As global competition intensifies, logistics – getting the right product to the right place at the right time – has become even more critical for companies these days. Atlanta is home to many well-known logistics players (UPS, Home Depot and Delta, to name a few) and at least one lesser known firm, Manhattan Associates.
After eight years as CEO of Manhattan Associates (founded in Manhattan Beach, Calif., where the name comes from), Pete Sinisgalli will be stepping down at the end of the year to await the next, unknown chapter of his life.
Despite the recession, Sinisgalli, 56, has presided over considerable growth at the company, which sells supply-chain software to retailers, manufacturers and distributors around the world. Since he took over in 2004, revenue has nearly doubled to an estimated $370 million this year, while employment has more than doubled to 2,270. Sinisgalli talks about how he managed through the financial crisis and how listening helped him avoid a key mistake.
Q: What’s the most important lesson you learned in your eight years as CEO?
A: Know who you are and invest for the long-term.
We went through a difficult time during the financial crisis, like everyone did. It really tested the company’s strategy and culture. I think at the end of the day, knowing what we wanted to be, how to get there and sticking with it was most important.
We invested in R&D. A lot of our competitors didn’t and we’re benefiting now. The trick is to take advantage of a difficult business cycle when your competitors are doing things that probably benefited them in the short-run (dramatically cutting costs), but hurt them in the long-run.
A lot of folks will tell you that the best time to take market share is during a crisis, because there are fewer buyers and they will focus on the better companies. During the financial crisis, we posted OK results, but we were down miserably from previous years. But we continued to invest in R&D. Our stock got beat up. It got down to as low as $14 a share. We’re now at about $50.
Q: Would you please give an example of the research and development you’re talking about?
A: Fortunately, we went into the recession in a good market position, with a strong balance sheet and cash. We didn’t have to panic.
We invested $250 million over a six-year period in a next generation technology to allow our customers to integrate our solutions in a more holistic way, including our market leading warehouse management system.
We believed it was a compelling investment when we asked the questions – how much market share will we be protecting and how much market share will we be grabbing from competitors? We believe this investment would help us do both, but it would be challenging because of the business cycle.
Our best guess was a three-year payback period. We launched the product in 2010 and had a good year then, and a very good year in 2011 and the first half of 2012.
Q: What’s your management style?
A: I’m not a micro-manager. We’re back to 2,300 people (from 1,800 during the recession). It’s very hard to micro-manage at that level. You have to delegate, but not abdicate.
You’ve got to have great people in good times and bad — people who are talented, passionate and motivated. The best way to motivate people is to hire motivated people. It’s like the sports analogy — you can’t teach speed. Then you have to empower them to do their jobs and let them make mistakes.
Q: What’s been your biggest mistake?
A: I’ll give you an example of a mistake waiting to happen, but my [executive] team coached me out of making it. During the depth of the recession, my team was saying, “Pete, you’ve got to communicate more to the 2,000 people around the world.”
I said, “I’m communicating all the time, what are you talking about?”
But my team said that the employees had to hear from me more regularly. People were scared, frozen, paranoid, worried about their jobs. I said that I didn’t have any more information to tell them. But my team said it didn’t matter. “You just got to tell them something.”
I reluctantly went with their idea. So I started sending a weekly email update to all employees from a monthly one. It turns out they were dead right. I got extraordinarily positive feedback. I discovered that the absence of bad news was considered good news. People were comforted.
You can’t over-communicate. I was a little slow at learning that.
Q: What’s your best advice for employees who want to advance in a company?
A: Take the hardest assignments, the unwanted ones. Take the tough customer or the tough market. If you’re successful, everyone will notice.
Don’t take the easy path, because it’s hard to make a difference. If you succeed at the hardest stuff, your path will be clear.
If you fail, most people will cut you a lot of slack for stepping up. I will give someone great credit for taking on a tough assignment. You’ll learn from it and grow.
Each week, Sunday Business Editor Henry Unger has a candid conversation, called “5 Questions for the Boss,” with a top executive in Georgia. Some remarks are edited for length and style.