Imagine if you had more than doubled your company’s revenue and employee count over the last five years. Imagine if you had increased your customer base by 80 percent and increased your annual profitability by 800 percent in that same period. And if you’re a public company, imagine if your stock had appreciated 300 percent, as well.
These numbers are Sohaib Abbasi’s reality.
When he took over Informatica Corp. (NASDAQ: INFA) as chairman and CEO in July 2004, the data integration company was on its way to finishing the year with $219.7 million in total revenue and a net loss of $104.4 million.
“At the time, Informatica was pursuing two distinctly different market options data warehousing and, the second one, analytic applications and business intelligence,” Abbasi says.
Abbasi had plenty of experience growing an organization, as he had previously worked at Oracle for 20 years, which he joined when it was a 30-person startup and where he was instrumental in growing the business from $4 million to more than $9 billion in annual revenue.
Using his previous experience, Abbasi created a clear vision for Informatica, and from there, he created a focused growth strategy that has resulted in revenue growth and profitability. Employee count increased from 800 in 2004 to more than 2,000 today.
All of this during a period when most businesses have struggled to stay above water and laid off employees. Here are the keys to how Abbasi did it.Have a vision
Before you can grow your company, you have to first know what your company is trying to ultimately do.
“The first step that we took was to refocus the company with a very clear mission to establish Informatica as the dominant leader in data integration,” Abbasi says.
Based on his experience at Oracle, he knew you have to be a leader to succeed.
“[You have to be] focused on a single category where you are the leader; you are in a strong position to redefine that market,” he says.
Look at what your company does best.
“It starts by asking what is core to the company and what is beyond the core,” he says.
He applied that filter to every strategy the company was doing and considering.
Based on his previous experience, he saw that Oracle had been a leader in the early stage market for databases and, as a result of that, had enjoyed healthy growth. As it tried to expand beyond that, Oracle learned the complexities of going into other market categories.
“Applying that lesson meant that if Informatica refocused on its core market, it would be productive to focus on how we could expand the core market, so our decision was to refocus on the core market and try to challenge ourselves on how do we grow that market,” Abbasi says. “Specifically what we asked was, ‘In what ways are customers gaining value from Informatica, and how can we deliver more value?’”
By looking at research, he saw that Informatica’s technology was traditionally used to aggregate data from a variety of databases to get better information and analyze trends.
“It turns out that our customers need to integrate data for operational purposes, as well, and by moving beyond analytical warehousing to operational data integration, we were able to expand our market fivefold,” he says. “ … By refocusing on our core market, we were able to take advantage of our pioneering leadership, and we’ve been able to redefine Informatica’s market every year.”Create a growth strategy
Once you know what you’re trying to achieve, then you can move forward.
“The second step that we took was to develop a focused growth strategy,” Abbasi says.
The strategy was a three-prong approach: The first part was to expand Informatica across all major geographic regions, the second was to grow beyond the data-warehousing market, and the third element was to advance the company’s technology leadership.
“The first element of a growth strategy needs to be around customers,” he says. “What is your growth strategy in terms of attracting and acquiring more customers? Are you focused on particular geographic regions or specific verticals?”
For example, he saw that Informatica’s customer base outside of North America accounted for only 30 percent of revenue it was too dependent on North America. He compared his revenue mix to that of more mature companies and realized that he could grow the revenue much faster outside of the continent, so he worked to try to gain more customers in those places. As a result, in the second quarter of this year, the company was now up to 36 percent of revenue coming from outside North America.
“The second element of any growth strategy is, ‘What value do you deliver to your existing customers and how will you expand that to deliver more value and more business purposes for your customers?’” he says.
At the time, just 20 percent of his customers used the company for more than data warehousing. By focusing on ways to expand this area as part of the growth strategy, today more than 50 percent of Informatica’s customers do so.
“The third element of a growth strategy is, ‘What are the technologies and services and how broad based of a product offering will you deliver?’” he says.
Informatica started by focusing on one product offering, but by expanding the core to embrace other technologies, it now has eight.
