When I interviewed Mike Ettling back in April 2019 he had just taken the hot seat at Unit4. He inherited a mixed bag of fortunes but told me about a bold plan to transform the company into a contemporary ERP vendor that sold modern intuitive software to people-centric businesses. His efforts centred on internal matters first; reinvigorate the brand, revamp the internal culture and double-down on the verticals where their product delivered most value. I caught up with him over Teams to discuss how his first year had gone and to see whether he had managed to stay true to those principles in the face of a global crisis.
Hi Mike, how’s things?
Very good. I did my first international business trip last week. I came into the UK for a week and left on Saturday.
What was the flight like?
Empty. Heathrow’s only got two terminals open which makes it really pleasant. The only downside is you can’t get anything unless you want a soggy sandwich from WHSmith.
Is there a noticeable difference between the UK’s attitude towards lockdown and the attitude of most Americans?
Yes, there’s a big difference. I was back in the UK in mid-June and it really struck me how different things were. We’ve been going to restaurants in the US since the start of June and beaches have been open for about six weeks. Of course, there is still social distancing, fewer people and one way systems but the US is getting back to normal a lot quicker than the UK.
Is that a concern for you?
Of all the markets we’re operating in the one I’m the most worried about is the UK because I could sense that there’s a different level of anxiety to what I’ve seen in other countries. There’s not the same rush to get back to work.
What’s been your strategy to ensure Unit4 remains robust and resilient?
We did really well in Q1 but I realised we needed a very structured approach coming into Q2 so we developed a detailed plan of action – we called it our ‘Dyke Strategy’, like the Dutch dykes. We didn’t do a load of scenario planning so no one was allowed to try to guess which sized wave it’s going to be or how hard the impact would be felt, because when you do that you talk yourself into one of the scenarios.
We said there’s only one scenario and that’s the original budget and everyone must focus on that. We then very aggressively put all these dykes in place to protect certain parts of the business. Avoiding redundancies was the most important thing so that was the last dyke. We didn’t want to take marketing spend out – we want to keep marketing and grow, so that’s the second last dyke. And we’ve just told everyone the budget’s the budget so we’re not going to tinker with bonus provisions. We’re going to keep providing as if we are 100 percent achievement. That’s the third last dyke.
Where did the idea of a dyke strategy come from?
The dyke was a beautiful analogy given our history and where we started. We were very transparent about that in terms of the budgets. Here’s the dykes. Don’t focus on the waves. That created a picture for how we’re going to tackle this which everyone could rally around.
Have you had to cut other costs out of the business to remain profitable?
We took out about 18 million euros of cost in two weeks. All the dykes were built and executed and that really created a huge amount of defence for our business.
Are there some longer term lessons for you there?
I’ve been attending weekly networking sessions; one is run by an investment bank and one by a mid-market CEO network. I remember in one of the early calls, Craig Conway, who was the CEO of PeopleSoft and now sits on the board at Salesforce, saying Benioff’s biggest regret from the last recession was he cut too deep, and then you don’t ride out of it fast enough. That stuck with me and that’s why I said we don’t want to touch marketing and we don’t want to let people go and then have to rehire later.
And what has revenue and bookings looked like over the last three months?
April bookings slowed down a bit because the climate was getting tougher. May was the most difficult month in terms of bookings but we actually have enough pipeline and opportunities, that in the absence of COVID, I would be saying that we beat budget. So we’re in a really strong position.
Have any of your customers been badly affected by the coronavirus crisis?
Of our verticals, the one which has taken the biggest hit is higher education. I think a lot of organisations were really caught flat footed as they didn’t have a digital model. But in the main our customer base has been fairly resilient. We were expecting an avalanche of people asking for subscription holidays and cash deferrals but in reality the numbers have been tiny.
What are the positives that can be taken out of the crisis?
There’s some good things which have come out of this. People have loved the connection with their families. They’ve loved that they don’t have to commute and being able to build a staggered day to take time to have breakfast with the family for example. Everyone’s still working really hard but being able to do that work around the family environment has been a real plus.
Do you think the changes to working environments will last?
We’re not telling our people you must work from home or you must work from the office. We’re saying work where you’re comfortable. If you need to come in the office that’s fine as long as you stay safe but there’s no pressure on anyone to do anything they don’t want to.
Do you think the lockdown has been long enough to force lasting change in peoples’ habits?
That’s a really interesting question and we have been having this debate on the CEO forum. We’ve all managed to support our customers and even win new business working remotely but if one vendor starts flying out to see new prospects others may feel at a disadvantage. That could force others to fall back into old ways very quickly and that would be a shame. But in general, I do think the flexibility to work from home will stay for most people and for us it will just be an extension of what we were already doing. We had already hired a new head of workplace experience and he’s already actively looking at how we’re going to redo our footprint and our facilities because I want a very different environment based on this new model.
How will Unit4 and other companies we able to ensure that positive change is lasting and we don’t just go back to old ways?
That’s where leadership comes in. As a leader, you can’t not use this crisis to change. Leaders must put their people first and really think about what kind of organisation, what footprint, what landscape do we want for our business. We’ve already said that 50 percent of our board meetings will be on Teams from now on and we have budgeted for 50 percent less travel across the board in 2021. Changing habits is difficult but you’ve got to lead your people to a better normal.
What measures have you brought in to cope with such a sudden change to working environments?
