“Jeff, call the office immediately. It’s very important.”
That’s the email I received in 2005 when I was on vacation with my wife on a 10-day Mediterranean cruise. We’re stopped in Santorini, Greece getting ready to rent some mopeds, which, in hindsight probably wasn’t the best idea (more on that later).
I check my email, which isn’t unusual considering my penchant for checking it, constantly, all the time, too often, and sometimes in an unhealthy way, but I digress.
I call the office.
“Jeff, we just got a letter from Nortel (our largest supplier). Effective August 15th, we’re no longer an authorized dealer.”
I’ve received lots of bad news over the years. Nothing ever as bad as this, especially when I’m on vacation, on a small island in the middle of the Mediterranean.
I speak with as many people as I know at Nortel to try and first, find out what happened, and next, see if I can convince them to rescind their notice.
Nortel cut our dealership because of grey market activity. Our company was an authorized dealer, and other than the occasionally used phone, everything we bought was through the proper channels.
The folks at Nortel weren’t changing their mind, which meant that our company was in a bad position. Nortel product represented a major part of our business, and not having the dealership meant we weren’t able to access tech support, and technically, no longer sell their product.
Rewind 6 months prior. Our company acquired one of our competitors. At the time it was a risky transaction, mostly because of the dollars involved, which for me, and at the time, was a large risk. It seems that the owner of the firm we acquired, who was at this point my staff member, was using our login credentials, unbeknownst to me, to generate grey market licenses and sell them to a grey market reseller. There were hundreds of transactions using our credentials, and the large number of grey market activity using our company’s credentials had raised red flags. I only discovered this many months later, but by that point, it was too late.
One rogue staff member badly damaged our reputation.
We were screwed. I was humbled. Humbled because up until that point we were doing well. Our company was growing, and the worst part was, our reputation took a hit. Our competitors used this as an opportunity to spread misinformation about me, and my company, which made matters worse.
Our company was defined as a Nortel dealer, so it goes without saying that they were a big part of our business. The impact was significant, and I needed to act fast because the misinformation was growing like cancer and became our vulnerability.
During this period, and for the next few weeks I wanted to stick my head in the sand and not come up. But I couldn’t do that. Not only was I humiliated and deflated, but, worse, the very survival of our business was at stake. It’s at this moment when my fortitude was tested to its limit. I felt like a failure. I came to realize that the decisions I was going to make in the next few weeks would define my business, so, I had to act decisively, especially in light of all the phone calls I was receiving from clients.
Should I continue to sell Nortel, but now as a grey market dealer, or, choose a new product?
What is our messaging going to be to our current team, and clients?
My fight or flight survival instincts kicked in, and I went on the offensive. My very business depended on the actions I was going to take in the next few weeks, and every day that I wasn’t battling the issue, on my terms, meant we were being defined by this issue.
My Next Steps:
Up until that point in 2005, I had put out many fires, but, none as serious as this one. I knew though that if I didn’t act decisively, and didn’t control the message, the problems would only exasperate.
The first thing I knew I needed to do was to pull my head out of the sand. I developed a plan of attack, which included looking for an alternate supplier and retooling our company as quickly as we possibly could. It also meant being upfront and as forthcoming as possible with our customers. I came to realize that I needed to be resilient in the face of adversity and that if I were able to successfully battle this issue, in the end, it would strengthen both me and my company. I was inspired by the Og Mandino quote I had read: Always seek out the seed of triumph in every adversity.
My seed of triumph was going to come in three different ways: 1. How we, as a company, are going to battle this issue, 2. what lessons I would learn, and what I would do moving forward to inoculate our company moving forward, and 3. how I was going to overcome adversity,
How we, as a company, are going to battle this issue
In the end, being cut-off by Nortel proved to be a blessing because they forced our company to find an alternate supplier three years prior to Nortel’s bankruptcy. As our competitors struggled in 2008 with how to react, our company was not only well prepared but, fully engaged with our new vendor, Avaya. We grew our Avaya practice to become one of the largest SMB resellers in Canada, I had a seat on the Avaya advisory council, the only Canadian on the council, and, in the end, the sweetest irony was that I was consulted quite extensively post the Avaya-Nortel merger on how to collapse the Nortel SMB product portfolio into the Avaya family once Avaya bought Nortel’s telecom assets post Nortel’s bankruptcy.
Avaya proved to have a superior product, the market wasn’t nearly as competitive, and as we moved into the 2008 recession, I doubled down on growth. As our competitors struggled with the downturn in the economy, made worse by Nortel’s bankruptcy, I decided that I was going to follow Warren Buffett’s expression: “Be fearful when others are greedy, and greedy when others are fearful.”
We hired any good engineer or salesperson that literally came to our door. We doubled down on advertising, and fortunately, grew both our top, and bottom line through the 2008 recession.
What lessons I would learn, and what I would do moving forward to inoculate our company moving forward
Having only one major product line in our product portfolio, and being so dependent on one company, was a major liability. I recognized that once we successfully on-boarded a new primary product, we needed to establish a second strong product in our portfolio. I recognized that although this second product wouldn’t completely inoculate us in the event that something like this should happen again, it would help mitigate the disaster.
So, here’s my word of advice: if your company is completely dependent on one primary product, then find a second.
I also learned that I, and our company, needs to play by the rules. It doesn’t matter that our competitors might be buying grey market. If you play on the shady side of business it will come back to haunt you. You will invariably get caught. Maybe not today, but, eventually.
How I was going to overcome adversity
As difficult as it was to recognize the possible moments of opportunity when I got the email while on vacation in Greece, I later came to realize that you can either let adversity define you or, you can define adversity
Successfully battling this issue empowered me, and helped make me a stronger person, better equipped to deal with other battles as they arose. And the bigger our company grew, the more shit our competitors threw at us, the more staff and customers issues we had, and the more battles I had to fight.
This Nortel issue became a defining moment for me. I view my business career as pre-Nortel 2005 and post Nortel 2005, and I can promise you, although I definitely don’t want to live through another humbling experience like that again, I do recognize two things:
- There will be more adversities I will face in my life, and what matters most is what I will learn from it, and how I will turn it into a triumph.
- If you don’t know how to drive a moped and have never driven one before, don’t assume it’s like a bicycle. I fell off, but, I did get back on.
I ultimately stepped aside and out of the President role in early 2018, you can read more about that here: My Journey Post Business Sale as I Sail Into a New Harbour