STRATEGY

Can Quark Turn the Corner?

CEO Ray Schiavone's bold new strategy
The Preacher Ray Schiavone has spent much of his first three years at Quark converting the troops to his vision.
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Ray Schiavone had hit a wall. It was October 2007, and Schiavone had been brought in to turn around software maker Quark, a onetime tech superstar that dominated and then completely lost its leadership in the $200 million market for desktop publishing. But after nearly a full year on the job, Schiavone felt as if he were spinning his wheels. Almost no progress had been made bringing an important new product to market. Schiavone convened 20 Quark executives from around the globe to meet at a Phoenix hotel. He wanted to hear firsthand how they were progressing. What they said was disturbing. One by one, the executives reported that collaboration within the organization was nearly nonexistent, and their work was suffering as a result.

Quark was struggling, and the Phoenix meeting made clear just how low the company's once highflying esprit had fallen. The company's blockbuster product had been QuarkXPress software, used to create newspapers and magazines (including Inc.). Then Adobe hit the market in 1999 with a program called InDesign (now used by Inc.). In 2003, Adobe launched its Creative Suite, which rolled in products such as Photoshop and Illustrator with InDesign. Quark couldn't come close. Its U.S. market share tumbled from 95 percent to just 25 percent. Some people in the industry fault Quark for losing its knack for innovation and for letting customer service slip. "They had created a lot of animosity with clients," Schiavone says of the company he joined. One blog post he read before taking the job stuck in his mind: "I love the product but the company is the devil."

Within weeks of taking the CEO job (the company is privately held; the children of the former owner and CEO are shareholders), Schiavone zeroed in on a new strategy: a push into broad publishing systems that can efficiently move text, graphics, and photos, whether for print, the Web, or a mobile phone. He also wanted to reach beyond the traditional media world Quark had once dominated to become the publishing system for sectors such as the pharmaceutical industry, financial services, and high tech. Implementing this major shift in strategy would demand an intense group effort on the part of the company's executives. And that would require extensive coordination and collaboration among Quark's various divisions -- something the Phoenix meeting made clear was not close to happening. "I needed to end the debate," Schiavone says.

The debate had been brewing since the moment Schiavone, a former General Electric executive with experience running another software publishing company, unveiled his strategy shortly after his arrival at Quark. Several high-ranking executives believed that pushing into enterprise publishing was a bad idea. Instead, they argued, Quark should stick to what it knew by making QuarkXPress so good that it could once again compete head-on with Adobe. One early dissenter was Tim Banister, general manager for desktop technology. "I thought we should double down on QuarkXPress," recalls Banister. "I was a guy who had been here seven years, and I thought I knew better than Ray."

The staff's skepticism was understandable. Quark leadership had been in turmoil for years, with two CEOs and an interim president since 2000. And the company had had a penchant for talking up new products, including a system for printing consumer packaging, but failing to deliver. "There was a lot of history -- skeletons in the closet -- of products that had been tried and failed," says Joshua Duhl, a marketing executive at Quark in 2008 and 2009.

Schiavone knew he would need allies within Quark's ranks to move ahead. So he launched a campaign to win over some of his most outspoken critics. He lobbied Banister in six one-on-one meetings, some lasting as long as two hours. The future of the company, Schiavone argued, depended on expanding its reach into new markets. He would often follow up with e-mails citing industry reports. "I was myopic and just thinking QuarkXPress," says Banister. "He pulled me up a level."

Still, a lot of resistance remained. To break through, Schiavone decided to simply set a date for a rollout of a new enterprise system -- a move that would force people to get on board or leave. The system would combine existing publishing tools with new ones developed both inside and outside the company. The resulting product would offer customers a comprehensive publishing software system. Schiavone ordered a demo system to be ready within a brisk four months.

Schiavone worried that failing to move quickly would hammer Quark's existing business. Other companies were doing a better job explaining how their products could help customers manage Web and mobile displays along with traditional publishing. "Every day I waited, I could lose my installed base, folks who were questioning where this company was going," Schiavone says.

