Joseph Ram is no stranger to change.
He founded InfoSonics Corp. 14 years ago, and, in that time, he has led the company through three major repositioning initiatives, taken the company public and reached record revenue of $240.9 million in 2006.
As a distributor of wireless handsets and accessories, InfoSonics operates in an industry that has evolved quickly. Ram, the company’s president and CEO, says that given the dynamic nature of the industry, he frequently reviews data in an effort to forecast the company’s future market position and isn’t afraid to make changes.
In an industry where success is a moving target, Ram’s latest plan includes expansion into the Latin American and South American markets, a move which required him to lead yet another corporatewide repositioning initiative.
“Making changes is always difficult, and it can take years to fully transition a company,” Ram says. “Along the way, you can doubt yourself, and people will question the decisions you are making. You have to have a tremendous amount of self-confidence, and you have to believe in your vision because you always have your detractors. CEOs need to envision where they want to be in two years and in five years, and eventually, by persevering, you can get very close to your goals.”
Here’s how Ram has conquered the challenges of change while taking InfoSonics to new levels of success.
Craft the vision
Surviving in today’s business climate means being willing to change.
“Every day the world is changing a little bit faster,” Ram says. “There are no assurances for any CEO that you are going to continue to make money unless you are willing to shift your business model.
“I’ve always had the ability to detach myself from the day-today operations, to take the time to look forward. Some CEOs go on retreats, others talk with their friends, but you have to take time to talk about the future. Most people look at the daily activities in a company and think that everything is urgent, but in reality, everything is not urgent. You really have to take time away from the fray on a daily basis and review where you are going.”
To anticipate your company’s future growth, the first thing you need is intelligence from multiple data sources, and you need to review it often and be completely honest with yourself about what lies ahead.
“I think that you need to look at industry data, the global economy and the local economy when looking at your company’s strategic direction and the prognosis for continuing growth,” Ram says. “Start with the outer circle, and look at what’s affecting your operation from the outside, and then look at the inner circle to see where your organization fits within the marketplace.”
Ram spends part of his time engaged in sales activities, none of which are more important than selling his revised vision to constituents.
“Once you have a plan in mind, the hardest part is to sell it,” Ram says. “In my case, I have to sell my plan to our board, our investors, and the members of the senior management team and the employees. The employees will then sell your plan to people outside the company, like customers. The complexity of the organization and the extent of the changes you are proposing determine how long that will take, but it can take months just to build consensus.
“Once, I thought I had completely sold my idea only to find that I hadn’t built consensus, so I had to go back in order to convince people. I think the best methodology for building consensus is to present everyone with the facts. Explain the situation, and give everyone the same set of facts, so they can see the logic behind your plan. If it makes sense and it’s logical, they’ll get behind it. If it doesn’t make sense, they won’t follow you just because you’re the CEO. And of course, as the CEO, you have to be convinced that your plan will work because you need to sell your idea with conviction.”
Ram has an interesting philosophy when it comes to dealing with those who doubt the vision. While many CEOs might choose to eliminate those who aren’t on the bus with the proposed changes, Ram says that CEOs just have to work harder to convince any dissenters.
“You just have to work harder to convince the naysayers,” Ram says. “You have to admire them for their guts. I don’t think that just because somebody doesn’t agree with you that you should let them go; I think you should embrace them.”
Execute the plan
Once the strategic vision is sold, Ram provides his managers with the plan’s parameters as part of the execution stage.
“I provide the managers with the strategic vision and some parameters, and they provide the detail that will execute the plan,” Ram says “We work from three sets of goals, which all have timelines. The plan includes macro goals, such as where you plan to be in the global marketplace, tactical goals, which detail the execution of the plan, and then the financial goals that result from the completion of the macro and tactical goals.”
Flushing out the details of the plan is a process that is often extended throughout several weeks as the exchange of information crosses the desks of managers stretched out across InfoSonics’ global footprint. While each manager authors their respective portion of the plan, Ram checks in weekly with each one in order to gauge each person’s progress. Ram says that if it occurs, he welcomes disagreement among the team members during the process of laying out the tactics.
“It’s important to have your most influential people be in charge of executing the plan so they can lead the other employees,” Ram says. “I think we thrive on disagreement here because it really helps us look at a problem from different angles, and as the CEO, you really don’t want to brainwash people.
“I think that most people come into a planning session understanding that they aren’t always right, so they are open to other suggestions. Usually, we can come to a consensus about our tactical plan. I also think everyone understands that as the CEO, you often have to make difficult decisions, and unless the team can reach an agreement, you’ll have to step in.”
The steps in the plan’s execution phase are laid out like dominos, requiring one department to achieve its goals before another department can execute the next step in the plan. The sequential nature of the plan not only allows Ram to track each group’s progress, but it also helps him focus his attention.
“I monitor the tactical achievements of each department once we move to that stage in the process,” Ram says. “The goals and timeline are laid out sequentially. For example, engineering has to complete their portion if we are offering a new product or service before sales can get the contracts signed, and I focus most of my attention on the weak areas. I think that most CEOs enjoy spending time with the strong areas in the company, but in reality, you need to dedicate your time and efforts to those who need the help.”
Celebrate achievements
Bringing a company and its employees through the emotional roller-coaster ride that often accompanies a major change initiative can be a challenge. As a change process veteran, Ram has learned to make the best of tense times.
“I think that people want to be part of a winning team,” Ram says. “As an employee, even if I think I’m underpaid, the work environment is more important, and the psyche of employees is such that they are motivated to help the company move forward and win. A major repositioning effort is a great time to work shoulder to shoulder with employees, and as long as they understand the vision, they will support you. In addition, it’s important to let the employees know that there’s light at the end of the tunnel.
“Each year, we set aside a certain percentage of our earnings, which go to InfoSonics employees and to charity, so they are financially motivated to help the company succeed. We always take a reflective look at the end of each year to see where we’ve been and to review what we’ve accomplished. This is important because it helps with morale, and it makes people feel like they’ve been part of a team that has accomplished something. I always maintain an open-door policy and let people voice their opinions, and having that kind of culture helps when you are going through big changes.”
A look at InfoSonics’ revenue after the first three quarters of 2007 hints that there might be light at the end of the most recent repositioning tunnel. Year-to-date revenue numbers for nine months of 2007 show a decrease in revenue in Central and South America for the company. However, net sales in the third quarter of 2007 were a record $69.4 million with South America sales representing 59 percent of net sales, or $41.1 million, compared to $49.1 million in the third quarter of 2006. Central America sales were 33 percent of net sales or $22.6 million, compared to $16.4 million in the third quarter of 2006. Latin America made up 92 percent of the company’s sales in the third quarter of 2007.
Ram says that he will continue to persevere through the company’s shift into newly emerging markets despite the challenges because he thinks it’s the best move for the company, and he has confidence in his vision.
“I think it’s crucial to be honest about the enterprise and yourself, so you can remain objective and make the right decisions,” Ram says. “Leaders can fall in love with a product or a customer and then they fail to make objective decisions, which can ultimately lead to business failure. When you go through these big transitions, you’re going to have good days and bad days. You have to continue to believe in your plan and in yourself, and you can’t show it if you have a bad day.” <<
HOW TO REACH: InfoSonics Corp., www.infosonics.com