It was 2018, and Mateo Alvarez, the newly appointed Regional Sales Director of Kinetic Solutions (KS), found himself facing an exciting and yet terrifying target: to double sales in two years.
KS produced drives that controlled the speed and direction of motors and had recently been acquired by Novatech, a Japanese firm aiming to become “the global leader for everything drive-related”.
When Alvarez joined, KS was experiencing a negative growth rate of 40 percent. After visiting KS’s offices in South Asia, Southeast Asia (SEA), and Oceania, Alvarez realised that it would take too long to inculcate a customer-obsessed company culture given the firm’s bureaucratic and “cruising culture”. So, he decided to start building the culture he envisioned—from scratch.
His efforts began to pay off within three months, and by 2024, not only had Alvarez met his sales targets, but KS had also expanded geographically and boosted employee morale to an all-time high. That year, he was promoted to the position of Vice-President of KS’s South Asia, SEA, and Oceania offices.
This is a story about undertaking cultural diagnosis, understanding its impact on performance, and developing strategies to lead effective change.
The Mindset for Embracing Change
Born in a small town in the Philippines in 1981, Alvarez was an electrical engineer by training and began his career as a power plant designer at a Vietnamese power plant. He moved to Swiss automation and energy management company Sennthal Energie AG’s business development unit in Switzerland, where he learnt much about European business strategy. In 2013, he joined Singapore-based French start-up company Axelec, with the aim of growing the company’s business in SEA. It was here that Alvarez learned how challenging it was to wean management off unproductive business partners and how to manage low-performing staff lacking a growth mindset. He eventually began hiring new staff while simultaneously commencing with layoffs. It was a humbling experience that exposed his knowledge gaps in finance, risk management and labour law, and spurred him to pursue an MBA.
Joining KS
In 2018, after having completed five years at Axelec, Alvarez was offered the role of Regional Sales Director for KS’s South Asia, SEA, and Oceania business. The company had been recently bought over by Novatech and was assigned aggressive sales targets—Alvarez had to double 2017’s sales numbers by 2020.
Established in Amsterdam (the Netherlands) in 1975, KS had once been a leader in the production of automation drives, but had since struggled to keep up with the competition.
To better understand the state of its operations, Alvarez visited KS’s offices in each region over May and June 2018. He found that not only were employees getting by doing the bare minimum, but operations at the offices were also stymied by bureaucracy, unequal rewards, and a high attrition rate. More alarming was that most offices had exclusive distributor partnerships which were not advantageous to KS’s growth.
Pushing a Hard Plan
Alvarez gleaned valuable insights into KS’s declining sales from those visits, and realised that urgent action was needed to meet his sales targets. He visited KS’s headquarters and presented two plans. One offered a sales projection of US$14 million by 2022 provided he spent significant time training the current staff. Even so, this projection would not meet the proposed sales target. The second plan was for the company to be number one in the region with sales of US$50 million by 2024, well-surpassing the current US$11 million in sales – but with significant restructuring of the workforce. Alvarez recalled, “I reminded them of Novatech’s vision, and how we currently had less than 1% of the market share. If this had to change, we had to revamp everything, which meant letting people go.”
The leadership team finally accepted the second plan and agreed to providing him with the required financial resources and the backing for layoffs, new staff hires, and increased marketing budgets.
Trimming the Fat and Injecting New Blood
Alvarez estimated that the cost of the entire layoff exercise of the sales staff would amount to nearly US$500,000. He researched into the labour laws of the respective countries, following which he let go of almost all the staff in the various offices.
After the layoffs, he shifted his focus to cultivating a more agile company culture. Employees were pushed to make decisions within two to three hours and then move on to the next issue. Team meetings were kept to an hour, on every Monday, compared to 10 hours over a week in previous years.
Alvarez personally hired each salesperson, relying primarily on interviews that featured high-pressure situational questions. Many candidates buckled under the pressure and exited the interview. Those who had an answer—even a wrong one—were shortlisted.
He also decided to prune away pre-existing distributors, by raising the price of KS products by 10%. As he predicted, many of them became disgruntled with the high prices, and eventually left.
With these changes in place, KS’s business grew with three months, and employee numbers doubled. Alvarez met his sales targets, and by 2024, the company saw a 23 percent compound annual growth rate.
Impact of COVID-19
When COVID-19 struck, Alvarez decided against salary cuts. Instead, he gamified the sales process with a point system to encourage sales growth from intense online outreach. Each employee was to make nearly 50 online sales calls a day—compared to two or three in-person sales calls earlier. Each online sales call earned the salesperson a point. A text from the salesperson to a client earned the salesperson 0.1 point, a video call was worth 0.8 points, attending a webinar earned them 1.5 points, and so on.
The gamification exercise was a resounding success, and KS recorded a 40 percent year-on-year growth in the first financial quarter of 2020. However, when the lockdown was lifted, the company immediately switched back to in-person meetings while their competitors continued with only online meetings. This nimble shift in strategy also contributed significantly to the company’s growth.
Powering Ahead
By having his ears close to the ground and thinking creatively, Alvarez engineered a massive culture shift at KS that sparked rapid growth. He demonstrated how cultural awareness and strategic leadership could instil agility and drive business growth.
This case study offers much insight into assessing and choosing appropriate change management strategies, which Alvarez used to propel the company to success.
The case study ‘Kinetic Solutions: Change Management for Company Growth’ was written by Associate Professor Tan Hwee Hoon, Mahima Rao-Kachroo and Dr. Lim Wee-Kiat at the Singapore Management University. To read it in full, please visit the CMP website by clicking here.