He says, “If you are executing well, your core will continue to grow.”
Abbasi also advises that you be prepared to modify your growth strategy.
“It’s essential to not only have a road map but to continually update the road map based on your progress and the changing IT landscape,” he says.
That’s been especially true during the downturn, so as part of the annual planning process, Abbasi and his team look at the technology industry as a whole on top of the data integration market so they can adjust the strategy if need be.
“At times, the operational discipline needs to be adapted to the changing macroeconomic environment,” he says. “We went through some unprecedented times of uncertainty as part of the great recession, and in our experience, if you go through those times of uncertainty, it is critically important to, very closely, monitor the changing circumstances and adapt the processes accordingly. In other words, the operational discipline needs to adapt, and in some cases, you need to change the planning horizon accordingly.”Be disciplined
Once you have a strategy in place, then you have to set up the organization to stay focused on it and fully understand it.
“With that focused growth strategy, we aligned the organization around those three growth strategy elements by coming up with corporate objectives and by coming up with metrics that we could measure how well we were doing against that,” Abbasi says.
One key was making sure employees knew what the company was trying to do.
“Have a framework where everyone understands what are the key corporate metrics and how does everyone’s contribution influence that,” he says.
He has defined several corporate objectives such as financial, market, technology, customer services, employee satisfaction, etc. that make up the mission and strategy, and he communicates those to employees. Every quarter in an all-hands meeting, he provides metrics to show employees how the company is meeting those objectives.
“Lay out a very clear vision and make sure that everyone understands what that vision is and make sure you actually take the time to verify that,” he says.
Abbasi verifies by surveying employees to make sure that they understand what’s happening. Ninety-four percent of employees responded and said they believed in the company’s vision and mission.
“You have to get that kind of awareness for what the vision is and a belief in that mission,” he says.
But you can’t just tell them what’s going on.
“The second [objective] is to articulate a very focused growth strategy and to make sure that the corporate objectives are stated in a way that not only do people understand what the focused growth strategy is, but they understand what their role is and how to contribute to that,” he says.
For example, customer service is one objective, and the goal is to rank No. 1 in customer loyalty. They measure this both for their customers and their competitors.
“It’s important to rely on an objective party, and it is equally important to benchmark against others,” he says.
So if that’s the objective, each department also has its own objective that contributes toward that. Customer support strives to make sure it lives up to the standards that customers have for it in terms of responsiveness. Product development will work to make sure that every product it puts out is the highest quality it can be so customers are satisfied. The sales team will work to build strong relationships with customers to make sure they understand what they’re buying so there aren’t surprises later.
“Within each department, each employee knows what their role is, and they know exactly, in what way, do they influence their groups, which, in turn, would contribute to the department, which, in turn, would contribute to the company,” Abbasi says. “The framework we came up with is not just the corporate level objectives but also how does that relate to the individual department and then individuals within those departments.”
As a result, 96 percent of employees said in the survey that they understood how to contribute to the company’s success, and 92 percent said they had the skills and capabilities to deliver their goals.
“Having that kind of alignment is critically important,” he says.
By implementing these three elements into the company, Informatica has enjoyed growth and success while many others have struggled. The company has also delivered a product every quarter for 16 consecutive quarters, which has led to its compound annual growth rate of 18 percent over the last five years even during the recession. On top of the $500.7 million in fiscal 2009 revenue, operating margins have increased from 5 percent in 2004 to 25 percent last year.
“I would reiterate the importance of having a clear vision, a focused growth strategy and exceptional operational discipline,” Abbasi says.
“The clear vision, the focused growth strategy and the relentless face of innovation have worked extremely well for Informatica.”
How to reach: Informatica Corp., (800) 653-3871 or www.informatica.com
Born: New Jersey
Education: Franklin & Marshall College; Lancaster, Pa.
First job: My first job was at a bakery, and I learned how to make jelly doughnuts. Not something that you want to share. I was 15 probably.
What did you learn that still applies?
