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Gastspreker 2 mei 2005

• Patrick De Groote
• Voormalig CEO en Gedelegeerd Bestuurder
• Zenitel N.V.
• Top management gevoelens en emoties bij
  herstruktureringen

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Praktische afspraken

• We beginnen met het exposé hier. Het laatste
  deel van de uiteenzetting is expliciet opgebouwd
  als interactief debat waar van u als deelnemer
  een actieve input wordt verwacht.
• 18u30 aperitief in de hall, waarna we voor het
  diner beneden in de zaal worden verwacht.
• We trachten het officiële deel stipt af te ronden
  om 21u30

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Introduction

• Capital markets between 2000 and 2004 are
  characterized by uncertainty and crisis of trust
  due to sputtering economy and downwards spiral in
  certain sectors.
• Ambition of CEOs was often in unbalance with
  economic reality and lacked modesty. Unfulfilled
  expectations in shortening reporting cycles give
  raise to the Battle of the Quarters by
  management.
• Recent international scandals around highly
  estimated CEOs result broadly in questioning
  leadership and entrepreneurship.
• Boards become nervous and tend to interfere in
  operational matters. Values of business and
  social responsibility start to embody changing
  contents due to mutating interests from reference
  shareholders.
• Against this prevailing back-ground, a
  turn-around becomes a very complex phenomenon in
  a turbulent environment.
• Related emotions from top managers cannot be
  neglected and influence decision taking.

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From Management literature..
Skills
Finding the right balance
Emotions
Methods
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The sound track

• - Bringing companies on speed the Algerian
  experience (72-77)
• - Power, steel, non-ferro
• - Difficult business environment in the
  seventies new technologies, poor skills
• - Nation wide strategy
• - Increase output and reduce cost through
  performant maintenance of production equipment
  (78-96)
• - Involved in several hundreds of restructurings
  in industry, power, transportation
• - World-wide
• - Development of professional methodologies
• - Maintenance engineering at ABB Service
  Worldwide (96-99)
• - The breakthrough of Full Service
• - Acquisitions
• - Taking over maintenance departments and
  re-structure
• - The Zenitel adventure (99-04)
• - The call for the impossible
• - External and internal turbulent and complex
  environment
• - How to get a terminal patient out of the
  hospital and give him a new future

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Zenitels Change Programme 1999 - 2004
First phase 1999-2002 based on two axes

• Business plan
• Acquisition strategy

Position for growth

• New organization
• Focus on core-business strategic alliances
• Business processes
• HRM
• Communication plan
• Cash position
• IT and reporting
• Grip on the costs

Strengthen the base
Next phase 2003-2006 profitable growth
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From SAIT RadioHolland and STENTO to Zenitel
Milestones
Divest non-core Debitel BE NL ATS EuroMarine Ser
voteknik Sirius Production Others
Acquisitions 100 Ramacom RNS Halberthall ATCOM R
adioteknik Telpro plus INES
Divested
Acquisitions 100 Servoteknik Colsys
Wireless Solutions
CSS
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Managing crisis and change processes (1)

• - Why do you take that challenge ?
• - Not without danger
• - The kick ?
• - The call for the impossible ?
• - Natural unrest?
• - The re-structuring path a matter of falling
  and getting up again and again
• - Doubt
• - Believe in yourself
• - About doing the right things and the things
  right
• - The big choices
• - Strategic plan
• - Mergers and acquisitions
• - Divestments
• - Dealing with the stock market and all
  shareholders
• - Up-dating the business plan

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Managing crisis and change processes (2)

• - The important moments
• - Watching the cash a continuous battle
• - Capital increase oxygen
• - About reference shareholders and listed
  companies
• - New corporate identity new HQ
• - MBO
• - The difficult things
• - Lay-offs
• - Setting up a new team
• - Internal policies the hidden agendas
• - Post MA integration
• - Lay-offs of management team members
• - Managing all stakeholders personnel, banks,
  suppliers, customers, media.
• - Why and when do you stop
• - Your own choice, at the right moment
• - The motivation curb
• - Invitation to new challenges

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Challenges (1)

• - External (over the past years)
• - Global economy
• - Telecom sector
• - Internet bubble
• - Own markets under pressure
• - Scandals and declining trust
• - General entrepreneurial climate
• - Uncertainty banks- investors-customers-supplie
  rs- .
• - Power of the media
• - Financial annalists
• - Stock exchange

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Challenges (2)

