GN News sat down with GN Netcom CEO Toon Bouten and CFO Anders Boyer for a talk about the status of GN Netcom, the progress of the FAST (Focused And Simplifying Turnaround) restructuring program, and a view into the future of headset users.
Let’s for a minute forget about the present challenges and the financial crisis that affects us all right now – and take a look into the future. Toon Bouten, how do you envision the use of headsets a few years down the road?
In Mobile, we will see Bluetooth continue to expand – in the car, in the streets, at home, everywhere. The Bluetooth headset will not just be for mobile use, but will evolve into an integrated entertainment tool. In the office, we will see headsets become an indispensable tool for unified communication. We will see an increasing number of devices in the office connect with headsets to continually improve office worker efficiency.
Will this development slow down as the financial crisis begins to affect the general economy and the businesses?
Actually, I think that the crisis will speed up this development, as will the increased environmental focus. The future office worker will travel much less, for both cost and environmental reasons. We will see more people work from home in a virtual workspace. This is happening today, and the trend will accelerate. At the same time, globalization will not slow down, and the need to interact and communicate will continue to grow. Video conferencing will replace many flights, and the demand for cutting-edge communications tools – with advanced and flexible headsets being an integral part – will continue to increase. Today, less than 10% of office workers use a headset, so the 90 % non-users represent a vast untapped market.
How will GN Netcom address this development?
We are already the Bluetooth headset leader and will continue to push on with new flexible headsets that support a multitude of office devices. One example is our collaboration with Microsoft on unified communication, which is now beginning to bear fruit. We will expand our products to support other major players such as Cisco, and continue to move beyond headsets with adjacent products. IP telephony, video conferencing and office efficiency will be powerful driving forces which GN Netcom will leverage with new innovative products.
How will GN Netcom’s mobile market approach change?
In the Mobile division, we are focusing on 90 large customers instead of our previous 700 customers of all sizes. Our 90 customers are – in addition to OEMs – large distributors, retail chains and telecom carriers. We are now co-defining our products and getting close to these customers in a completely new way, with daily interaction. These customers accounted for 90% of our revenue in the past, and they are already buying more from us due to our increased focus. Add to this the significant reduction of cost from the easier handling, reduction of inventory and working capital, the different planning process and the hugely different order size we can expect more revenue at a higher profitability from these 90 customers.
How will the market approach change in CC&O?
In the CC&O division, we are integrating the sales channel into the value chain. You could call it “the indirect IT model,” where we only sell to distributors and hybrid resellers, but maintain a firm grip on demand generation up through the value chain for both resellers, and end-customers.
How do you feel that the restructuring of GN Netcom has gone so far?
Very well, although performing a turnaround in the present economic climate is a very complex undertaking. It’s a bit like rebuilding the plane as we fly. We have built two strong and flexible wings to fly with the mobile, and CC&O divisions. We had to replace part of the crew mid-air which are new structures, processes and improved skills. We now have an 80% rebuilt plane and would have preferred steady weather for the remainder of our reengineering process. But – like the rest of the world – we are currently flying through some nasty air pockets – the weak economy. Here in the cockpit, we are monitoring all instruments closely and are ready to adjust our course as needed to get us safely to our destination.
Anders Boyer, you are responsible for the actual implementation of the FAST program. Are you on target?
Yes, and in some areas we are ahead of target. As Toon said, this is a very complex undertaking, completely changing the business and financial model. We receive proof daily that the hypothesis behind the FAST program was correct and the turnaround is working. We can see the first positive results from the changes, though obviously they have not yet materialized on the bottom line.
What are the main advantages FAST has given the business?
Our split into two separate divisions will improve our focus on what is important – not just in management, but throughout the organization. We are changing into a far simpler business with far better transparency with respect to daily operations, where value is added and costs. Our financial management will become simpler as we move from a rather complex virtual matrix organization to a simple real life organization. And our organization and cost structure will be scaled to a completely different way of doing business – focused and simplified.
Are you making these changes in time?
One can always question whether a restructuring is tough enough and quick enough. Could we and should we do more? As management, you have to always aim for a balance between getting the business straightened up fast enough and not damaging it as you rebuild. GN Netcom is a knowledge-driven company, and we need to retain the talent that can help create tomorrow’s blockbusters while at the same time we strive to provide quick results.
Will the FAST measures be sufficient to effect a turnaround of GN Netcom?
I truly believe that we will see a substantial improvement in profitability in GN Netcom after the FAST program. But, obviously, there is a time factor, we are fully aware that we don’t have forever to produce significantly better results.