From Linden's Vancouver Canucks to Jacqui Cohen’s revitalized Army & Navy, five leadership success stories
Vancouver Canucks: Back in the Game
Trevor Linden didn’t need a comeback. “I was doing my thing and happy doing it,” Linden says, recalling that far-off spring of 2014. His Club 16 fitness business was humming along, and Linden had a steady stream of corporate speaking engagements. “Life was good,” he says.
For his former employers, not so good. Just three years after the Canucks had hosted Game 7 of the Stanley Cup Finals, general manager Mike Gillis and coach John Tortorella were overseeing a team that would be starting the NHL playoffs on the golf course. Owner Francesco Aquilini wanted a fresh start. Why not call the most popular player in franchise history?
A no-brainer for the Canucks owner perhaps, but a trickier decision for Linden. “The one thing I heard from some very influential people was, ‘You’ve got a good reputation, people like you—why would you put yourself in that spot?’” Linden says. “I was kind of like the backup quarterback: everyone liked me because I hadn’t made a mistake. It was a storybook ending when I finished my career here in ’08. Not many athletes get that sort of send-off. Why jeopardize that?”
Yet the pull of the organization was strong. “I was 43 years old. I was never going to go work in Minnesota or St. Louis or Carolina. The only place I would ever work was here. And here is the opportunity. If it’s ever something I thought I’d want to do, now’s the time.”
But if he was going to accept responsibility for the team’s future, he needed the responsibility to call the shots. “I told Francesco, ‘I trust my ability to make good decisions; I trust my judgment.’ I asked him to trust me. I need to have the autonomy to bring in the people I feel I need to bring in, that share the same philosophy and belief.”
Linden took over April 9, 2014, as president responsible for hockey operations, including coaching, scouting, player procurement and development, and minor league affiliations and operations. Struggling businesses are often urged to focus on fundamentals, and for the Canucks’ new president that meant scouting. Replacing Gillis with Jim Benning, a man with an extensive scouting background, was key to Linden’s philosophy. “The lifeblood of our organization is our amateur scouting,” Linden says. “We wanted to improve our direction to [scouts] and improve the accountability we hold them to—not unlike what we ask of the guys on the ice.”
Linden’s arrival in the Canucks head office also happened to coincide with the expiry of the team’s 20-year deal with arena caterer Aramark. It meant that the rethink Linden had been brought in to mastermind extended to the off-ice product. “I think we had to re-identify how we wanted to interact with our key stakeholders—our season ticket holders, our corporate suite holders, our corporate partners,” Linden says. “And that dovetailed with the whole hospitality element, re-thinking the experience from the minute you walk in to the minute you leave, how you’re greeted at the door, the service at the wine bar, service at the concession stand, the quality of food, being able to take control of that from Aramark, move it in-house and have a level of service and food that was up to the Canucks standard. [COO] Victor De Bonis and [executive VP and arena GM] Michael Doyle put in hours and hours, had to hire a thousand people. It was a massive undertaking to bring our standard of service and food quality up to the premium brand that the Vancouver Canucks are.”
Still, Linden’s main job involves the on-ice product. While he says post-season play remains mission number one—“We’re focused 100 per cent on making the playoffs,” he insisted when BCBusiness talked to him earlier in 2015—it’s also clear that short-term goals will not trump long-range planning. “We are not going to sacrifice our future. We have to build from within,” Linden says. “The focus of our organization is not just the players on the ice tonight but the big picture—the AHL (American Hockey League), prospect development, what’s happening at the amateur level.”
Linden is a friend and sometime skiing/mountain biking partner of Harbour Air’s Greg McDougall (see below) and sees a connection between the Canucks’ situation and those of the other companies described here. “I think the one thing that’s consistent with the businesses you talk about is that when you fail, you have to have a very hard look at yourself,” Linden says. “Where you are, why you’re there, and what you’re going to do about it. We’re still going through that now. It’s a work in progress.”
Norsat: Shooting for the Stars
It’s not one silver bullet, says Norsat CEO Amiee Chan. “More like a dozen bronze bullets.”
