The context

The company Geoengineering SA is owned 85% by a majority shareholder, Mr Batteri and by 3 other shareholders 5%, who have each a sit on the board. Mr Batteri is acting as CEO and board member.

The company sells IT solutions and services to cities enabling to manage their digital presence in the public space. Those solutions include in-house developed software and expensive hardware and range in the 6 digits price range. The in-house development software is made on several platforms and technologies. A team of 6 engineers is working full time on the development, configuration, integration and operation of the systems. The company sells directly to its clients in Suisse Romande and has a team of 4 sales people.

The usual sales process for 6 digits projects to government-owned organisations is complex.  Investments decisions by state or cities organisations are following unpredictable patterns and can last over a long period of time. The implementation is dependant on many technical and operational parameters not in the control of the company, leading to delays in closing and cashing-in projects. As a result, Geoengineering is regularly into financial trouble (similar companies have similar issues).

The CEO is a very innovative and customer-oriented but he has difficulties stabilizing his value proposition towards clients, offering to each of his clients a tailor-made solution. This results in some pressure on his IT team and generates frustration. Furthermore, the sales team cannot sell a stable product or solution. The consequence is frustration as well that leads to a high turn-over in the commercial team. This all leads to difficulties to predict project closures and revenue. Despite all these difficulties, the financial situation has always been managed and invoices eventually paid (often with delays and negotiations).

The board does not believe anymore in the capacity of the CEO to bring the company to profitability; there was no impacting changes in the last months neither professionalism in the management structure. The CEO, on his side, is convinced that he can reach by himself sustainable growth objective.

The intervention of the board

The board is finally able to convince the CEO that the real growth opportunity lies outside of the market in Suisse Romande. In order to reach that market, the board convinces the CEO that there is a need to develop a new market understanding, new cultural and language skills and to build a new sales organisation. Considering the board arguments and the reality of the future of the company, the CEO admits that this strategy is out of his current reach and agrees to consider a partnership.

The board searches for the right partner with the CEO and contacts the company Docswitzerland, a successful and much bigger company,  active in a similar field in the Swiss German Region. After few rounds of discussions (not always easy to conduct), both companies decides to enter into a trade sale agreement, whereas Docswitzerland AG  purchases Geoengineering SA and offers Mr. Batteri a position as CTO in the new entity with substantial equity. This CTO position is far more in line with his innovative way of thinking and skills; he feels much more comfortable in this new position than the previous one, where he constantly felt overwhelmed.

Lesson learned

  • Founders/entrepreneurs would sometimes prefer to take other positions than the CEO sit. It is difficult however to accept and confess it to its shareholders and board members.
  • Board members can help the founders / entrepreneurs to admit it is time to change their role by showing hard facts and consequences of a given strategy. This means board members have to be aware of the emotions behind a project and have to help the founders/entrepreneurs to address them, recognize them and define together a new future in their company.
  • Board members can help identify the right strategy, the right partner when needed, without emotions. The can truly help in identifying the right deal between potential partners, who may not trust each other by essence.
  • Board members can really play facilitators in these critical situations and always have in mind the sake of the company