Make your move
By getting back to basics, GNC eventually started heading in the right direction. Halfway through 2005, the company started to show a turnaround, and 2006 ended up being a good year with the company posting revenue of $1.49 billion.
Yet, Fortunato still had to wrestle with the dilemma of when it’s time to start thinking more strategically and growing for the future. Even during the first six months of 2007, he was reluctant to divert people’s attention away from the core business.
“Now, it’s not that you’re not paying attention and thinking about what you could do to enhance the business during that time frame,” he says. “You’re getting your ducks in a row, but you don’t start executing against those strategies and take the risk of driving focus away from the core business again and then going back to a situation where you’re thrown back two years again.”
Fortunato also decided to keep the focus on the core because he didn’t feel he had the talent pool to take the company to the next level.
“That’s nothing against the people that were here,” he says.
“They’re fantastic people. They’re still here. They fill their roles very effectively at what they’re very good at. But the talent level you need, it really comes down to a decision — are you satisfied the core business is stable and a foundation is strong enough to move on and that we can grow upon this base?
“Sometimes you tend to be a little cautionary about that. Eighteen months sounds great, and looking back, (we) probably could have pulled the trigger at 18 months, but in conjunction with that, you’ve got to make sure you have the right talent.”
The talent that was responsible for the growth in the 1990s was not the same type of people GNC needed today. Back then, GNC needed people who would be able to come in and drive a fast-paced environment and who had passion and knowledge of the industry and the business.
“You’re just looking for people who take direction very well, who can think within the constraints of their area and execute,” he says. “It’s really a different mindset than somebody who comes in and you are looking for a strength in a merchandising area or a strength in marketing and a more of a creative culture and a mindset that is more visionary and strategic. That’s a different approach.”
Now, Fortunato wants people who think outside the box to complement the people who were able to drive the core.
“The talent from the outside cannot come in and replace that talent, because that talent is very specialized to this business and this industry,” he says. “But, the talent from the outside can bring new thoughts and processes into the business that that core individual does not have in regards to what else exists in the world and what else can we go after.
“We basically just beefed up our infrastructure to keep the core business momentum there and the core business talent pool there, and then bring in a new level of talent to really develop a world-class organization that would be able to deliver our objectives for the nex three or four or five years.”
GNC’s revenue has continued to grow. Its 2007 numbers were $1.55billion — a 4.4 percent increase over consolidated revenue for the same period the year before. Revenue increased in each of the company’s business segments, and Fortunato credits having that mixture of old and new leadership as a key to successful growth.
“My advice would be, look to your organization, make sure that the talent pool you’ll need to drive that organization forward is there and the senior management leadership is there as you have to back away from the core business,” he says. “Because, you can’t focus your energies on the strategic needs of the business and growing the core, adding onto those core assets the business has and still be involved as much as you were before on the core business. You need people that are going to be able to take that over, and you have a confidence level that they are going to be able to continue to drive that business because, once again, without that, you can’t do the strategic part.”
HOW TO REACH: General Nutrition Centers Inc., (412) 288-4600 or www.gnc.com