That’s an interesting question in any retail business, it’s about being responsive to clients and quick to move. It was a fun experience, but it was pretty demanding. And really, every job that you have you have to take with a level of seriousness in order to be successful, and I think that that was as true in the bakery as it is today.
As a kid, what did you want to be when you grew up?
I wanted to be in anything in the theater. I had a love of the theater as early as I could remember and I was a performer. I was the kid at every school play. It took me until I was in college to realize that really wasn’t my greatest strength. I moved out of that, but that was where my first love was.
Right now, I’m on the board of directors for the San Jose Repertory Theatre, which has been a terrific experience for me in really getting back to that joy I had as a kid, and being on the business and administrative side is really a nice way to transition and also use the skills that I have in business and specifically from an audit perspective to benefit the theater so it’s been a great opportunity.
What’s the best advice you’ve received?
I think it’s from one of my early mentors at Ernst & Young, and that was around being open and receptive to any opportunity. I’ve been fortunate in my career, having been provided lots of different opportunities, some of which might have been out of the box, but by being open to those, it’s provided me with lots of different twists and turns in my career that I hadn’t anticipated. I think that was great advice to be open and receptive to anything and be willing to listen and think about what the future might look like with that opportunity.
What’s your favorite movie?
I have so many I do love movies. ‘West Side Story’ is actually one of my favorite old-time movies, and that was certainly an early one and started my love of the theater, and I go back to it a lot. It’s a little dated, but the music can’t be beat and I performed some role I think I was a Jet girlfriend at some point in that play in junior high.
Education: Bachelor’s degree from the University of Pennsylvania; law school at Temple University
What was your first job?
I mowed lawns. I was in the fourth grade. I took my mother’s push mower, and I mowed the lawns for as many neighbors as would let me. In those days, it was two bucks, and for a kid that was 9, that was good eatin’ right there.
What’s the best advice you’ve received?
I worked for a guy named Mark Tanoury at a law firm called Cooley. The guy’s brilliant. American Lawyer the magazine named him America’s top business lawyer about 10 years ago. He was a CPA before he went to law school. I tell you all that because the guy’s really, really that good, and working for Mark, I learned two things that were really important, not just to my business success but my happiness in business.
He’s such an incredible guy, and then he’d not know things, and he’d say, ‘I don’t know.’ He was so comfortable saying, ‘I don’t know,’ that I decided, as a mere mortal, that I did not know. And that was OK. The sky didn’t fall. Things didn’t stop. I didn’t get bad performance reviews. I could just not know. Now maybe I’d do something about not knowing next, but he’d just say, ‘I don’t know,’ and that was probably one of the greatest lessons ever. He never lectured me on it. I just watched him do it, and that was so liberating. I’ve used it ever since. Turns out there’s lots I don’t know.
Thomas Schall is amazed at how his company performed in 2009. As founder, president and CEO of ChemoCentryx Inc., a company that focuses on the development and discovery of medicines, he could have just been happy that the company was profitable in a year where many weren’t. But it was more than just that.
His business had demonstrated that their new medicine for Crohn’s disease, an extremely debilitating and chronic form of inflammatory bowel disease, could actually get patients into clinical remission at an unprecedented rate, while doing it in a safe manner, unlike other therapies, which tend to have large safety concerns and aren’t as effective in the long term.
On top of that, Schall expanded his company’s clinical pipeline even further last year, having successfully completed three phase-one clinical trials of three new experimental drugs. He also initiated a phase-two clinical trial for a new drug for rheumatoid arthritis and prepared to start a phase-two clinical trial for an entirely new drug for Type 2 diabetes.
But all of this success didn’t happen overnight. Instead, Schall built ChemoCentryx on key sustaining principles when he founded it 13 years ago. He believes that great science drives great medicine and that he and his team have a moral obligation to use great science and employ their knowledge and talents to discover new medicines. The other key principles are that the medicines they discover should be differentiated from others in the market, that they will find ways to bring new medicines into clinical practice faster and cheaper, that their products will be more capital effective, and they will adhere to a philosophy of ethical drug development. By taking this approach, he has grown a successful and sustainable company.
