be my full-time job however,
it is still important to keep attention and focus on the
needs of the business first.
Soon after joining the firm you re-branded it. Why?
It was important that we transitioned the business and really
focused on our pure-play GPS applications strategy.
As mentioned earlier, some of the acquisitions had never
changed their company names or signs on their buildings and
we had employees in those divisions never even changed their
business cards. It was more like a collection of businesses
than one coherent entity. Re-branding the business was partly
a milestone to reflect putting the past behind us. This was
as much an internal program as it was an external one, and
it really helped to bring the company together under a common
banner and to help it deal with some of the location-based
multi-culture issues. We now have all the business cards
and building signs the same, all the e-mail addresses the
same. Some of them are small things but they are very important
when trying to bring a company together. We also have people
acting in a more aligned fashion. I wouldn't say we are 100%
there yet and there are still people that haven't fully embraced
the change but there have been huge strides.
How did you get the people onside with the turnaround?
The good news was that the will of the team was already
there. They all wanted to get through the transition and
focus the business. We had to harness this motivation and
energy to make as much progress as possible. This included
some changes to the team to align with the new direction.
There was a little bit of anxiety because some people were
going to be leaving but we needed to make the transition
to a world-class GPS team. There were some tough decisions
and difficult discussions with people but everyone knew the
path we were on and why it was necessary.
It is also much more motivating to build than to tear down
so it was important to focus as much of the team as possible
on the continuing business versus the discontinued operations.
To the extent that we could, we kept the divestiture activities
for myself and the CFO as well as one or two of the board
members. The Chairman, who had been the interim CEO, had
started a few of the deals so it made sense to have him continue
to have some involvement. The CFO spent a considerable amount
of his time focused on the divestiture activities. The rest
of the team we kept focused on the new strategy and executing
You arrived without a lot of domain expertise in GPS. How
did that affect your interaction with team and overall turnaround?
Initially I did a lot of research online. There are research
reports, analyst reports, and industry activities all readily
available and I immersed myself in those as much as possible.
The information was heavily skewed towards the consumer part
of GPS but there is still a lot of information to be gleaned.
GPS technology and telecom technology are very related which
made for a very quick learning process given some of my prior
What made the transition easier
is that our challenges and issues were business-related and
not technology-related. It also helped to have some of the
world's leaders in GPS already resident in the company.
That group was great in providing a “GPS 101” for
me within the first few weeks and I was able to get fully
briefed on the technology in our company as well as what
our competitors were up to and how it all compared. The
first few weeks were a real deep dive and I was visiting
customers in the second week so you get to hear all the
perspectives. Some of those initial customer meetings were
challenging as I wasn't in position that I could promise
a lot other than to work hard to make things better. Happily
a lot has changed for the better and some of those customer
relations that were strained are now much better.
When did you start to see that the new strategy was working
and how did you build on it?
We've had a number of wins along the
way. First, 2006 became known as our “transition year” as we exited
the businesses that were holding back our growth and profitability
potential. Then, 2007 became our “stabilization year” as
we built more elements of maturity into the business such
as a new ERP platform, new corporate processes, and a new
manufacturing business model. These were all required to
set up 2008 and beyond as our “break-out years”.
It has been particularly rewarding to have our Q1 2008 financial
results include record revenue and profitability. We've generated
more quarterly revenue in our GPS business alone compared
to when we had three separate businesses. We also generated
more profit in Q1 than we've ever generated in a full fiscal
What did you do right that has enabled the firm to now thrive?
We've been most successful with a balanced focus and innovation
strategy. We needed to increase our innovation to increase
the competitiveness of our product portfolio. However, we
engaged the development on a focused basis and resisted trying
to be everything to everyone.
What has surprised you in this whole process? What would
you have done differently?
Exiting a business, especially more than one at the same
time, is a lot harder and takes a lot longer than expected.
In trading off the balance of disruption, it may have been
wise to make some people changes sooner in retrospect.
Looking back over what you have been through in the past
two years what advice would you now give someone being hired
into a turnaround situation?
It's easy to try to get involved in too many things out
of the gate. I would recommend clearing your calendar of
unnecessary meetings and rolling up your sleeves. Real heavy
lifting is required to execute on the real priorities. I
would also caution people to expect the unexpected and do
as much scenario-based planning as possible, both upside
and downside related.
I highly recommend reading a book
called So You’re In Charge - Now What? It's a great preparation
guide for stepping into a transition opportunity. I really
felt like the book was written for me and it had lots of
the standard ideas like a 30-60-90 day plan but also things
that are less apparent such as being well rested and in shape
physically. I rested and worked out to make sure that I was
in good physical condition and that helped immensely in the
physical effort in the first month.