Paul Holmes 06 May 2005 // 11:00PM GMT
In early 2003, NCR Corporation faced an unexpected change in CEO. In February 2003, Lars Nyberg, CEO of NCR since 1995, announced that he would resign in March. The company needed to reassure key stakeholders – employees, shareholders and customers – that the CEO transition would be successfully managed and that reengineering plans being put in place to improve operational performance would not be derailed.
Taking over NCR was company veteran Mark Hurd, who possessed a strong sales and management track record, most recently as head of NCR’s Teradata business unit. The transition from Nyberg to Hurd was successfully managed with Hurd focusing much of his time on “burning platform” issues related to stakeholder confidence: energizing the workforce, restoring investors’ confidence in the company, revitalizing the salesforce and helping to secure new and repeat business.
NCR’s situation had been grave for a long time. The company had dropped off the radar screens of most industry watchers when AT&T, having bought the company for $7.5 billion in 1991, spun it off five years later after losing more than $3 billion. The company was bleeding and bleeding fast, losing $2 million per day. There was a real possibility that NCR, with its 100-plus years of invention and innovation and, at the time, 30,000 employees in over 100 countries, would continue to languish, if not expire.
At the time of Nyberg’s resignation announcement, much had been accomplished but there was a great deal more work to do. When Hurd took over, sales were shrinking, infrastructure costs were out of control and the company’s stock was trading at its lowest price, $18.11, since the AT&T spin off. Hurd needed to tackle the company’s bloated, inefficient cost structure head-on while stopping the hemorrhaging in sales.
Massive change was needed on a number of fronts: NCR employees were demoralized and lacked energy, the sales force had lost its focus, customers were confused, and Wall Street was angry at the company’s lack of performance.
Prior to the CEO announcement, corporate communications had worked to position Hurd as a vital member of the management team. Following the announcement, Hurd’s leadership capabilities were reinforced by his personal involvement in delivering the company’s strategy and framework for success in a clear-cut, factual manner that would resonate with stakeholders. The message, that Hurd was poised to be as successful at leading NCR as he had been at leading the Teradata division, was repeated often. Meetings, speeches, press releases, interviews and letters to customers, shareholders and analysts all reflected his vision, his passion and his operational excellence.
To ensure a successful transition, corporate communications conducted and leveraged research on the role of the CEO and the impact of a CEO transition on company reputation. Research included: soft-soundings with company management and external publics including customers and analysts, soft-soundings with target media, and media review and analysis into the best/worst practices of CEO transitions.
The campaign’s main objectives were to: build confidence in the company by ensuring a smooth CEO transition from Lars Nyberg to Mark Hurd, despite the unexpected nature of Nyberg’s resignation; develop Hurd’s reputation as a transformational business leader and communicate openly and honestly; and fully engage NCR stakeholders in the transformation process.
As one of his first orders of business, Hurd presented a broad communication framework to the company’s board of directors, outlining his vision and plan while creating a sense of urgency for the actions needed to turn the company around. corporate communications developed a number of tools and guidelines: a CEO Persona and Cultural Manifesto with aspirational statements related to the new CEO, the company’s mission, customers and people; core messages for use with internal and external audiences; an elevator story; and thought leadership platforms.
Hurd engaged employees in the company’s turnaround by conducting more than 60 face-to-face meetings with employee groups from Brussels to Beijing. He kicked off an “Energizing NCR” campaign that became the rallying cry for mobilizing employees to pick up the pace, while celebrating milestones and having fun in a team environment.
Communication vehicles included quarterly global webcasts, personal phone calls, e-mails and an open-door communication policy. An internal message board, called “The Tack Board,” was established so that employees could air their opinions and issues during this time of transition. Up to 140,000 page views per month were recorded.
To reenergize the company’s sales force, Hurd set up an executive sales council, comprised of the heads of sales of the five business units, to focus on identifying and resolving impediments to sales. Hurd spent as much time as possible directly in front of customers in one-on-one meetings, supplemented by more formal speeches and keynotes to larger customer audiences, including NCR Teradata’s user group meeting attended by 2,800 executives from 40 countries.
Quarterly calls with investment analysts were supplemented by Hurd’s participation in a number of Wall Street-sponsored investment conferences and visits to the company’s headquarters by investors and potential investors. In addition, an NCR analyst/investor meeting was held in New York city on December 2, 2004. Media training was conducted for Hurd and business unit leaders. As the company’s financial performance improved and credibility improved with Wall Street, select media interviews were arranged on an exclusive basis with targeted media outlets, such as The Wall Street Journal.
Despite initial worries that Nyberg’s departure would be disruptive, key audiences responded favorably to Hurd’s appointment largely because of the quick action taken by Corporate Communications and Hurd’s personal involvement in communicating NCR’s vision and strategy. The tightly managed media opportunities generated a number of major placements including a feature story in Business 2.0 positioning NCR as “America’s first tech giant”, a feature in The Wall Street Journal chronicling NCR’s turnaround, and Hurd’s appearance on CNBC’s PowerLunch program.
Financial and investment analysts are now speaking favorably about NCR’s current and future prospects, including Richard Farmer, an analyst with Merrill Lynch, who credits Hurd for putting the restructuring efforts, started by his predecessor, into fast-forward mode. At time of writing, NCR’s stock has increased more than three-fold, reaching as high as $71, operating performance and cash flow have significantly improved, and the company’s salesforce has achieved its highest performance in recent history (every business unit leader achieved the company’s highest sales recognition for 2004, Century Point Club membership, an achievement that has not been attained for more than five decades).