Tragic Tale No.003

This is the third in a series of tragic transformation tales, shared by a diverse group of business leaders, in conjunction with the launch of Angie’s book, TransformAble: How to Perform Death-Defying Feats of Business Transformation.

Today I’m talking to Lee Senderov, Chief Marketing & Digital Officer of Foundation Partners Group, as she revisits a transformation tragedy from her past.

Angie: This is the story of a very successful gaming startup with a single very profitable game that they built out over the course of eight years to worldwide success. But games are not immortal, even if their characters are, and this game is now plateauing. So now what? Lee, tell us about it.

Lee: The game had achieved significant revenue, a large user base, and very solid profit margins. It had already lived far longer than many games, and the company wanted to maintain profits from it as long as possible, while concurrently investing in new products. I was brought on to head up marketing, a little over a year after the decision was made to build new products.

Angie: This is a common story for successful startups. They surmount all the perils and pivots to gain product/market fit, then achieve the next huge hurdle of growth, work really hard to make the company profitable, and bask in the glory for a bit—if they make it that far. Then they realize they must do something new in order to expand. But it’s not easy.

Lee: That’s understating it. The goal was to transform that single-product company into a multi-product one. And a lot of time and money went into doing a lot of things in a very short period. Developing new games in house, buying companies, replatforming the original product, changing the culture. It was a massive undertaking that ultimately failed to produce anything as valuable as the original product.

Angie: That’s a lot happening at once. Let’s unpack some of that. There are four things in there: new game development, acquisitions, replatforming, and culture. Let’s start at the beginning. The company realized they needed new products and…?

Lee: They hired engineers and designers and started developing four new games in house. After about 18 months, which is when I joined, the games were only partially functional. And product/market fit had not been worked out. Who were the customers? No one had any idea.

Angie: Placing bets on multiple games seems to make sense, to have a portfolio of options, but it sounds like they dove too deep into details before proving the concept. This is a pitfall I talk about in my book. Tell me more.

Lee: Because games typically have a short lifespan, you’re right, it wasn’t a bad idea to develop multiple concepts at once. But the company skipped thinking about the customer. And it was managed by someone who had always managed a single engineering game, who now was trying to run four separate teams to rapidly build out four totally new products on different technology stacks concurrently.

Angie: And what about buying companies? Did this happen at the same time?

Lee: No, that came later, after the four products were under development. Leadership felt it was taking too long internally, so they bought a couple companies, a game company in Sweden and a distribution platform company in Australia.

Angie: So now you’re integrating companies while still building the other products internally?

Lee: Yes, while we’re developing the go-to-market strategy for those four games. And this new game, though successful in Sweden, needed to be adapted for local markets like the US. And that work was massively underestimated. Oh, and did I mention? We were also replatforming the core product, because what was high tech in 2003 was now way behind in 2012, which meant rebuilding the entire game—with all its assets, all of the custom creations of every user, in eight languages, on new technology. It was crazy.

Angie: Wow. So we have games, acquisitions, and a massive replatform necessary to keep the core product alive. All at once All started within, what, a 2-year period?

Lee: It felt like insanity. And we haven’t even talked about the culture.

Angie: We definitely can’t leave that out.

Lee: This company had a very unique culture. Everyone went by their gaming name—

Angie: Wait. Seriously?

Lee: Yes! To this very day, I still don’t know the actual names of some of my ex-colleagues. I can’t find them on Linkedin because I don’t know their real names. I never even met many of them. They could work from anywhere, anytime, and meetings happened in-world.

Angie: “In-world?”

Lee: We had a virtual version of our office, and our avatars would meet up in-world.

Angie: Huh. OK. Unusual. But why was that a problem?

Lee: Some of our employees only interacted in world, under their gamer names. This was their life. But with all the growth efforts, a lot of new people, who were unfamiliar with that life, were brought on all at once. Also around this time, in an attempt to change the culture and increase productivity, the leadership team decided that people should be in the office. In real life. But only the new people. That obviously created a lot of tension.

Angie: I’m starting to see the core issues here. When things spiral like this, where it seems like every new major decision that is intended to improve things instead introduces more chaos and dilutes focus, there’s an underlying root cause. It sounds this change to a multi-product company was not treated like the truly transformative effort it was. Did leadership realize what they were taking on?