But there were risks in moving ahead too quickly. If the new product was not nailed down, potential customers might think the solution wasn't ready and take a pass. Worse, if Schiavone pushed his teams to embrace his views and then got them pumped up for a new business launch, he risked a backlash if the new product bombed. "We couldn't afford to fail," Schiavone says. "We wouldn't be able to get employees back on board if we did.

The Moment of Truth In February 2008, Schiavone held a companywide meeting at Quark's Denver headquarters. He pulled together the global sales team and all U.S. employees, a total of 450 people. He had Quark managers demonstrate the new system and then brought out a series of experts -- customers and analysts -- to outline the huge opportunity in enterprise publishing. The meeting was part introduction to Quark's new offering, dubbed Dynamic Publishing Solution, and part pep rally, including a sentimental video highlighting gung-ho Quark employees worldwide. "He put a stake in the ground, and it forced people inside the company to take a stand one way or another," says former Quark executive Duhl. Banister says what started as a somber, quiet assembly turned buoyant and even festive by the end of the day. "You could see the change from the beginning to the end of the meeting," he says. "In the morning, it was skepticism. But after the meeting, the new push became the mantra around here. We understood it."

Not everyone was convinced. About a dozen senior and middle managers left within months, an unusually high pace of departures, recalls Jim Haggarty, Quark's CIO. "A lot of people didn't think we'd be able to pull it off," he says.

But those who remained went about their jobs with what struck Schiavone as a renewed level of engagement. He and his top team also pushed ahead harder then ever. They acquired a small company to complement the new product's features. And they set out on a nine-city tour to introduce the product to prospective customers.

Two years later, Dynamic Publishing Solution is a qualified success. The company has lined up a few marquee clients, including Airbus, which provides a boost to the sales team when it pitches new prospects. In 2009, Quark's enterprise products division posted revenue growth of 24 percent. (Quark won't release revenue figures, but market research firm Gartner estimated the company's 2008 sales were $170 million.)

Quark still has plenty of competition from Adobe, as well as several smaller players. The company is also unlikely to ever regain its position as the undisputed leader in its market. But at least it has a new product everyone can rally around.

The Experts Weigh In

Support The Team

The all-hands-on-deck meeting was a good idea. And if Schiavone stays out there with employees, doesn't hide out, that will inspire his people. He has to be clear that, "I'm in the trenches making sure we deliver this product to our customers." Success will come down to whether he sticks with this. Certainly, not all products are tested to the nth degree when they hit the market. So if there are problems, he needs to clean up those mistakes. If he works in partnership with employees and customers to get that product 100 percent there, he has a shot here.

Tony Smith
CEO, VSA Consulting Group
New York City

Try To Stay Nimble

It was a good idea for Quark to express its strategy, because its silence was in effect a signal of a lack of strategy. It had to say something. But when it launched, it didn't have a pipeline of professional developer partners on board. Quark's technology costs a lot and is complex. True, this market is a huge opportunity. And Quark has the credentials, an installed base, and visibility. The problem is, it is not easy for the company to be nimble when it has so many existing products it needs to support. I see this market being led by newer, more nimble competitors that don't have to maintain an existing platform.

Toby Bell
Research Vice President, Gartner
Stamford, Connecticut

First Listen, Then Decide

Schiavone did exactly the right thing. He communicated clearly, set expectations, and conveyed this idea of "all in or all out." What he was pushing was contrary to the Quark culture, so he needed to listen to the opposition and affirm people's worth. Ask for ideas. But as the senior person, you need to be decisive. Where many organizations fail is in execution. That part of it isn't fun or exciting. But the leader pushing for change better be excited about it. You need to make and then celebrate every milestone. If you don't, people become demoralized, and you give them excuses not to get behind the strategy.

John Baldoni
President, Baldoni Consulting
Ann Arbor, Michigan

IMAGE: Jamie Kripke
Last updated: Apr 5, 2010




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