• - Internal
• - Nobody likes change
• - New organization incl. change of top mngt and
  board
• - Strategic plan and focused offering
• - Consequences lay-offs, divestments,
  acquisitions
• - Focus on core-business external partners for
  supporting processes with related
  acceptance/integration problems
• - Several simultaneous processes training,
  motivation, communication, corporate image
  building, re-engineering internal processes
• - Figures results and their development vs
  expectations
• - Board and its pressure
• - Shareholders change from reference
  shareholders
• - And above all the troops at home

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Emotions (1)

• - Certainties
• - Quick decision taking
• - Once decided do it
• - Believe in the company believe in yr team
  believe in yourself
• - Decisions in team weak or safe?
• - Have the courage to stop long lasting
  decision processes
• - Doubts
• - Major choices Am I right? (repositioning of
  offering - divestments acquisitions)
• - Difficult decisions are taken alone the
  general on the hill
• - Finding the right people

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Emotions (2)

• - Emotional moments
• - Lay-off of people, especially of management
  team members
• - Cutting deep, but how deep? Afraid of loosing
  capacities?
• - The battle against continued stress
  unexpected events and poor understanding
• - Keep the pace at the home-front
• - Lonely at the top
• - Process of falling and getting up, again and
  again never ever give up
• - A feeling of satisfaction
• - Appreciation especially by your people
• - Sounding board of objective professionals
• - Tranquility of mind ethics above all
• - The feeling of having moved forward

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Emotions (3)

• - Destabilizing factors
• - Diversity of reference shareholders interest
  and corporate governance
• - External influences become an increased
  bourdon
• - Figures improvement process takes always too
  long
• - The islanders incompetent people generate
  monopolies
• - Dealing with contradictory interests
• - Post acquisition integration cultural shock
  and clash personal policies - hidden agendas.
• - The pressure of the stock exchange
  volatility, liquidity, price
• - It would be easy to hit the target every time
  if it would just stop moving (N. Hamson)
• - You need to have a thick skin
• - Some managers go through all of them at
  different points in time anger, abnormal fears,
  guilt, resentment, relational problems with
  team and private, grief, anxiety, despair,
  fatigue, tension, loneliness, withdrawal, worry,
  compulsive behavior, sometimes panic or
  obsessive and negative thinking, depression
• - The solution
• - The thick skin. Dont let doubt eat your
  self-confidence.
• - The real art is to find a rest point in the
  turbulence
• - Living in compartments
• - There are no miracles good results are the
  consequence of gradual successes

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What helps to balance the emotions

• Strategic plan as a reef facing the breakers
• Importance of active assistance of reference
  shareholder
• Speed and accelerated transition quickly
  search for stability in turbulent times
• Call for top people line managers,
  consultants, allies..
• Educate your consultants
• Make choices, take decisions and execute the
  plan severity, discipline, rigorous
• Cost awareness management if needed, you never
  cut deep enough
• Communication often but no overshooting ,
  repeat messages, transparent, bad news very
  early, successes
• Work on company image
• Inform on regular basis suppliers and bankers
• Controlling internal processes. Performant
  reporting. Clear accountability
• Keep performance high - pinpoint value creating
  incentives
• No position jockeying everyone has to merit
  his job
• Be fair for all integrating groups after MA
  but no compromise management
• Realism in self-confidence ban
  self-satisfaction
• Make sure your troops are with you

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and 4 major sources of emotions..

• Success
• Is a word of yesterday (Bob Delbecque) you have
  to earn it every day.
• Is never the result of one person, but always
  from a team.
• Failure
• Is watching at each corner.
• Is also never the result of one person, but
  always from a team.
• Team
• A leader is as strong as his/her weakest first
  line report.
• Thus.invest in your team.
• Reputation
• Comes by walking and
• Runs away on a horse (Peter Anthonissen).

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Some statements (1)

• - Organisaties op scherp. Herman van den Broeck
  en Steven Mestdagh
• - Apart of human capital, change is considered
  as the most important factor of success (CEO
  poll)
• - An important part of human information
  treatment is based on discovering related and
  recurrent patterns with the goal to tune our
  behavior
• - Managers feel well if they can plan, monitor,
  coordinate, predict and drive. Quid if something
  happens that doesnt fit this picture?
• - Finding a state of mind between search for
  change and consolidation
• - Managers judge too often on the basis of
  non-related facts and not on the basis of their
  inter- relations reductionism one focuses on
  things, not on relations
• - Change-fatigue feeling fed up to spend energy
  in changing processes knowing that it wont
  bring anything or that it will be changed again
  in the future
• - Stress danger of predicting or anticipating
  specific results, in pre-calculating exactly what
  change-programs will cost (lots of managers
  take for granted their wishes) 80 of change
  programs fail because of an exaggerated initial
  optimism, loosing all sense of reality by
  placing the parameters around the change
  program in a wrong perspective

