How these three companies evolved to stay alive

You can learn a lot from Spencer Ogden, Artfinder and Howard Hunt.

by Jack Torrance
Last Updated: 17 May 2016

Learn how to evolve and innovate at MT's Future of Work conference on 23 June

‘Change is the only constant,’ as everybody is fond of saying at the moment. Whether you run a Chinese takeaway in Cardiff or a law firm in the City, businesses have to be willing to adapt if they want to survive in today’s disruptive, digital maelstrom.

According to performance consultancy firm CEB, the average company has experienced five ‘enterprise changes’ – for example a merger, restructure or change in leadership – over the past three years, but only one third of such changes are a clear success. So MT tapped up a few companies that have had to undergo big changes in their business models to find out how to do so successfully.

‘It was pretty scary stuff’

Launched in 2010, recruitment firm Spencer Ogden rode a wave of growth in the oil and gas industry to reach a turnover of more than £75m in 2014. But when oil prices started going south and the industry massively cut back on hiring, it had a big problem.

‘The impact on the business was just enormous – we were 74% oil & gas’ says co-founder and CEO David Spencer-Percival. ‘It was pretty scary stuff to be honest.’ The first step was to cut costs. While the business called in suppliers to renegotiate contracts, the unfortunate reality for a recruitment firm is that people are the biggest expense that can be trimmed.

‘We shed 70 people working in upstream oil and gas in the first two months of the year’ says Spencer-Percival. ‘It’s a very difficult decision to make, because you’re dealing with people – you’re not just shutting down factory lines of production.’ Nonetheless he suggests the best strategy is to cut hard and fast, rather than slowly ushering people out of the door, otherwise you risk seriously damaging the morale of those who remain.

Once that unfortunate business was out of the way, the company was in a position to think about growth. First of all it was important to reassure the remaining staff that things were on the up by coaching and training them. ‘I think that was a key thing to do – the shock and awe of the cuts and then bring people together...and get them prepared for the next phase of growth.’

With oil and gas still in the doldrums, Spencer Ogden had to diversify to start growing again. It expanded its power generation recruitment division (there’s still plenty of demand for that) and moved into the construction, transport and marine industries. Now oil and gas just makes up 23% of its business and while it had a flat year in 2015 Spencer-Percival says it is now in ‘a period of real growth’.

Learn how to evolve and innovate at MT's Future of Work conference on 23 June

‘Pivoting is never easy’

Jonas Almgren had a big problem when he took the reins of London-based start-up Artfinder in 2012. While the company, which set out to be an ‘IMDB for art’ (for the uninitiated, IMDB is a comprehensive online database of films that was acquired by Amazon) had lofty ambitions, its business model didn’t work.

The idea was to make money by selling posters of famous artworks but it had too many low-margin competitors for that to work. So the Swede, who spent 15 years working in Silicon Valley and eight in New York, decided the business needed to ‘pivot’ and become a place to buy original new artwork.

‘Pivoting is never easy and it wasn’t painless for Artfinder,’ he says. The company had grown to 20 staff, ‘but it was burning through cash quite quickly,’ so that number was cut down to five. ‘There were a lot of talented people on board but as you pivot you have to think of it as a restart and you can’t just keep moving on.’

‘You need to keep some of the original people to keep momentum going,’ he adds, but ‘you need to make sure that the people that you keep truly believe in the new idea and the new direction.’ Many of the old investors were ‘washed out’ and new ones brought on board.

‘If you carry too much luggage it’s going to be very tough to make a significant change,’ he adds. 'Most pivots that fail, fail because they aren’t pivoting – they’re still holding onto the original idea.’ Now the business is ‘doing tremendously well,’ says Almgren, and its headcount is back up to 15.

‘The culture is very different’

Some industries are as big as they are ever going to get. In 2016 you wouldn’t want to invest in a manufacturer of chequebooks or a DVD rental company. For Luke Pigott, who inherited his father’s direct mail company Howard Hunt, surviving was about moving into other, complementary lines of work.

‘10 years ago we decided that data was really starting to become quite interesting.’ he tells MT. So he launched Celerity, a data marketing agency, followed by a web development company and a ‘marketing concierge service.’

Making the move from traditional printer to a digital-focused company hasn’t been without its challenges. ‘If you’re a direct mail manufacturing business and then all of a sudden you’re betting that the growth in the future will all be around services and digital, then that is a big sea change and a learning curve’ says Pigott.

‘The culture is very different,’ he adds. Hiring and retaining digitally-savvy workers is more difficult than for those who work in more traditional industries, so the company brought on board three full-time talent managers.

But they didn’t have to discard all of the original company’s approaches. ‘The learnings you get from a manufacturing company, you can use use a lot of them in service-based businesses. The way you drive KPIs, the way you drive system processes, the way you drive reporting.’ It seems to have paid off. Cross-selling its services has helped its direct marketing division to maintain its revenues. The company’s profitability has tripled in the time since and turnover is up 150% to £80m.

Learn how to evolve and innovate at MT's Future of Work conference on 23 June

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