Make your case
As the new guy, Burgess expressed respect for all that Insituform had achieved since the company launched in 1971.
“Insituform invented this business and was the leader in 1971 and is the clear leader now,” Burgess says. “If anything, it’s probably strengthened its position in these markets. That’s a great testimony to the technology roots of the business and the people that have poured their life work into what is a crucially important business.”
This proud history, however, was threatening to blind Insituform from other opportunities where its talents and its technology could be of great use.
“You can become so focused and enamored about what you do and your capabilities within it and then the markets change,” Burgess says. “You have this strong position, but it’s just not as valuable as it was 20 years ago. If you stay in that tunnel, you can switch from being a premium return company to a modest return company to a low return company. … You say, ‘Look, this isn’t about the past. It’s about this is where we are and if we want to continue in markets that are very competitive.’”
Burgess called the leaders of his business units together and initiated a review of the past and an assessment of the future.
“We tried to do some forward forecasting based on the improvements we felt we could generate in each of our businesses and modeled that out to see where it got us over time,” Burgess says. “We drew the conclusion that our core business would not get us to the premium return profile that we sought. At that point, you know you’re not going to fix it just inside with what you have.
“And so then we went to, ‘OK, let’s break down what we know how to do. Let’s look at opportunities that fit those skill sets and make sense for us to be able to tackle those confidently and to add value.’ We wanted to diversify into an industrial client base that would give us better balance as the company went through various business cycles.”
As you draw up plans and conduct round tables to figure out what your company could do, it’s critical that you keep your feet on the ground in making such plans.
“Many companies are in a low-return environment, but then they put together models that suggest or forecast that the situation will improve either through cost reduction or a turnaround in the market or a change in economic conditions or other things that they do,” Burgess says.
“Then they embark on that plan and two or three years later, it’s not there because the assumptions they made were overly generous. You have to be very rigorous about that. That was probably easier for me to do because I came from outside of Insituform. I’m not burdened with all the history. History can be a good thing, but it can also be a burden. So you have to be very rigorous about that. Because if you get that wrong, you might not see the situation as it truly is. That’s always a formula for making a bad decision.”
You need to base your decision on the facts as you see them at that moment.
“If there is a gap there, we have to do something different,” Burgess says. “Not blame it on the market or blame it on the capital structure of the company. We have to figure out how we can take the skills and the capabilities of this company and get to different markets.”
