CEO McBee Takes Slow and Steady Approach to Solving Mitel’s Problems

by Matt Klassen on June 23, 2011

Mitel CEO Richard McBee

While it must be an exciting honour for people to be invited to ring the bell at the NASDAQ stock exchange, for Mitel CEO Richard McBee his invitation on July 5th could mean so much more, it could ring in a new beginning for Mitel. But don’t ask McBee to see such symbolism, as he scoffs at the notion of one single event changing the fate of the Ottawa-based telecommunications company.

As his sixth month anniversary on the job draws near, McBee is cautiously optimistic about the direction of the company, confident that it can recover from its devastating IPO last year and once again compete in the SMB communications market.

But if you thought Mitel’s transformation would be a quick and easy process, well think again, as McBee’s mantra through this restructuring and refocus period has always been, “one day at a time,” a slow and steady approach to the task of righting Mitel’s ever-listing ship, a task made all the more difficult because Mitel’s struggles are not caused by one or two problems, but by a thousand little ones.

Over the past year Mitel’s struggles have been well covered here at TheTelecomblog, a company that despite a strong product and strong staff simply couldn’t find its way in the enterprise communications market. It’s a problem McBee recognized immediately, and has spent the last several months trying to correct.

In fact, on the first anniversary of Mitel’s devastating first day on the public market, McBee promised measures towards ongoing restructuring and refocusing his company, as a way of making the Ottawa-based telecommunications company competitive again. But just how did Mitel get itself in this mess, and what steps is McBee taking to get it out?

While there are dozens of reasons why Mitel finds itself in its current predicament, one clear antecedent has been that Mitel’s eyes have been bigger than its stomach, for lack of a better phrase.

Lacking focused leadership, Mitel’s direct sales staff began eyeing large corporate clients (more than 5000 phone systems) as the true prize of the communications world, not realizing the time and resources it takes to land, service, and maintain contracts with such sizeable clients. Simply put, sales to large corporate customers can “suck you dry,” of both resources and inventory, as McBee puts it, leaving you short product for your other clients.

But then again, Mitel was never built as a large enterprise communications provider, so it should come as little surprise that it struggled to fill the roll. As part of his ongoing strategy McBee will forego such large corporate clients, bringing Mitel back into the realm where it feels most comfortable, that is, servicing small and medium businesses (100 – 2500 employees).

It is the SMB market that McBee believes Mitel can be the most competitive, taking advantage of the fact that competitors Cisco and Avaya are fully geared towards large corporate clients, a fact that can easily be used to lure away both those companies’ smaller clients.

In addition to moving away from direct competition with Cisco and Avaya, McBee has promised that the company will stop competing with its resellers, a point that has left many distributors frustrated. Whether or not this means scaling back Mitel’s direct sales staff remains to be seen, but McBee is clear, “We’re not going to compete with our sales partners like we did in the past.” Sure it may only be solutions to a few of Mitel’s issues, but with a strong product this refocus clearly puts Mitel back on the right path.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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