In 2006, Norsat needed a straight shooter. When Chan took over the top job, it was a $13 million microwave and satellite technology company with annual losses north of $4 million and mired in debt. Norsat had been chasing rainbows, often pursuing nine- figure U.S. military contracts that would typically go instead to massive companies like General Dynamics. It occupied a fancy but impractical third-floor office in Burnaby and had a large U.S.-based executive staff. Chan’s immediate task was to downsize and refocus. “No more home run attempts,” she recalls. “What we needed were base hits.”
Chan had the advantage of having been with the company for many years: she had started with MPR Teltech as a co-op student back in 1989 and joined Norsat when they acquired the company in 1996. The upside was that, upon taking over the top job in 2006, Chan was surrounded by staff who knew and trusted her; the downside was that when it came time to take aim, the people she was firing were people she knew. Chan did not want to prolong the pain. “It’s best to do it once and do it quickly,” she says. “That way hopefully you won’t have to do it again.”
After announcing staff cuts that included many executive positions, Chan held a company town hall to explain the plan to remaining staff. “They were 100 per cent behind me,” Chan says. “Everyone understood cost- cutting was needed. We had to be realistic about what level we could sustain.”
That included corporate culture changes as well as a new address. Norsat moved to a new facility near YVR—ground floor, which was more practical for shipping and receiving. “We divided the budget, shaved it down,” Chan says. “No more ‘Get it to me faster and spare no expense.’”
Norsat is now focused on communications for remote and challenging locations. The company’s modular approach allows them to build quickly without incurring extra engineering charges. And no more fruitless bids on mega-contracts. “We looked for niche customers who required customized products,” Chan says. “We needed to kick-start the cash engine and return to profitability.”
By 2014 Norsat was reporting revenues of $36.2 million, with an adjusted EBITDA (Earnings Before Income Tax Depreciation and Amortization) of $4.7 million. Norsat now boasts clients in over 90 countries—and after two takeovers (Sinclair Technologies in 2011 and CVG in 2013), the company has effectively doubled in size during Chan’s tenure. While more acquisitions are planned, Chan does not consider every company to be a buy-and-turn-around candidate. “Buying some companies is like catching a falling knife,” she says.
Chan has a handle on this one, at least.
Harbour Air: Ready for Takeoff
Getting out of the bush leagues is a struggle for ballplayers and businesses alike. For Harbour Air, it was no metaphor. Founded in 1982 with two float planes, Harbour Air was strictly a bush operation, one of many small carriers that carry clients to isolated fishing lodges and workers to logging camps.
Founder Greg McDougall says bush-league status extends to the typical mentality of small, seat-of-the-pants outfits. “I used to think that a good pilot was the one who got you there when no one else would,” he recalls. “Pilots were patted on the back for taking chances. It’s a frontier culture, all about risk-taking.”
Romantic perhaps, but a sustainable business model it isn’t. Small float-plane operations do almost all their business in a three-month period when the lodges are busiest. (McDougall’s original partner left to start a fishing lodge of his own.) And they are affected by downturns in resource industries. “Upstart carriers eventually die on the vine,” he says. “The ones that are still around are just making wages, and at any given time they’re pretty much all for sale.”
The precarious nature of his business was brought home to McDougall in the early ’90s when the B.C. lumber industry hit a serious downturn. “The Japanese economy was collapsing and the Japanese housing market with it,” McDougall says. “The market for raw logs dropped. A lot of our business at the time came from timber surveys—taking a float plane instead of a water taxi to check out sources of raw logs. That business disintegrated very quickly.”
McDougall saw an existential crisis looming. “If we were going to survive, we had to make the operation more sophisticated,” he says. “We had to take the bush out of it.”
That meant shifting the business model to scheduled flights. Harbour Air had started that process in 1984 when it began flying regular Gulf Island routes. Acquiring more planes was another key step: in 1986, when Jimmy Pattison’s Air BC decided to concentrate on wheeled aircraft (eventually partnering with Air Canada), Harbour Air bought up its fleet of nine float planes.
