Like Archer, Bain stuck with Reed and his strategy. Reed says he wasn’t overly concerned about whether or not that would be the case.
“We presented our strategy to them, so when they bought the business they bought it knowing the strategies that we wanted to employ, and frankly believing in them. They paid a premium for a business that wasn’t just a fixed asset that was stuck in the water, but one that had momentum, that had a vision, a strategy and a management team excited about growing the business going forward.
“If you’re selling a business that has those attributes, you tend to get a much better price for the business. You’d only buy a business in that case if you agreed with that strategy and had confidence in the leadership team to deliver on it. So no, I didn’t feel scared.
“That said, one of the things about working with private equity is that there is a board of directors who are very involved in your business, who get to know your business very well, who challenge on all aspects of anything from strategy through to operational delivery. I also knew that with a new board, I would be challenged, that they would question the strategy. They might agree on a high level, but when it came to the priorities within, for example, our product development, our product investment priorities and all that, they might want to know why I’ve got something as my first priority and something else as my fourth priority. I knew that that challenging would take place, but I think that’s a very healthy thing.”
In December 2012, the company issued $155 million worth of subordinated notes, which entitled bearers to a 2.5% discount on the company’s shares in an ASX initial public offering.
Despite this, Reed says he doesn’t expect the company will look at listing anytime soon.
“Bain typically holds their businesses for seven years, and they bought us a year ago. We’re years off that.”
Reed was the only person to remain on the board after the transition from Archer Capital to Bain Capital. When Archer first bought the business, he had some support in the form of CFO Simon Martin, who also sat on the board, but Martin left when Bain bought MYOB.
“When 100% of the board members change overnight, it becomes really important to get to know the new ones,” Reed says.
He says he built relationships with the board in much the same way he builds relationships with everyone he deals with.
“You need to make sure you listen well and that you’re present in all conversations. You need to make sure that you do spend the time – through thinking about the person, putting yourself in their shoes, thinking about what questions they might have, what concerns they might have. You can then be considered in your responses to their questions. You should contribute to the conversation as well, bring something to bear. You should ask questions of them, not just listen to their questions.
“If you do that in life, you form good relationships. You get to know people really well, you get to consider their needs and pre-empt them in most circumstances.
“That’s my strategy for forming relationships, period, and the board is no exception to that.”
Reed adds that boards expect their executives to have an excellent operational knowledge of the business as well as be across what is being presented. Here, a good memory becomes important.
What’s the one thing a leader should never say or do?
“I don’t think a leader should ever abdicate responsibility. Part of being a leader is being responsible for things. As soon as a leader abdicates responsibility, blames external circumstances, looks to pass the buck, they’re extremely diminished in being able to lead in the future.”
What elements are critical to achieving change?
“The first thing you need to do is build a case for change. You have to explain to people why things need to be different than what they are today, then you’ve got to paint the picture of the path to change.
“If you fail on the first, just explaining what you want to happen will never, ever work. You’ve got to invest enough time upfront to bring people along with you.
“Once you’ve got that, you need a clear path as to how the change is going to be done, what’ll be different. You need to paint a picture of the end state to help people move together, to make that change effective. But don’t underestimate the importance of making the case for change.”
What makes a workforce productive, or more productive?
“Knowing what needs to be done. It sounds like a really basic thing, but if you can paint a big-picture vision for the company and get them excited about what it’s doing, and then tie their role to the company succeeding, then people don’t feel like they’re just coming in and doing a job. They feel like they’re part of a team that is winning out there in the marketplace – whether that’s getting the best customer-service scores of anyone in the industry, or however you define that. Ensuring that vision is really well-painted and that people understand it, and then tying the link from the big picture to what the individual contributes.”
What qualities do you look for in your direct reports?
“If I’m looking to promote someone to run a large division or to lead a team, the first thing I look for is whether they fit into the culture of the organisation. They’ve got to be people who operate in ways that naturally fit the values of our organisation. That doesn’t mean everyone has to be cut from the same cloth, but they’ve got to be comfortable operating in ways that fit our values.
“I look for people who think, who challenge things, who question things, who are constantly thinking about better ways of doing things, of innovating. At times I look for people with specific skills in the discipline they might be running. So, someone running our software engineering teams needs to have an understanding of the engineering and development process. That’s a skill that’ll make them more successful in their role.
“I also look for people who I fundamentally trust. And it takes me a while to decide upon that.”
What’s your favourite source of leadership inspiration or ideas?
“I love talking to our clients for inspiration. I love getting out and talking to SMEs, hearing about successes that they have, the challenges they have, and thinking about ‘how can we make their lives easier’. That’s the biggest source of inspiration for me – getting about and talking to our clients.
“The other thing that I do is I read a reasonable amount. I like reading business publications. I like reading about the different strategies that people employ. It’s really easy now – there’s so much great content online that I read plenty about business management.”
What was the worst moment of your career, or your career’s biggest challenge?
“I’ve been very fortunate in my career and in the opportunities that have presented themselves. But I think about the time I was in Silicon Valley, and I think about the start-ups that I was in. I was really attracted to that ‘live and die by the sword’ idea, that it works or you go out of business. But it’s very difficult being in a business that is failing.
“It’s very difficult remaining upbeat, and driving and trying to get to an outcome, when, for example, the company you’re in is losing money and you’re not sure you’re going to raise the next level of funding. I think being involved in a start-up that ultimately wasn’t successful was probably the moment where, if I look back at when I felt the worst about myself, when I most questioned my own performance… from the outside it felt like a really attractive model, but from the inside I always felt that I would be in one of the successful companies.
“Academically I could almost separate myself, say ‘this is a great business environment, and this is a great way for an industry to innovate and move forward’. When I actually got inside, and the company was losing money and customers, and we had 90 days then we wouldn’t be able to make payroll, and we were burning more money than we were taking in… the pressure of that environment, and, ultimately, being part of a company that failed, they were probably the worst moments of my career. I learnt a lot from it, which is the other side of that.
“So many of our customers are having hard times now. So I often think back to those moments when I was struggling.”
This article first appeared on LeadingCompany.
Myriam Robin is a reporter for SmartCompany and its sister site LeadingCompany. She has degrees in economics, international studies and journalism. She likes writing about businesses taking risks and doing new things.
