Symantec 4.0: A New Strategy

Posted by David Hill
March 13, 2013

Among the objectives of Symantec's reorganization are improved teamwork, increased customer focus, consolidation for leverage (i.e., eliminate redundancies) and upgraded growth capabilities (such as change sales process management).

The reorganization includes significant layoffs that will occur by June 2013 (having set aside $275 million for severance pay indicates how significant it is). Symantec's challenge is to get remaining employees to remain productive and keep them committed to the new strategy, and not just give it lip service.

Finances

Publicly-traded American corporations are yoked to quarterly results that ideally are supposed to trend upward each quarter. Otherwise, the stock market tends to punish a company's share price. There's no way that Symantec can deliver those rosy results in a transitional year. Quite frankly, it has to get the financial analyst community behind it and cut it the necessary slack so that its stock price is not trashed. Symantec promise 5% or more organic revenue growth and 30%+ operating margins in subsequent years as a "carrot" that will help it avoid the market's "stick."

The question is whether shareholders focus on short-term results, or are willing to be patient as long as they understand the need for change. Symantec needs enough of the latter shareholders so that it has time to make its transition.

Mesabi Musings

Customers naturally focus on products. They want a vendor to do well in part because failure means they have to switch products, which can be painful. They also want to know that a vendor's products have a future (i.e., updates and innovations) that fit in with the changing times.

From a company perspective, business models that may have been successful in the past come under regular attack. Companies may be forced to remodel themselves without abandoning existing strengths.

So from a practical perspective, IT customers and technology professionals should keep a close eye on Symantec as it attempts a significant transition. In the past, too many companies have waited too long, and were either unable or unwilling to make the necessary changes.

We can't know whether this is the right strategy, but the message that Symantec projects seems rational and coherent. Yes, they may very well be biting off more than they can chew in the time frames that they suggest. Yes, they may have made short-term financial promises that, in retrospect, may seem too optimistic. But frankly, that potential overreaching seems to be a much better bet than trying to simply fine-tune the status quo. Boldness may not necessarily win, but meekness would probably have been a certain loser.

Symantec is a client of David Hill and the Mesabi Group.