Lee: We all recognized that a business model and culture change was inherent in what we were doing, but that took a back seat to building new products. Yet the entire company was facing a new way of life. The marketing team went from supporting one product line to five. Engineering was building four new products, replatforming the core business, and localizing an acquired product.

Angie: This is a tragically familiar situation. Leadership inexperienced in transformation fails to recognize that what they are facing is a business transformation, and tries to treat the parts like typical projects. But a business transformation requires expert orchestration and organization. And an experienced leader. A person who knows that at the heart of the matter they are transforming a system of people, and operates accordingly, to bringing clarity and focus and taming the chaos.

When there is a lack of transformation know-how, one obvious symptom is that feeling that things were out of control. A related, and equally obvious sign, was how the company ran too deep, too soon, into detailed work. Coding new game concepts without identifying the customer. Buying a game and dramatically underestimating the effort required to make it work in other markets.

Lee: It felt like we were doing too many things at once, that we were placing too many bets. But that’s a hard decision that never has a clear answer—how many bets to make on the future at once?

Angie: That’s hard, for sure. We can’t know for sure. Let’s assume many multiple bets at once was smart, philosophically. It is possible to do all of this at once, with the right framing, focus, expertise and human capital. But it requires understanding you have a massive transformation on your hands, and treating it that way. With the right leadership, rigor, and change management.

Lee: That’s a good summary of the situation. Maybe we needed different leadership for the situation.

Angie: Maybe. But it doesn’t have to be “or.” A product expert “or” a transformation savvy leader. It can be “and.” To execute that, leadership needs to realize what they are facing and get expert help. Hire a transformation executive to lead the transformation. Imagine a COO-like role but focused on transformation, where they come in and run a 2-3 year transformation of the business, then set everything into a healthy future state operating mode—where new products are regularly tested and introduced—and then they move on to a new job elsewhere.

Lee: You’re right, it could be “and.” The big lesson for me was that going from a single product company to a multiproduct one requires completely transforming the company’s business model and culture. And that this takes much longer and is way more complex than I had originally anticipated.

Angie: This is a great story, because this happens all the time. A company has optimized their org structure and operations for a single product, honed them over the course of 5 to 10 years, or more. Then one day they realize that the product is plateauing, and they need new growth channels. However, when they build that next product—or multiple products in this case—they have many more challenges than they realize. They have a massive business transformation on their hands, but don’t realize it.

Lee: It really does happen all the time. Many startups hit this point…

Angie: …And so do big companies—it’s all too easy to become comfortable riding the success of a single product. You’ve led some impressive things since those days. How did this experience shape your career?

Lee: The biggest takeaway for me from this experience was the notion that being strategic actually translates to, in layman’s terms, saying no. We hear this all the time in business but actually doing it is much harder. Later in my career when faced with a similar challenge, I had to really push myself to say “no” and hone in on what best to make.

Angie: Which I’m sure was integral to your amazing success in the online jewelry industry. To sum up this tale, a young single-product company was facing the need to develop new products as their highly profitable game was plateauing. The company failed to realize that they had a business transformation on their hands, and instead initiated a series of disconnected efforts in a short time period and discounted the impact of culture change. This is a common tragedy many will learn from. Thanks for sharing, Lee.

Lee: Absolutely. I enjoyed my time at this gaming company and met colleagues—the ones whose names I did know—that would remain lifelong friends and co-workers.

Though I think I still have some PTSD.

Angie: Don’t we all.

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Order Angie’s book TransformAble: How to Perform Death-Defying Feats of Business Transformation from your favorite bookseller. 

Angie Tuglus is a transformation expert and executive advisor. She has led numerous business transformations as a former Fortune 500 executive, and has worked in companies ranging from startup to Fortune 10. Learn more at www.tuglus.com

Lee Senderov is the chief marketing & digital office at Foundation Partners Group. She is an executive known for leading high ROI marketing, sales, and business development initiatives that grow businesses and drive revenue. She enjoys challenging and reshaping established industries. Lee has a BA from Brandeis University and an MBA from the Harvard Business School.
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© 2021 Angie Tuglus