Genesis Automation - Company Background
Over its thirty-year history, Genesis Automation grew from a tiny start-up whose three founders operated out of a rented warehouse bay to an international player with more than 3500 employees worldwide. Today, customers generally perceive Genesis’ product as top in the market, and it is used by more than 80% of North America’s oil and gas transmission companies.
The company specializes in automating oil and gas pipeline systems, allowing transportation and distribution companies to monitor and control their pipeline network from a centralized location. In the mid ‘80s, deregulation of the oil and gas transportation industry led to an explosion in demand for Supervisory Control and Data Acquisition (SCADA) systems. In addition to real-time control and automation, Genesis developed back-end solutions to provide customers with billing, nomination, leak detection, batch tracking and a host of other applications. To date, Genesis has been a minor player in the water, wastewater and electrical transmission markets. However, it expects most of its future growth to come from these areas as they undergo deregulation.
The worldwide market for energy transmission control systems hovers at approximately $700 million per year. As a relatively small market, it has not interested many larger players, which affords Genesis some protection. In 1995 Genesis attempted to diversify out of the SCADA market into the multibillion custom business services/solutions market, but the venture produced three successive years of losses and was spun off to "live or die on its own" in 1998.
Since 1990, Genesis successfully increased market share through aggressive pricing and acquisitions. Sales in 1998 and 1999 were particularly good, as customers clamored to upgrade their systems to avoid the much-publicized Y2K meltdown. Management anticipated a slowdown in sales during the first quarter of 2000, and expected sales to recover by mid-2000. However, throughout 2000 and well into 2001 new contract awards were slow and backlogged work quickly disappeared. For the first time, new recruits were not aggressively pursued, and rumors of layoffs began to circulate among employees. Productivity and morale sank to an all-time low and turnover became an issue.
Despite repeated assurances of an imminent upturn from Sales and Marketing, Genesis’ situation continued to deteriorate. Teledata, its nearest competitor, did not seem to be suffering, and made matters worse by posting several quarters of market share improvements at Genesis’ expense. By July 2001, Hoffman could no longer convince himself that there was nothing to worry about. He scheduled upper management to attend a strategy session to determine what was happening, and what to do about it. The three-day meeting was held at a dude ranch 45 minutes outside the city. The ranch specializes in executive getaways, and Hoffman hoped that the isolation would remove barriers and improve communications among the various departments, factors so critical for reaching consensus.
Representatives from Sales and Marketing admitted that the current product line was not as attractive to customers as it used to be, and further indicated that smarter end devices using open standards had created the risk of disintermediation. Market studies revealed that field device manufacturers were abandoning their proprietary protocols and switching to standard access methods (such as ODBC), which would allow data to be retrieved and manipulated by any number of Windows applications.
Sales and Marketing’s report was mirrored by R&D, who further indicated that the next version of the product was Genesis’ response to the open-standards game. The new product would allow the user to effortlessly move data between their SCADA system and their Windows applications.
Engineering reported that the market share problems were related to product quality and customer service, as both metrics were falling in recent surveys. Engineering suggested that this decline was caused by premature software releases and the subsequent lack of attention that R&D gave to the current product while pursuing the next.
Service pointed out that their employees’ average experience level was lower than in other departments, and that they were so busy fielding customer concerns and traveling to site that they didn’t have time to train.
After two days of discussion little progress had been made, and Hoffman had no expectation that the third day would be any different. Instead of kicking off a final day of round-table discussions, he challenged senior management to work together to come up with concrete ideas addressing the problem within 30 days. To emphasize to his managers the gravity of the situation, Hoffman ended the retreat early with the prophecy that, if they failed him on this, he was not the only one who wouldn’t be working at Genesis in two years time.
Back at the office Hoffman was unsure that his executives could effectively tackle the problem, so he contacted business strategy consultant Catherine West. On previous occasions he had used Catherine to find creative solutions to difficult problems, and he hoped she could do so again.