New research: From failure to success

A company in crisis can end in bankruptcy. With the right board of directors and an eye for the past, however, it can also end up as a success story. In 2007 the Danish hearing aid and headset company GN Store Nord (GN) was close to folding, but managed instead to double its market value 12 times in the space of five years to 21 bn Danish kroner.

Business historian and Associate Professor Martin Jes-Iversen, Department of Management, Politics and Philosophy had a unique opportunity to chart exactly how what happened was possible. For two years he had access to reports by GN’s board of directors and management covering 1995 to 2010.

- I’m grateful to have been allowed to gain insight into GN Store Nord’s decision-making processes. That access made it possible for me to discover patterns behind the way out of the crisis that may benefit many large and small companies, explains Associate Professor Martin Jes-Iversen.  

Jes-Iversen’s research is presented in his new book, Turnaround, which, in addition to GN, describes the structural development of the largest Danish companies since 1990.

Give the old guard the boot in the board of directors
But what exactly is the way out of a crisis? Jes-Iversen’s study shows a tendency that the role and composition of the boards of directors in the largest successful Danish companies has changed.

- The board of directors has moved from being passively controlling to being more active. Today the board must help change the company, he explains. 

Taking on an active role, however, requires specialist knowledge. Jes-Iversen emphasises that today it is important to avoid automatically selecting the same group of 50 people that are on many Danish boards of directors.

- It’s not the old guard you want on your board. Today’s active boards require technological skills and marketing skills – and even qualified people brought in from abroad. The individual’s own management network in Denmark is less important, says Jes-Iversen.   

At GN, the arrival of Norwegian Per Wold-Olsen as chair of the board, for example meant the company suddenly saw some progress.

Retain historical competences
Another way out of a crisis can be determined by the past. The ability to delve into one’s past and actively use it in a new strategy is vital.

- The management has to have an overview of which unique historical competences can form the foundation of future growth. What is the company’s raison d’être? What separates it from the competition?” asks Martin Jes-Iversen.

In GN’s case they became aware of the fact that, for several generations, it was prestigious for engineers to work with hearing aids at the company. This meant that their professional skills were safe and sound. Commercial capabilities, on the other hand, were lacking. Instead of listening to the customer, the engineers developed products they felt were interesting and relevant. GN’s new strategy was dubbed “commercializing innovation”, and in 2010 GN was the first to market a 2.4 GHz wireless hearing aid, which since then has led to a valuable partnership with Apple Computer.

- A classic feature of companies that do well in Denmark is that they have defined a global market niche. This is true, for example in the maritime industry and in the food and pharmaceutical industries, where Denmark has a historical niche, he adds.    

Read more about the path from failure to success in the new book Turnaround

For additional information please contact Associate Professor Martin Jes-Iversen on e-mail: mji.mpp@cbs.dk or tel.: +45 3815 2185 or please contact press officer Matilde Hørmand-Pallesen on email: mhp.ea@cbs.dk or tel.: +45 4185 2205