TEOCO (the employee-owned company)
Introduction
TEOCO positions itself as the key provider of Engineering, Analytics and Assurance services to the providers of communication services worldwide (TEOCO, 2016). The predecessor of TEOCO, a Strategic Technology Group, was launched in 1994 and focused on providing consultancy services for IT projects. In March 1998 the company was given a new name TEOCO (the employee-owned company). The renaming of the company was concerned with its recent strategic decision to turn from consultancy services to product development, as well as shift from IT projects to the telecommunications industry. At the same time, the company also launched a range of well-known Internet start-ups, such as netgenShopper.com (online auctions), Eventrix (event planning portal) and AppreciateYou.com (support for employee retention) (Calo, Roche&Shipper, 2014, p.13). Starting from 2005, the company performed a range of successful acquisition, ending up with more than 300 employees. The peculiarities of internal management and leadership philosophy make TEOCO highly different from many competitors.
External forces and industry conditions
TEOCO functions mostly in North America. That is why the political environment of its functioning is rather stable. However, if the company accompanies communication projects, conducted in other countries, its needs to take into account possible politics-related challenges. From an economic standpoint, the environment is currently highly favourable for business in the U.S. However, specific challenges many stem from current mild economic decline in Canada, as well as a developing nature of the Mexican economy. Social factors may influence the activities of TEOCO, because public opinion shapes the range and scope of projects, run by communication companies. However, the influence of social factors is only secondary, and may be considered as not so significant for the activities of the employee-owned company.
Technological actors tend to play a crucial role in the company’s activities, because its daily operation is concerned with the implementation of innovative technological solutions. A failure to go in line with technological development is likely to decrease a rating of a company and prevent it from the implementation of its growth strategy. Environmental factors may also exert impact upon a company’s activities due to the fact that it needs to ensure environment-friendliness of its products, as well as consider corporate social responsibility issues. Finally, communication sphere and the activities of the Internet-based startups are currently subjected to in-detail legal regulations. Furthermore, TEOCO needs to comply with the U.S. legislation in a range of fields, such as employment, anti-discrimination, anti-trust and taxation.
TEOCO functions within a fragmented and extremely competitive industry. In each of the segments of its activities (Product Development, Analytics and Assurance, TEOCO faces significant competition. Its major competitors in North America include Connectiv, Subex, Wedo, Pulse Networks, as well as Telarix and Global Convergence (Calo, Roche&Shipper, 2014, p.15). It is worth mentioning that the industry is characterized with insignificant barriers to entry. However, it is rather hard to sustain due to a large number of established competitors and a significant role of reputation in the industry. Both suppliers and customers have medium bargaining power due to the ratio between them and service providers. A significant number of competitors, who use their unique engineering, analytics and assurance solutions, leads to a high threat of substitute.
Thus, the functioning of TEOCO is concerned with the need to take into account a broad range of factors and sustain competitive advantage, despite a highly competitive environment.
Internal organization and culture’s influence on performance
One of the crucial ways the company differs from its competitors deals with its internal management strategy, namely an emphasis on high-quality internal cost management. This emphasis is manifested in two major ways. First of all, the management starts each budget year by creating a revenue plan for the whole year, based on various sources of data. Then, the company establishes the percentage of the revenue that can be spent. The company’s investments into various activities (e.g., research and development, marketing, mergers and acquisitions) tend to be continuously reconsidered to prevent going beyond the predetermined limits. Furthermore, TEOCO dedicates significant time and attention to monitoring the costs of each operation, regardless of its type. Developed internal cost management helps the company sustain competitive advantage and conduct a careful planning of investments (Calo, Roche&Shipper, 2014, p.16). It is important to mention that TEOCO is client-oriented, and smooth client operations represent one of its important focuses.
Shared leadership and culture of employee ownership exert highly positive impact upon the company’s functioning. The experiences and skill sets of three TEOCO leaders are complementary and tend to form a powerful combination. Employee ownership is a crucial feature of the company’s culture. As employees are encouraged to buy and possess TEOCO stock, they become more committed to the success of the company, and actively participate in decision-making and overcoming challenges. The “All Hands Meeting”, held on monthly basis, and the functioning of a standing A-Team committee serve as a practical tool of promoting a shared success model.
