The Caps Situation as a B-School Business Case

Those of you who have read my posts on the Clips and GDTs or my few FanPosts know that my brain tends to work in a logical fashion, perhaps less emotional than others.  I tend to identify alternative solutions to a problem and think through the alternatives before responding.  My thought process likely comes from 10 years as a business consultant and nearly 10 more after that in corporate America, where everyday we're required to solve problems and justify the answers. Thus, I can relate better to the Capitals by putting them into a business context.  

Imagine, if you will, that you are the owner of the Capitals, which is a product business and not a sports franchise.  It doesn't matter the product you sell.  You've maintained a steady record of success in previous years, but you just haven't been able to pass your biggest competitors. Each year, you work with your VP of Human Resources to remove poor performing salesmen and add a few new salesman to cover underperforming territories, but you don't blow up the team.  You have a well-liked VP of Sales & Marketing, who is a great face for the company and has driven record revenues in the four years since you hired him.  The VP of Sales & Marketing has succeeded like few previous people in his position.  You sell enough to make good profits and improve the products, but have never closed the big deal. You started this selling season with a string on wins, but have now fallen on hard times.  You aren't even making the first cut on a few deals. It's a phenomenon you saw at the end of last year which you've tried to correct.  What do you do?  What are your options?

As I've thought through the options below, I've come to the conclusion that no drastic change is the right approach and gives the Capitals the best chance for a Cup this year.  Making dramatic change introduces too much risk and decreases the chance for a Cup in 2012.  Yes - I've changed my mind back since last night.

Here are your options -

Fire Your Vice-President of Sales & Marketing

This is an easy choice.  After all, you gave him the people he needed to be successful, and you upgrade his team every year.  However, this would also be a difficult choice.  He's popular among the salesmen. Heck, you like him, and the VP of Human Resources is a huge fan.  You just aren't happy with profits alone.  You want to be the leader in the industry, and the recent string of losses is very concerning.  Maybe the VP has run his course, and maybe the team isn't responding any longer.  Maybe it's time for a change there.  A new leader with a different style might be just what the team needs.  Your challenge, however, is that it's mid-season, and you've got customer meeting after customer meeting after customer meeting on the horizon.  How do you bring in a new VP, when he has no time to assess the situation or learn the products before being thrown into customer situations?  This is very difficult to do in the middle of the selling season, unless you can find someone with great experience.  You start to scan the market looking for an answer.

Move Salesmen to Different Territories to "Start Fresh"

You think you have the right salesmen.  They are talented. They know their products.  Incentives are clear and attractive.  Become number one, and they all get huge bonuses.  Maybe, just maybe, you've misaligned the territories.  If you switch Fred from the DC-metro area to Charlotte and Pete from Charlotte to Miami and John from Miami to DC, fresh faces could make a difference to customers.  Maybe the salesmen would be happier.  This could be a great way to spark customers as well.  However, you've done this before, several times, and it hasn't always worked.  The problem here is that you know developing a territory takes time.  If you move salesmen too early, you're restarting that development period.  Leaving them in place could result in longer term sales, even if this year is lower.

Fire the Underperforming Salesmen

Rather than waiting until the end of the selling season, maybe you eliminate the poor performers now.  One of your leading performers in past years seems to have hit a wall and is coasting a bit, taking only the easy sales.  Do you remove him as an example to others, to motivate them?  A few of the new salesmen aren't performing up to expectations either, and they are an easy mark.  Your challenge, however, is that it's not easy to replace any of these guys.  A new person will need time to learn the products and learn the territory.  A new person may not mesh with the rest of the team by joining in the middle of the selling season.  It's a risk.  Besides, you can only really find new salesmen from one of two places.  You can hire a young kid, right off the street with no experience, or you can poach someone from the competition.  If you do the latter, you'll have to overpay to get them to leave the competitor, thus forcing you to drop a high salaried salesmen to even out the salary expense.  That much said, your competitor may not let that person go due to a non-compete clause.  Nonetheless, you start to look around.  Maybe there is an experienced person you can get cheaply.  Maybe one of your competitors is ready for a similar shake-up.

Fire your VP of Human Resources

This would be a gutsy call.  You'd be admitting that the VP of Human Resources hasn't hired the right salesmen or the right VPs to take the company to market leadership.  You've been relying on him to staff the teams, to evaluate the performance, and to make difficult decisions.  He's hired a sales team that needs a good leader to be successful.  Is that the right way to go, or do you need more of a self-starting team?  If you think the root of the problem is in the overall hiring philosophy, then you make this move.  Not unlike the VP of Sales & Marketing, however, changing the VP of HR mid-season brings risk.  A new VP won't understand the team for a while.  The learning curve is steep, and there would likely be no impact this season.

Fire the VP of Product Development

Upon further review, you realize that it's not the VP of Sales & Marketing or the VP of Human Resources or the salesmen, but it's the products they are trying to sell.  They are good, but they aren't spectacular.  Salesmen have a difficult time selling the products.  Competitors have better products and are constantly identifying new products to offer the market when the old products get stale.  Your salesmen have new products, but they don't necessarily believe in them, and customers aren't really buying.  If you fire the VP of Product Development, you are admitting to your salesmen and to customers that you don't have the right product philosophy.  Thus, poor sales could be a self-fulfilling prophecy.  You'd essentially be retooling for next year now.

Bring the Entire Team Together for  Motivational Talk

It might be time for an all-hands, face-to-face meeting to discuss the problems.  Your gut says you have the right VPs, the right products, and the right salesmen in the right territories.  Something, however, is missing.  Your team isn't aligned and isn't acting as one.  You know everyone wants to succeed and getting them together to air challenges and prepare for the rest of the year will make the difference.

Do Nothing and Hope Things Come Together

Let's face it.  You've been profitable and successful and will be this year.  You know you've got good people in place.  Customers are buying, and don't appear to be going away.  Sales are coming in.  You've had bumps in the road previous seasons, but you always pull through.  Maybe this is the year that it all comes together in the end.  Why introduce more risk into the current season?  If you are going to make changes, wait until the selling season is over and then do it.  It's too late now.

Pretty easy to see the Caps here.  Boudreau is the VP of Sales & Marketing and the VP of Product Development.  GMGM is the VP of Human Resources.  The Caps players are the salespeople.  Territories are lines and pairings.

Translating this to a business perspective, underscores for me how risky and uncertain firing Boudreau, firing McPhee, and making drastic personnel moves are.  I know.  This is nothing new.  It is also clear to me now that, if you fire Boudreau or McPhee or gut the team through trades or cuts at this point in the season, you are admitting that failure this season is ok. A Fleischmann for Hannan trade makes sense.  That's not "drastic" in my opinion. 

We started this year saying that another playoff wash out spells the end for the current regime.  After thinking through the Capitals in a business context, I still think that's the right course.  I also think it's the course the Caps are most likely to take.  Quick changes now decrease the chance for a Cup this season.  They don't increase them.

As JP says - "Have at it, people."  Raise your hand, or the professor may call on you.

If this FanPost is written by someone other than one of the blog's editors, the opinions expressed in it do not necessarily reflect those of this blog or SB Nation.

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