For a lot of businesses that emerged during the dot-com era, unrealistic expectations for growth proved deadly. For Bostick, president and CEO of IT consulting firm Lucrum Inc., the experience provided a painful but valuable lesson.
Lucrum landed on Cincinnati’s Fast 55 list more than once and on the Inc. 500 list of fastest-growing private companies. And Bostick was a regional Ernst & Young Entrepreneur Of The Year Award winner in 2000 in the e-commerce category.
But then the tech bubble burst, and Lucrum found itself in serious financial straits as the domino effect of crashing tech companies left it with piles of invoices it couldn’t collect on.
As a result, Lucrum’s bank essentially took control of its purse strings for 14 months. Today, the company is back on the growth track, with $21 million in annual revenue and 120 employees, and Bostick says he learned some valuable lessons about growth assumptions and how a CEO should lead.
Smart Business spoke with Bostick about how he refocused on the basics that made his company successful, he says, putting it on the rebound.
How did Lucrum get into trouble?
I took my eye off the daily habit of managing the financials and having tight financial controls. I took my eye off making sure that customer satisfaction was truly there and personally leading the charge in that effort.
I took my eye off where the market was going and where the overall economy was going. (People) may have the need to use you, but if their budget got cut, all of the wishing in the world’s not going to matter because they’re not going to buy it. That’s an external economic factor that you’ve got to watch.
When did you realize that you had to make a change in how you were leading Lucrum?
I went through this financial period when I had weekly and daily reports to the bank. I understood that for me to manage my way out of that, I needed to get back onto a momentum of identifying new business and new customers and continue to go back to old customers and make the market that way.
To me, it was all about continuing momentum through positive vision and optimism and leadership, and also just a lot of hard work.
What did you learn from that experience?
I had a very tough lesson because it was a very painful lesson. At the same time, it’s made me a heck of a lot better CEO. I can anticipate things up front.
Even though I’m more conservative in some areas, I’m a more educated risk-taker in some other areas, so I wouldn’t say that I got so conservative that I didn’t make any decisions anymore. I just try to remember my natural inclination to potentially go too fast in certain areas and slow myself down.
I get other people to do certain areas where my abilities may not be the best.
How has your management style changed as a result of your experience?
I’ve always been hands-on, leading from the front, and then when the dot-com bubble happened and we were all looking at company valuations and company success and growth for any reason, if you will, I became enamored. I got intoxicated in that, and it only took a short time for the intoxication to trash a company through some mistakes I shouldn’t have made.
When businesses have struggles, they come faster and more furiously than you’d ever expect them to come. So stylistically, I’m back to my hands-on approach. I’m not meddling in my managers’ affairs. They know who is to execute what.
I act as an adviser or leader in that area now, but in the past, I probably exercised too much micromanagement. I was emotionally involved to the point that I thought I had to make a lot more decisions than I needed to.
Where do CEOs in fast-growth companies go wrong?
I think a lot of CEOs become very internally focused about their company and themselves, yet their success originally was because they understood the external market and took advantage of the marketplace. In my opinion, very few CEOs spend too little time on internal factors.
The internal factors tend to be the politics in the company, the company’s product line, the balance sheet and financials, its board, its business strategy. It’s easy to get very wrapped up in that and not enough in what’s happening externally and how can it affect my market.
CEOs have to lead from the front of the business, not from the back of the business. Of all the generals on the battlefield, the best ones led in the front, not in the back.
If I’m having a customer satisfaction issue ... that means don’t have your people call him. You, personally, as CEO, lead the charge and you call them, you go over there and talk to them and listen to what’s going on.
How to reach: Lucrum Inc., www.lucruminc.com