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Some statements (2)

• - Leiden in woelige tijden Daniel Vlerberghs en
  Hans Begeer
• - you dont need to wait until change happens
  you can initiate it yourself and monitor it
  therefore you need to love change i.e. one
  should learn to break resistance against change,
  starting with oneself
• - Robert Stouthuysen todays managers need to
• Be alert for developments, also external to the
  company be visionary
• Be continuously up to date in the profession be
  professional
• Take time to think and afterwards to
  execute/drive be manager
• Extract of your people what they have be leader
• Be agents of change be able to mobilize
• - Change management based on a relation between
  structure, culture, strategy and management
• - The loss of certainties in organization create
  stress
• Predictability
• Feasibility of the organizational structure
• Stability
• Clearliness loss of hierarchical structures ,
  definition of responsibilities
• The environment is changing so quickly so that
  adaptations to the external world only are not
  sufficient anymore

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Some statements (3)

• - Turnaround management in de praktijk. Peter
  Faulhaber Norbert Landwehr.
• - Valkuilen en struikelblokken van de
  turn-around
• Vluchtgedrag
• Selectieve waarneming
• Vergoelijken, zelfbedrog, bedrog
• Verkeerde opzet van de onderneming
• Gebrek aan consequentie en radicaliteit,
  verkeerde consideratie
• Opzetten van valschermen de valkuil van de
  afscherming
• Reparatiegedrag
• Verkeerde of ontbrekende communicatie
• Gebrek aan vertrouwen bij stakeholders
• Foutieve beoordeling door stakeholders
• Verlammingsverschijnselen
• - Turn-around management is een creatieve daad,
  waarbij een bedrijf onttakeld, gestut en
  opnieuw wordt ingekleed

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Some statements (4)

• - The service profit chain. J.L.Heskett,
  W.E.Sasser, L.A.Schlesinger
• - Hiring for attitudes first, skills second
• - The tyranny of either/or vs the policy of
  and/also
• - After Atlantis. Ned Hamson
• - Chaos and opportunity are the twin choices for
  individuals and organizations as one era ends
  and the shape of the one to come is as yet
  unknown
• - How much longer will successful companies
  survive if they dont figure out how to respond
  to the challenge of change
• - Currents, rip tides and whirlpools to
  overcome I want it now, new, beautiful/elegant,
  high quality, low cost, earth and users
  friendly, and made just for me
• - Managers and workers saying I want more
  input/control over my job, it should have meaning
  for me, I need variety/newness, I want
  predictability too, I want my job to have less
  hassle in it/ user friendliness/low cost to me,
  I want it to fit me and Im going to watch your
  feet, not your lips

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Some statements (5)

• - Dagboek van een vijftiger, Herman van Rompuy
• - De herhaling geeft stabiliteit.
• - Gecompartimenteerd leven daarvoor moet je een
  vijftiger zijn
• - Waarheid komt 2 à 3 jaar later
• - De waarheid kan kwetsen maar de onwaarheid nog
  veel meer.
• - Het moeilijkste is niet vernieuwen maar trouw
  blijven
• - Steeds meer doe ik dingen uit plichtsgevoel.
  Daar komen geen initiatieven uit voort maar wel
  goede raad en goed beheer
• - Wie zich te evenwichtig voelt mist de
  gedrevenheid
• - Wie vaak ontgoocheld is, is eigenlijk zeer
  pretentieus en wie het niet meer is heeft geen
  verwachtingen meer

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Some statements (6)

• - Five frogs on a log, Feldman, Spratt
• - Change is expensive but delay can be
  catastrophic
• - If I had to do over again, I would have done
  it faster
• - Getting good players is easy. The hard part is
  getting them to play together
• - A merger between equals gives the managers of
  the combined organization a license to engage
  in an interminable debate over who has the best
  practices
• - One calendar year in transition is equivalent
  to 7 years of normal growth, and so you have to
  move at an unbelievable pace (John Chambers
  Cisco)
• - Management caught spinning its wheels is
  almost invariably management that is pursuing too
  many business initiatives simultaneously
• - The kind of reengineering that must be done in
  the middle of a major transition is like
  operating a MASH unit. Its not pretty, Its
  not perfect. But it saves lives.

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Contact

• Patrick DE GROOTE
• Nelemeersstraat 9
• 9830 Sint-Martens-Latem
• Tel. [phone]
• Fax [phone]
• GSM 32 495 77 77 76
• Patrick.De.Groote2_at_telenet.be
• www.zenitel.biz