How to reach: ChemoCentryx Inc., (650) 210-2900 or www.chemocentryx.com
All of the stories about Kenneth R. Grossman are so familiar, especially now, more than three decades after he founded Sierra Nevada Brewing Co., one of the nation’s first microbreweries. Just flip through any of the several dozen magazines that have featured him or turn the pages of one of the books about beer in America that have included chapters about his youth in Southern California. Yes, when he was a teenager, Grossman snuck into his neighbor’s garage to learn more about home brewing and to sample the product, of course and he later opened Sierra Nevada when he was still in his early 20s.
But all of that has been written about again and again.
What has been neglected more often than not are the facts that Grossman, owner and president of the company, turned his appreciation for details into a quality product, how he turned a quality product into invaluable word-of-mouth advertising and how he turned all of that into what is now the sixth-largest brewery in the United States without a business model.
Throughout the more than 30 years he has owned and operated Sierra Nevada, Grossman has always had an aversion to debt. He spends only what he needs, and he pours profits back into the brewery. That has led to top laboratory equipment and sustainable energy creation, in addition to one of the larger private solar arrays and four hydrogen fuel cells, which help produce 80 percent of the necessary energy on site.
Employee familiarity with the company and the product are also a boon. Grossman provides incentives that range from a health clinic and day care center on site to energy-efficient company cars and profit sharing, all of which leads to high employee loyalty and low turnover. Think Grossman still needs to sneak into his neighbor’s garage? Not anymore.
How to reach: Sierra Nevada Brewing Co., (530) 893-3520 or www.sierranevada.com
partner, DLA PiperPriya Cherian Huskins
partner and senior vice president, Woodruff-Sawyer & Co.Patrick Lo
CEO, NETGEAR Inc.Dianne Dubois
principal, Atlas Business AdvisorsChristopher A. Masto
senior managing director, Friedman Fleischer & LoweJon Fisher
author, Strategic EntrepreneurismTMDavid T. ibnAle
managing director, TPG Growth LLCEllie Victor
CEO, ZOOM Marketing
Rehan Jalil didn’t have the best track record. There were a few failed attempts to start a business and to persuade investors.
But what he did have was perseverance and the passion to innovate. That determination led to WiChorus, a Tellabs company that offers products for the 4G network.
Developing the business model and receiving, the eventual, venture funding was the easy part. As founder and president of WiChorus, in 2005, Jalil was entering a well-occupied market to compete with large companies that had household names.
As a virtual unknown, some of the first barriers that he faced were convincing mobile operators to carry WiChorus products and attracting the industry’s top talent. With a good product and a good plan, Jalil was able to do both and the company was well on its way.
In order to compete in the crowded marketplace, Jalil created a company focus that targeted a market segment with potential growth. Looking at subscriber growth in mobile data networks, he chose product categories that could provide a high margin and continuity of revenue growth. His foresight to pick differentiable products that were of strategic importance to mobile operators was an innovative strategy that ended up working. And the company’s SmartCore was the first purpose-built platform in the industry for 4G services.
It is quite a story for a man with a humble upbringing in Pakistan. Jalil cherished his education, and he knew if he excelled in his studies, he’d be able to change his life and the life of those around him.
While running the successful company in San Jose, he also co-founded Koshish, which establishes schools and libraries for disadvantaged children living in the slums and small villages of Pakistan. A true entrepreneur, Jalil also started a program that connects mentors with aspiring students internationally.
How to reach: WiChorus, (408) 435-0777 or www.wichorus.com
When Michael Gregoire took over as chairman and CEO of Taleo Corp., he wanted to see better performance.
To do that, he knew the talent management software company couldn’t fall into a trap like competitors where the product cycle was three to seven years. Gregoire developed a technology tenet that focused on Taleo’s software-as-a-service model. The idea was that the software would offer one configuration for products, so as Taleo’s customers grew and desired customization, they wouldn’t need multiple versions of the product to meet their demands.
The concept has given Taleo many advantages. First, it makes it easier and faster for customers to benefit from Taleo’s product innovation. Second, it allows Taleo to constantly enhance its product line with help from customers. Those added advantages have led to profitability that helped Taleo weather the economic downturn.