With his lumber industry business cratering, McDougall needed a more dramatic shift into scheduled operations. By 1996 they had begun regular flights to Victoria, with Nanaimo added soon after. It was a gamble. “There was an ‘If you build it they will come’ aspect to it,” McDougall recalls. “We had to institute a regular flight schedule so that people knew the service was there and they could rely on it, and then hope the customers came.”
Schedules weren’t the only element that needed to be stabilized. There was also the corporate culture. “We had to professionalize,” McDougall says. “We had to institute safety management systems.”
They not only had to change; they had to be seen to have changed. Advertising now trumpeted an airline—not an ongoing reality show adventure, as had been the case. “The pilot used to be a guy in a T-shirt with a cigarette hanging out of his mouth,” McDougall says. “Now they were in uniform.”
Along the way Harbour Air has acquired competitors, among them West Coast Air, Cooper Air and Whistler Air. The motivation is not just equipment but access. “Whistler Air had the only dock space available in Whistler,” McDougall says. “Cooper owned a great facility in Victoria Harbour. It made sense.”
Now Harbour Air has a new business: international consulting. Japan, Bali and in particular China have all sought advice on building up float-plane operations where airport facilities don’t exist. “In China you have cities of millions with no airports,” McDougall says. “But they have water. It’s a way of starting air service quickly without having to build all that infrastructure.”
Meanwhile Harbour Air planes come and go from Coal Harbour almost as regularly as the SeaBus. “We’ve become a very important part of the regional transport network,” McDougall says. And if Harbour Air had stayed in the bush leagues? “There’s no way we would still exist.”
Creation Technologies: Born Again
How does it feel to buy a business and find out in the first week that you have just lost your biggest client, half your revenue and your line of bank credit? “Fun!” says Barry Henderson. “I was jumping for joy.”
Henderson, the former president of Creation Technologies, is being serious, mostly. “You never feel more alive than when you’re about to die,” Henderson says. “It frees you to figure out what you really want to do with your life.”
What Henderson wanted to do was build better music technology. In 1986 he came west from the University of Waterloo and joined Anatek Microcircuits, a North Vancouver-based manufacturer of hybrid circuit boards. Henderson helped Anatek branch into music equipment with accessories called “Pocket Products” that attached to MIDI keyboards to make them more versatile. After Anatek was purchased by Gennum in 1989, Gennum decided to move most of the company’s manufacturing back east. Henderson contacted Geoff Reed, an old friend he’d met in a Saskatchewan bible college (then working for Ernst & Young in Toronto) and suggested they buy Anatek’s local operation. Henderson sold his house, Reed got a loan from his father-in-law, and they brought in Dave Pettigrew and Paul Clark as sales and manufacturing heads. For approximately $500,000, the four men purchased the former Anatek. Renamed Creation Technologies, the new company launched on March 18, 1991. One day later, the new owners learned that they were losing their primary circuit board customer, Novatel Wireless, and with it almost half of their contract electronic manufacturing business. Other smaller clients dropped them as well.
“I suspect that when Novatel and others heard there had been an employee buy-out they got the heebie- jeebies,” Henderson says. “They knew the big money backer was gone.”
Also gone: a $100,000 line of credit from CIBC. “Getting the news was awful,” Reed admits almost a quarter century on, but adds: “We knew where we were at financially and we knew what we had to do to get through it.”
Emergency measures were required. Gennum had employed 80 people locally; of them, 32 stayed on at Creation—with wage cuts—as the new owners scrambled to retrench. “We brought everyone together and said that we thought we could weather this,” Reed recalls. “We asked whether people were willing to take a pay cut to get us through, and everyone said yes.”
Happily, Royal Bank stepped up with a new $300,000 line of credit. “They saw something in us,” Henderson says, “and kudos to them.”
Reed’s wife, Karen, cleaned the kitchen as there was no money for janitorial staff. Henderson and Pettigrew (“The best salesman I’ve ever known,” Henderson says) flew down to the headquarters of Hughes-Avicom in Los Angeles and came away with a million-dollar electronic manufacturing contract.