In terms of technology we were very fortunate because we had already put things in place 18 months ago that really helped us. We had moved the whole company from desktops to laptops and we had integrated Teams as our collaboration tool. We had also abolished desk phones so everyone uses a virtual number. When lockdown happened we weren’t scrambling to buy hardware or licenses.
I remember the single biggest thing was advocating to everyone to remember to hit the video button. That was the extent of our transformation. We were using it already, can you just hit the video button now please?
Ok, so you had the technology already but what did you focus on to support your people?
It was clear to me that the single biggest thing we had to focus on was the wellness of our people. We put all our energy into that so we had the foundations to deal with all the other issues.
Can you give me some examples of the kind of things that you had to do for your people?
We launched what we called our ‘Fit for You’ programme with daily fitness classes, meditation sessions, and training around how to avoid Zoom burnout and ensure that everyone was looking after themselves at home.
We also started a kids programme with material for parents to use to help keep children entertained and motivated. And we also sent out a resilience gift to everyone. Every single person in the company got sent a yucca plant for their home office to thank everyone for their resilience and to put some more oxygen into their home offices. We also extended our employee assistance programme worldwide so everyone had access to counselling programmes if they needed it.
My view was if our people are mentally and physically fit then they’ll continue doing the right things for our customers.
Have you managed to stay true to the ideals of leadership and strategy we talked about 18 months ago when you first joined Unit4?
I think that’s really interesting. So, if I talk about the Unit4 perspective, we had done a lot of work last year about repositioning the brand, setting out our positioning around people experience and then launching a lot of programmes around creating a great people experience internally.
We launched our work life balance policy where there’s no limit on leave. Take what you need. Again, in one of these CEO forums, one of the issues in the early days, which was causing a lot of CEOs anxiety with their people was people were saying, “well, I have to take time off to work with our kids at home, am I going to run out of vacation time come the end of this and I want to go on holiday?” They’re now saying, “I don’t have that problem.”
I think the stuff we did in the last 12 months prior to this really helped focus the organisation, focus everyone’s mind on our own people experience – because I always said, “yes, we’re in business for people, but to be the best in the space we need to create an extraordinary people experience internally.”
I think the other thing is having a strong sense of purpose and being authentic is crucial.
We’ve talked about your leadership style in previous interviews – how would you say you have performed?
Well, I’ve been true to that style right through this crisis. I’ve been very authentic with people and very open about our plans. I’ve escalated communication and been very transparent about the dyke strategy.
I also think the purpose I have talked about since joining Unit4 has played well – we had built strong purpose around being in business for people leading up to this. I would contend that companies who have real purpose will survive through this stronger. Companies who were weak with purpose before will not survive this in the same way.
Turning to the broader ERP market, what do you think will happen in the short term? Will there be any casualties along the way?
I do think there’ll be casualties because I think what companies will do during this period is look very carefully at their whole landscape. We’re doing that internally. It’s a great opportunity to look at everything and ask yourself, “why are we doing that in the first place?” When we built the dyke strategy, what struck me as interesting was things which were sacred cows four weeks before suddenly got ripped up when we realised what was actually important. It really intrigued me how we could achieve so much so quickly as a result of this and I think companies should be using this opportunity to relook at everything.
Perhaps, but many businesses are struggling just to keep the lights on. How will they find time for that kind of root and branch analysis?
It will ultimately help you keep the lights on. Particularly companies that are 40 or 50 years old like we are. Most businesses build up a legacy over the years and often there is a simpler way to do things. I keep saying to my people “call up the CEO of a high-growth cloud company and ask them what their landscape is.” You won’t find the level of complexity which you build up over 50 years. I think it’s part of surviving that you have to do this.
Do you think that there will be a significant drop off in spend on ERP applications in favour of keeping the lights on collaborative technology?
I think there’s going to be winners and losers in ERP. At the enterprise level I think there’s going to be some serious looking at it in terms of exercises like I’ve described. How do we optimise this? What do we need to do? Do we really need this massive new upgrade?
In the mid-market I believe vendors with the next generation of modern architecture for ERP are going to win. What do I mean by that? It’s not just about whether its multi-tenant or micro services? It’s about what’s your landing page now? Four months ago my landing page was Outlook. Now its Teams and I’ve got Unit4’s Wander on the left of my Teams folder and it keeps telling me to approve invoices and do stuff. So when I say modern ERP, ERP which has faced this, which works through the new landing pages which people have now adopted over this crisis.
We are cautiously optimistic that we will see new business pick up in the mid-market. I think it will be very different in the enterprise side where the players which augment ERP – the likes of ServiceNow or the RPA players, will see a massive boom whereas the vendors trying to sell huge ERP upgrade projects will find it very difficult.
And finally, what’s the one piece of advice you would give to a business leader that was struggling to come to terms with the complexities of a crisis?
Find your tribe. Find your peer group. I am extremely grateful for the CEO networks I had access to and was able to share our stories and vice versa. Those things were extremely valuable and I encouraged my team to go find similar ones during this crisis for themselves.
I think that peer to peer support is crucial. Some people think that leadership has to be about being a strong individual – I made the decision. Well, the best decisions are made by a village with a lot of input and a lot of insights. If you can create those environments it will help you benchmark your decisions and you will take a lot of comfort from talking to other people in similar situations.