TEOCO strategic response to challenges
TEOCO responds to internal challenges by aiming to create a strong shared leadership and decision-making, facilitating a strong corporate culture and ensuring careful use of costs.
Responding to external pressures, the company tends to base its product strategy on “spidering” through clients’ ventures. Since 2010 TEOCO has been actively using cross-selling techniques. TEOCO aims to acquire as many customers as possible to sustain competitive advantage. Furthermore, TEOCO adheres to the concept of organic growth, financed with the help of internal cash flows. Since 2006 TEOCO has been actively implementing its acquisition strategy. Before 2010 it managed to incorporate Vero and Vibrant solutions that helped TEOCO get more large customers. In December 2009 TEOCO started considering an acquisition of a global Israel-based company called TTI Telecom and specializing in providing assurance solutions. Furthermore, in 2009 TA Associates, a world’s leading firm in the field of private equity growth, made a $60 million institutional investment in TEOCO (TA Associates, 2009). Despite the fact that the acquisition of TTI and TA’s investment opened up a new stage in TEOCO’s growth, these developments threaten to challenge three important pillars of TEOCO success, such as shared leadership, employee ownership and HRM as a strategic function 9Shipper, 2014, pp.205-207). As the representatives of TTI and TA are to be appointed to the management board, it is important to ensure their integration into the leadership structure and mode of TEOCO, so that they are aware about the major drivers of TEOCO success. Furthermore, it is essential that TEOCO leaders get to know the peculiarities of leadership approaches of the new members to the board and manage to make best use of them.
With regard to the employee ownership, it is crucial to emphasize this culture and get TTI employees to take part in the “All Hands Meeting” and A-Team. Furthermore, it will be crucial to promote TEOCO stock ownership among TTI employees. Atul, the CEO of TEOCO, is currently highly involved into the details of the HRM process. However, as TEOCO continues its growth and HRM issues become ever more complicated, it is essential for the company’s leadership to ensure smooth running of HRM processes, not requiring continuous attention of CEOs.
Strengths and weaknesses of Atul management
Atul is a central figure in the company’s leadership. His major strengths deal with emphasizing strong corporate culture and shared success. His role focuses on culture and values. A weakness of Atul’s management deals with the fact that it may be hard for him to sacrifice the elements of a highly peculiar culture in light of the need to accommodate TTI and get adjusted to the TA’s investment-related requirements (Calo, Roche&Shipper, 2014, pp.20-21). At the same time, as Atul tends to be very flexible in his relations with other CEOs, he may somehow manage to overcome the challenge of change.
Conclusion
The acquisition of TTI and TA’s investment posed a range of challenges to the activities of TEOCO. It is recommended that the company’s leadership focuses on open communication, dialogue and finding common solutions to issues, while simultaneously promoting the drivers of its success. It is crucial that TEOCO leadership makes TTI and TA’s representatives understand that the success of TEOCO is based on several specific pillars that need to be preserved, despite the company’s growth. In this regard, special attention needs to be paid to preserving shared leadership, employee ownership and strategic nature of HRM. Furthermore, it is important to view growth as a source of opportunities, rather than challenges and make best use of synergetic effects and cross-selling.
References
Calo, T.J., Roche, O., Shipper, F. (2012). Principled entrepreneurship and shared leadership:
the case of TEOCO (the employee-owned company). Journal of Business Case Studies, Vol. 8(1), pp.11-36
Shipper, F. (2014). Shared entrepreneurship: a path to engaged employee ownership.
London: Palgrave Macmillan
TA Associates (2009). TA Associates Completes $60 Million Minority Investment in TEOCO.
Retrieved 19 February 2016 from http://www.ta.com/News/TEOCO-Release.aspx
TEOCO (2016). Home. Retrieved 19 February 2016 from www.teoco.com
