Can the Returning CEO Turnaround the Crisis at Hammerhead?

Abstract

Synopsis

Hammerhead Systems (HS) evolved from the incubator stage inside a venture capitalist (VC) firm. HS was founded in 2002 as a data-switching firm with a niche in the telecommunications (telecom) industry. The company had access to financial and human resources and enjoyed the promise of quick success. The co-founders secured Series A funding from VCs and hired industry savvy management and talented engineers yet their success slowly vanished. After only 16 months from starting HS, CEO/co-founder, Rob Keil, was replaced because the Board of Directors (BOD) believed a different type of CEO was needed to take HS to the next level. As the initial product moved toward the production stage under the second President/CEO, the telecom industry trends changed. A third CEO was hired in 2004; however, he was unable to increase the customer base and sustain strategic partnerships. In 2008, the third CEO resigned and HS Board brought back Keil as President/CEO of Hammerhead Systems to recoup the $100 million VC investment spent by the prior two CEOs and reverse the downward direction.

Learning Objectives

The objectives of this case study are:

1. Develop realistic strategic options to meet the management challenges inherent in running a small startup business in a rapidly changing telecom industry.
2. Demonstrate the ability to analyze the external environment of HS in order to evaluate current conditions and formulate appropriate strategies and implementation plans.
3. Evaluate the role of available internal resources to change HS business fortunes.
4. Demonstrate the ability to integrate appropriate models and concepts across disciplines

to analyze company data and make reasonable management selection recommendations.

Application

This case was designed for senior level undergraduate and MBA level courses that focus on entrepreneurship and leadership in startup firms. The inter-relatedness of issues in this case requires students to draw upon prior knowledge of: concepts and models in entrepreneurship, management, organizational change, marketing and leadership and to a lesser extent, strategy and finance. Students are expected to make viable recommendations, from the perspective of the CEO’s (Keil) second tour, to save the company from a downward spiral.

Key Words

The appropriate areas are: Entrepreneurship, Small Business, OB/Management, Organizational Change, and Leadership.