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The Tough Get Going: Digital Island

When the worsening economic times hit New Zealand in the third quarter of 2008, Blair Stewart was in a unique position to gauge its impact. As managing director of low-cost telecoms services company DigitalIsland, Stewart could see the calling records of his customer companies.

These records are accurate barometers of business activity. And Stewart could see client companies’ business was slowing down: calling activity in many companies slumped by as much as ten to 15 percent.

The knock-on effect came shortly after. DigitalIsland’s sales teams started reporting customers were taking a wait-and-see approach. As the economy tightened, they didn’t want to commit to long-term contracts. “A limbo state kicked in,” says Stewart.

It was new territory for a company that had previously hoovered up business, scoring awards at the Deloitte/ Unlimited Fast50 Awards in both 2007 and 2008.

Digital Island is not in a business niche that is naturally resilient in a downturn. “We’re not selling lipstick or something that everyone uses or something that booms during a recession,” says Stewart. “We’re a standard company supplying services to businesses.”

What to do? Well, the company set out on an almighty spring clean.

“When things get tough, you have to improve every single thing you do,” says Stewart.

By the start of 2009, DigitalIsland had been given a very thorough mop-through. It kicked off with a close look at the underlying business model. It pored over each and every product: consigning poor performers to the dustbin. It checked out suppliers: eliminating a few and striking up new relationships with others.

And it sharpened its focus. “Our whole offering is based on price and service,” says Stewart, “so we looked to improve both of those aspects. We went through all of our customers. We had a look at ones where we thought we could make some improvements to their pricing. Then we contacted them and said ‘we recognise you’ve grown or things have changed and we can offer you better pricing’.

“We also looked at how we can improve our service levels and we put more resources into our customer services and account management teams. We started shortening the period in which we outbound contact our customers just for standard account management.”

All this year, DigitalIsland has continued to sweep through its operations. Stewart believes businesses should leverage available technologies to the max during tough times. So he’s brought in Salesforce software to help manage the sales process. And he’s introducing a new document management system to help boost efficiency companywide.

Digital Island has also put itself through a rebranding exercise to re-inject some new sparkle into its image.

Most importantly, Stewart has rejigged the staff mix so there’s more emphasis on looking after existing customers.

“For us, it’s a case of get the basics for running our business right and [then] improving them,” says Stewart. “That comes down to managing your debtors very closely and communicating in your business what’s going on. People laugh: our management team eat lunch together most days of the week so we have a miniature strategy session every day of the week. I don’t know if there are many other businesses out there that do that but as a result we’re constantly well informed and making daily decisions about the running of the business.”

Maintaining forward momentum is vital, says Stewart. It’s one of his biggest bugbears.

“When times become tough, you need to make better decisions faster than ever. We see a lot of companies go into a limbo mode of indecision. They just wait and see. This causes just as much damage to companies as the recession.”

He also emphasises the need for intelligent cost savings.


The three founders of DigitalIsland: (L-R) GM Blair Stewart; commercial manager Stuart Cowdell; and operations manager Glen Larsen.

 

“I’m an advocate of targeting areas where you can save the most and where you will make the best impact on the business,” he says. “I’ve got to laugh – just after 9/11 I was sitting in a management meeting for an airline and we were discussing whether or not to make staff bring their own pens to work. That’s a good example of ridiculous cost saving that would have had a completely detrimental affect on the business.”
The spring clean is paying off.
DigitalIsland has continued to grow and improve profitability during the past 18 months. It has achieved greater than 25 percent revenue growth in its 2009 financial year.

“We’ve implemented a whole lot of things to make our business work,” says Stewart. “So now we’re trying to take those lessons and, where appropriate, make them available to our customers. We could, for example, make adjustments to products and reporting systems to help our customers get through tough times. I want our company to become the best choice of a telco to be supplying during a recession.”

Advice for growth:

• Be positive. The attitude of management teams has an incredible effect on the business. When you walk into some companies you can just feel the doom and gloom.

• Don’t go on holiday right now. A lot of business owners think they can take off and when they come back everything will be right. The reality is you’ve got to buckle down and work harder than before.

• If you really must take a break, go on a training course and bring that value back to the business.
• Do more planning, analysis and decision-making. If you thought you were busy during the boom times, you should be twice as busy now. Don’t sit on your hands waiting for the business to sort itself out. Get in there and make it right.


www.digitalisland.co.nz






 

 

 

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