Gregoire’s innovation has also led to aggressive investments that expanded the company’s product line to include solutions for managing employees. Also, Taleo rolled out a platform worldwide to tap into the industry’s largest collection of customers. The Talent Grid allows customers to drive innovation and growth by collaborating on best practices.
Taleo was busy in 2009. It delivered a suite of new products to the market, reached an all-time high for customer satisfaction, kept up customer renewals and drove growth in profits to stakeholders. Gregoire’s well-planned growth investments have allowed Taleo to become one of only a handful of on-demand businesses that return shareholder profit.
Plans for continual grow and innovation remain in the future. Gregoire developed a three-year plan that invests in the company’s growth along eight axes from product to operations and network. The idea is to place Taleo at the helm of the talent management market and, in turn, put talent management at the front of the company’s business agenda.
How to reach: Taleo Corp., (888) 836-3669 or www.taleo.com
At the age of 12, Pamela Hawley got her first glimpse of extreme poverty. The experience of seeing begging children while on a vacation in Mexico established her lifelong commitment to service through social entrepreneurship.
In 2002, after her first company VolunteerMarch took off, Hawley founded UniversalGivingTM, an Internet platform that provides giving and volunteering opportunities in more than 70 countries. The nonprofit organization allows visitors to pick an issue, such as education or the environment, and a region and matches them with volunteer and giving opportunities. Hawley’s UniversalGivingTM Corporate also manages companies’ strategy, operations and vetting of nongovernmental organizations to provide third-party security for international giving and volunteering.
UniversalGiving’s innovation lies in the adjustments it has made over the years to ensure security and quality experiences. The vetting process has increased from seven stages to more than 15. Basically, it’s a commitment to users that they can trust they’re giving to a good cause.
UniversalGiving offers corporate clients incremental levels of NGO vetting, beginning with financial reviews, a 501(c)≥ assessment and a review of terrorism activity, up to customized due-diligence of in-country standards.
Hawley, the company’s CEO, hopes to expand UniversalGiving’s partnerships through solutions-based journalism. The objective is to provide readers a link below the story that leads to related giving opportunities. It’s a model UniversalGiving hopes to expand beyond its partnerships with Christian Science Monitor and LinkTV.
With that, UniversalGiving is poised to expand its reach. The organization hopes to connect users to more than 100 countries by the second quarter of 2010 and is looking to increase the number of areas it covers. More than 10,000 volunteers have been matched since UniversalGiving’s founding.
How to reach: UniversalGivingTM, (415) 296-9193 or www.universalgiving.org
The original idea for PlaySpan Inc. came from Karl Mehta’s 12-year-old son, Arjun, who was an avid gamer in online multiplayer games. He had become one of the best players and his community members bought virtual goods and currencies from him in the game.
The need for a cross-game global commerce and payment platform for in-game digital goods was apparent, so Karl Mehta invested seed capital (after being rejected by 65 venture capitalists) to develop a core team to build a complete platform from the ground up.
After the platform was built and three major publishers agreed to use the platform, the VC situation reversed.
The game industry is very incestuous and is tough to break into, very much like the movie industry, and Mehta had no prior experience with gaming. The idea of allowing gamers to buy and sell their virtual goods in-game was very radical when it was pitched to game publishers.
The first year, there was huge resistance. It took two years of constantly pitching and demonstrating continuous progress when publishers started taking PlaySpan seriously. Today, every major game company executive knows PlaySpan and Mehta, its CEO.
He was the first person to envision a business model based on selling virtual items in the games between publisher to player and player to player. The business model is like Amazon, eBay and PayPal for virtual goods. It was the first company to build this model and is now recognized by industry players as the most innovative in the multibillion-dollar market.
The company is growing at more than 100 percent year over year and is doubling its employee base. There is strong organic growth as more developers, publishers and gamers use the company’s platform to complete transactions.
How to reach: PlaySpan Inc., (408) 617-9155 or www.playspan.com