MNJ Technologies is a $125-million plus channel company that has been in decline for several years. Its switch to cloud services is one of the reasons. The company also restructured its culture, go-to-market strategy, and technology portfolio.

This is the story of MNJ Technology, an entrepreneur-owned and self-funded business. Learn from its transformation.

MNJ Technologies was founded in 2002, following the dot-com crash. Paul and Sue Kozak were the founders of MNJ Technologies. They wanted to be “a full-service technology solutions provider with an outstanding reputation for knowledgeable solution architects and sales representatives, as well as exceptional logistical capabilities.” Paul Kozak is a 14-year veteran in CDW and has figured out a lot about scaling businesses.

MNJ Technologies was based in Buffalo Grove and thrived selling products from HP, Cisco, NEC, and other companies for much of the decade. The company was now a $100 million-plus company that caters to small and medium-sized businesses in the Chicagoland region.

Sales growth started to slow around 2013-2014. They stagnated over the next three years as customers started to look more closely at cloud-based services on a monthly basis. They began to shift their IT spending away from capital-intensive investments and towards flexible monthly contracts that were financed from operating expenses. Paul Kozak, MNJ COO, says the shift caught them off guard.

MNJ was forced to do some soul-searching and realized that it did not have the right customer relations, salespeople, or business model, nor the market insights, necessary to pivot quickly. MNJ, which was known for its customer intimacy and employee-friendly policies like “free-lunch Wednesdays”, found it losing customers’ trust and alienating long-standing employees.

MNJ spent more time talking with customers about plans to move to cloud services and realized that they did not know where their data was located, how it would be protected, what applications they would use, and who would assist them in their digital transformations. Kozak and Sue Kozak, the company’s president, saw an opportunity before them. The picture began to become clearer and so did the challenges.

Kozak says, “I realized that we needed new capabilities and new players to work alongside us, as well as new ways to market ourselves.”

MNJ recruited new talent to jump-start the transformation. Ben Niernberg was a former Canon copier salesman and was currently working as an Executive Vice President in charge of business development and operations at a title company. Although he had no knowledge of MNJ Technologies or cloud services in general, he was very knowledgeable about turnaround transformations. MNJ hired him as the senior vice president of operations, sales, and marketing in April 2017, after he interviewed with the Kozaks.

Niernberg found MNJ a “great company base” that didn’t adapt to the changing times when he arrived. Niernberg says that MNJ was having trouble making the transition from the VAR model to what customers wanted.

Soon after arriving in New York, Niernberg realized that MNJ had to retrain their technicians and gain new capabilities and insight. MNJ also needed the skills to succeed.

Sell services to line-of-business buyers whose goals were measured in business results and not network uptime

This proved to be particularly difficult. Niernberg did some more research and discovered that MNJ’s sales team didn’t understand the difference between a P&L balance sheet and a P&L. Sales continued to stagnate despite an improving economy.

Management began to retool. MNJ purchased in Chicago, Equivoice in 2016, a high-end solution provider and services provider that specialized on cloud services and network infrastructure management. It also developed new go-to-market strategies and adopted business models. This resulted in the creation of Ignyte, a business unit that provides white-label services for channel partners.

The company’s transitions didn’t happen overnight. They were not easy. During the company’s transformation, morale plummeted and frustrations grew.

“MNJ Technologies Services [sic] has a downward spiral because of personal bias that is allowed be affected management decision-making regularly and ongoing,” said an anonymous former employee on Glassdoor in 2015 Another employee said that MNJ was nothing but a box-pusher and could not compete with Insight, CDW and many other real VARs in June 2017.

Many salespeople decided to quit the company instead of undergoing extensive retraining as frustrations mounted. The sales division was originally comprised of 42 people. It now has 34.

MNJ began to focus its efforts in an effort to revive the enthusiasm of those who had stayed. MNJ shifted its focus away from the data center and instead focused on the edge corporate networks, where customers were making strategic investments to prepare for a host of new applications.

Niernberg explains that everyone at the company needed to shift the way they saw the customer journey.

This extended beyond the engineering and sales departments to include the warehouse, accounting, and facilities maintenance organizations. He encouraged the sales team not to focus on boxes and instead pushed them to concentrate more on business applications, supporting infrastructure, and other aspects.

This shift was a success for the business. MNJ had fewer salespeople in 2018, but its sales rose 10 percent to $138million in 2018. The majority of growth was due to existing customers. Sales are expected to exceed $150 million this year. The company is now attracting many new salespeople. Niernberg is optimistic that there will be 50 sales specialists and many more customers with a little luck.

MNJ adopted a dual-pronged strategy for vendors in 2018. It aimed to get closer to five of its largest suppliers, including Cisco and Dell EMC, and also bring in new vendors in areas like UCaaS and other fast-growing industries. MNJ has established close ties to Jive, RingCentral, and 8×8, among other providers.

MNJ is now in a stronger financial position and more competitive than ever before. MNJ, which was once dependent on low-margin high volume sales, has seen its monthly recurring revenues (MRR), rise from $500,000 per month in 2017 to $800,000. The company anticipates that MRR will reach $1.2 million by the end of 2019.

Paul Kozak and Niernberg agree that the company would not have achieved the level of success it enjoys today without making conscious efforts to change the culture. The company adopted a more professional dress code. It adopted a customer-focused mindset and paid upfront commissions for MRR sales. It took steps to improve communication and morale. Jim Mercir, an ex-professional baseball player from the Oakland As, was brought in to provide motivation and inspiration. Mercir, among other things, helped MNJ adopt a culture that was more responsive and flexible to customer needs.

This, along with new business models, is helping MNJ to rise from the ashes that it was on two years ago.

Read the original article here.