Staff buy-in was key to the turnaround—first in terms of the extra hours of work required, and then literally as Creation launched an employee share purchase plan. “When you have engaged people thinking like owners, you get two things,” Reed says. “Everyone gets to share in the excitement when you succeed, and everyone sees the financial benefit.”
Within about a year, wages were restored; within five, staffing was roughly back to previous levels.
But the crisis had temporarily sidelined the company’s music equipment business. “We didn’t have the time or money for R&D, so at first we had to focus on the existing CEM (contract electronics manufacturing) side,” Henderson says. With Creation back on its feet, Henderson received a BC Science Council grant of $137,000 and in 1992 unveiled RADAR, a digital studio recording system. Creation partnered with Japanese company Otari to distribute RADAR, which was soon being used by the likes of Stevie Wonder. When Otari ran into serious difficulty in 1999, Henderson wanted Creation to take back RADAR. But by that time Creation’s circuit board business was pulling in, by Henderson’s rough estimation, “about a million per month.” It was mutually decided that Henderson would buy the music division and go his own way. Now called Iz Technology Corporation, it recently launched a cutting-edge studio-in-a-box product being used by Neil Young, U2, Disney Cruise Lines and IMAX, among others.
As for Creation, the company long ago outgrew its North Vancouver facility, moving to an expanded Burnaby location; it also has manufacturing operations in San Jose, Dallas, Milwaukee, Minnesota, Chicago, Mississauga, Mexicali and Changzhou. Projected revenues for 2014 were $500 million. And there will be no more days like March 19, 1991: today no single client represents more than five percent of the company’s business.
Army & Navy: Last Brand Standing
Army & Navy may not be a general store, but in 1998 it needed a new plan of attack. That’s when the new commander-in-chief took over. And Jacqui Cohen was ready to map out a strategy. “I was so ready for it,” Cohen says now. “It was in my blood.”
The Army & Navy chain was launched in Vancouver by Sam Cohen in 1919. Over the decades it expanded to Edmonton, Moose Jaw, Saskatoon and Regina (which became the new headquarters), with sales topping $100 million by the late 1970s. But by the time Cohen’s granddaughter assumed command two decades later, revenues had dropped by approximately half. Its flagship store was still located in Vancouver’s Downtown Eastside, hardly the desirable locale it had been in 1919.
But Cohen did not turn her guns in that direction. She closed all three Saskatchewan stores and shifted the company headquarters from Regina back to Vancouver. She also sold the Edmonton property. “At the time the [Edmonton] downtown core was dying, although they are revitalizing it now,” Cohen recalls. Cohen did not abandon the Edmonton market though—she opened a new Army & Navy in Londonderry Mall. “More family-friendly,” Cohen says. She also opened a new store in Langley.
Cohen streamlined the buying process. Whereas the chain had once employed separate buyers for each store, Cohen centralized the operation while at the same time specializing. “There are now six different buyers—one for each department,” she says. “They understand the needs of their particular department in each store.” Army & Navy stock varies from location to location, with groceries more important in the Downtown Eastside, for instance, than they are in Edmonton. “As they say, retail is detail, and it all starts with the buy.”
Part of the Army & Navy survival story can be linked to marketing efforts that have made the brand relevant again. The annual shoe sale in May, the most successful holdover from the company’s past, has become a major media event and this year for the first time also happened online. It’s a natural evolution for Cohen. “Once we used flyers, but 20-year-olds don’t really read flyers anymore,” she says.
While consolidation and refocusing have not returned Army & Navy to its nine-figure 1970s heyday, the decline has been checked. Revenues have remained relatively constant in the $50-million range during Cohen’s tenure, even as other department store chains such as Eaton’s, Zellers, Kmart and Kresge (to name a few) have disappeared from the Canadian map. All those tombstones on the retail landscape serve as reminders that the battle never ends. “Can you sit back and collect your rewards?” Cohen asks. “Never.”