Zeus Kerravala
Zeus Kerravala is the founder and principal analyst with ZK Research. Kerravala provides a mix of tactical advice to help his...
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Zeus Kerravala | September 12, 2016 |


5 Focus Areas for Polycom's New CEO

5 Focus Areas for Polycom's New CEO From my perspective as a longtime Polycom watcher, here's my ideas for incoming CEO Mary McDowell.

From my perspective as a longtime Polycom watcher, here's my ideas for incoming CEO Mary McDowell.

As mentioned last week on No Jitter, Polycom has announced that Mary McDowell would become CEO effective immediately upon the closing of the company's acquisition by Siris Capital Group, expected this month or next month.

Mary McDowell, incoming Polycom CEO

McDowell is an executive partner at Siris, which she joined in March. She is a seasoned leader in the technology industry, having held previous executive roles at Nokia and HP-Compaq over her 25-year career. (She also serves on the board of directors of UBM, the parent company of No Jitter and Enterprise Connect.) Her experience in leading multibillion-dollar technology business units will bode well as she looks to move Polycom into its next phase.

The CEO shake-up shouldn't be a huge surprise to anyone, as new owners often change out the top leadership at the companies they acquire. Company goals change, and so too should the CEO skillset.

Before I get into what McDowell should focus on at Polycom, I would like to tip my hat to Peter Leav, outbound CEO. Since taking over the Polycom ship in December 2013, Leav had initiated a number of substantial changes that made the company an appealing acquisition candidate. The stock price has seen some ups and downs in Leav's tenure, but, as often is the case, that doesn't tell the whole story.

In 2013, the company reported an operating loss of $17.1 million and net loss of $18 million. One year later saw a dramatic difference in these numbers, with an operating profit $46.4 million and net profit of $42.1 million. By the end of 2015, operating profit had reached $87.8 million while it reported net income of $70 million.

Polycom has become a lean, mean fighting machine that is run more efficiently. Had the company kept going down the path it had been on prior to Leav's arrival, the stock price would be a fraction of what it was and the only acquisition would have been a fire sale. So, Mr. Leav, kudos to you: Job well done. I wish you well, and hope our paths cross again.

Life for Polycom goes on, and McDowell will need to focus on reinventing the company in this era of collaboration. As Polycom will be a private company after the Siris deal closes, it will no longer face the pressure of trying to meet Wall Street's short-term demands, which are often at odds with doing what's best for a company's long-term health.

I'm sure McDowell has her own thoughts on what to do once she takes the helm, but I would like to offer her some advice as a longtime Polycom watcher.

  1. Focus on User Experience and Expand the Definition - Polycom has always stood for a great quality experience. Growth in the early days came from offering best-in-class audio experience. The SoundStation sets, with audio quality that was second to none, became the de facto standards in conference rooms. The next wave of growth came from providing the best combined audio and video experience. With Polycom's video-enabled rooms, business users participating in meetings that were across town or across the globe had an experience similar to what they would have had being there in person.

    Moving forward, Polycom needs to broaden its focus on the user experience, taking into account the entire collaborative spectrum, including audio, video, content sharing, digital boards, and other meeting tools. Polycom should strive to be the enabler of outstanding meetings, and as such incorporate all of these tools into its strategy.

    A final note on experience, Polycom's historical excellence has centered on the transmission of voice and video, but the user interface has been poor to fair in most cases. An experience that delights includes not only great technology but also an outstanding user interface.

  2. Grow the Ecosystem - No vendor can offer all things collaboration, even though some do try. As a mid-size collaboration vendor, Polycom's best shot at becoming a dominant meeting room vendor will happen by being the glue that ties together solutions from a wide variety of vendors. The company has committed to being open and standards-based, which creates the most options for partnering and is key in building an ecosystem. The company has a great relationship with Microsoft and with a number of UC-as-a-service providers, but I'd like to see McDowell expand this strategy to emerging areas like team collaboration and virtual reality.

  3. Move the Market in a Direction Favorable to Polycom - This may seem obvious, but it's not something that Polycom has done a good job at over the years. A number of unique features and technologies, such as acoustic fence and noise block, allow Polycom solutions to go boldly where no video has gone before. For example, acoustic fence would eliminate prohibitive background noise and enable a manufacturing organization to place a video station directly on the noisy floor for use in maintenance, support, and other necessary communications. However, every Polycom demo I have seen has shown acoustic fence in a normal office environment. That's interesting, but not game changing.

  4. Think "Dynamic" and "Distributed" - The world is changing, with everything becoming more dynamic and distributed. The workforce is everywhere, and we need information instantly. IT infrastructure is becoming rapidly virtualized, containerized, and mobile, allowing us to buy modules of technology rather than vertically integrated systems. McDowell and team need to consider this when building products. If the new product doesn't support a dynamic and distributed workforce, then Polycom leadership needs to question whether the company should be spending resources on it.

    Short-term focus areas should include a better cloud strategy, mobile enablement, and a communications platform as a service-like offering.

  5. Continue the Excellent Brand Transformation - A few years ago I thought of Polycom as a stodgy, legacy video vendor with great engineering and poor-to-mediocre branding. Since then, the company has done a 180 with respect to branding. The multi-triangle logo gave way to the sleeker circles along with a revamped, modern Web page. The "Defy Distance" and "Unleash the Power of Human Collaboration" campaigns were two of the best ones the company has ever had, and I'd like to see the efforts in these areas continue.

    A core tenet of my research has always been that market share changes happen when market transitions. The collaboration industry is transitioning as younger workers have an entirely different way of working than their older peers. NHL great Wayne Gretzky used to talk about skating to where the puck is going to be, and Polycom's branding efforts today can help it be where the collaboration puck will be in the future.

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