The 7 success habits of highly adaptable companies

Although The Marlin Co. is 103 years old, the majority of our evolution has come over the past 12 years. It was driven by technological change that put most of our competitors in the printing sector out of business. We not only survived but are experiencing rapid growth — specifically, a compound annual growth rate of 25-plus percent in our digital products over the past five years and more than 10,000 locations using our products in more than 40 countries.

Looking back at the rapid — and sometimes wrenching — evolution, it seems inevitable, but back then there was no direction to follow or "industry" to belong to. There were just a bunch of new promising technologies, most without any track record.

Our legacy business was publishing posters on workplace issues (e.g., safety, productivity, teamwork, morale) and shipping them in a monthly carton to customers who would post them on bulletin boards we provided. Today we are a software-as-a-service (SaaS) developer, creating online products to help our customers with our longtime mission: to be the workplace communication experts to help companies communicate visually with every employee throughout their organization.

How did we get from there to here?

My epiphany was just after we bought our first Macintosh (NASDAQ: AAPL) in the early 1990s. I walked into our editorial department and saw one of our first computer-designed posters on the screen. It looked beautiful and vibrant, much better than on paper. I knew that if we could somehow get that digital version in front of customers, it would be a hit. We soon started working on it and introduced our first digital product in 2004.

The value of the new technology started with the better presentation and the ability to publish immediately; materials could be at the customer location in seconds instead of days. One early lesson was that this immediacy also amplified problems instantly. When we'd make a typo or if the network or server went down temporarily, we'd start getting complaints — in seconds instead of days.

The bigger benefit for our customers eventually became the ability for them to post their own Word, Excel, PowerPoint (NASDAQ: MSFT) docs, videos and KPIs, enabling them for the first time to communicate instantly across the building or around the world. Our products today have two primary benefits: content we publish daily, and the way we make it simple for customers to post their in-house materials.

The transition from print to digital products has been both a blessing and a curse. A blessing because the cash flow from the print products was the venture funding for our multiyear digital product development, allowing us to not dilute equity. But the print product started to lose steam rapidly a few years ago and created a drag on our growth as those customers didn't renew or convert to the new products. We had to replace them with new digital customers just to break even on the revenue line, masking the robust growth in new products. Although it was an overall healthy situation, it's often been difficult to explain it to bankers and stockholders. Today the vast majority of our mix is in digital products, and we plan to close the print side sometime this year.

Here are seven lessons learned from the last dozen years:

1. Stay true to the mission.
Our mission today is the same as it was 15 years ago and has been the guiding principal during our evolution. The need to better serve our customers dictated which technologies we used and which products to develop. This is an important point, because as we got into digital signage and software, there were many seductive inflection points to develop products outside of our expertise. Not a week went by that some employee, friend or stockholder wouldn't make a suggestion of a product that was "just like the ones you're working on." Some of them turned out to be good products for other companies. And that's fine. We had to realize that like all companies, we had limited resources and needed to focus completely on serving our customers by developing new products that would help them, and not some other "new" customer that we had no experience with. It's challenging enough to transform your business without having to invent new ones on the way (unless there's no other choice).

2. Be ready for high-level resistance.
In a start-up, resistance is not an issue because it's all about newness. But in a company where you're changing from a well-established, profitable product line to a completely new one that's consuming a lot of cash, it's a whole other ballgame. When we started our initial development there was no criticism. But as soon as it became evident that we'd need significant funding and resources that took away from the status quo, objections sprang from everywhere. Most of the criticisms were about our lack of experience in software (true), we didn't have the right people to figure it out (true), the board is going to push back on this (true) and, even if were successful, Microsoft, Sony (Tokyo Stock Exchange: 6758.T-JP) or Google (NASDAQ: GOOGL) would be able to build a better version and put us out of business (apparently not true).

My point is not that the objections weren't valid. They were. But they were in the spirit of thinking that viable new products couldn't spring from an old company set in its ways. That thinking was wrong-headed. Looking back on it, my advice is to develop a thick skin, take the comments into consideration and keep moving forward. This dynamic is a good personal test, as I believe one's belief in the future is in direct proportion to the strength he/she has to endure criticisms and stamp out self-doubt.

3. Get new key people in place quickly.
Since we morphed from one kind of product to new ones built in completely new ways, we didn't have any of the expertise in house. Our first software was designed by consultants; I think we were a little lucky to get good ones the first time. But it turns out that there's a lot more to software development than just writing code. You need teams of developers, new types of product market research and product management, quality assurance people, tech support teams, new types of customer service, websites that are the actual product (not just marketing) … the list goes on.

In retrospect, I waited too long to get the right people heading up some of those areas, and in almost every case, they came from the outside. Not only does getting the right person in the right place make an immediate difference, but the fresh perspective is invaluable, albeit a little painful sometimes.

4. The culture WILL change — get used to it.
While the mission remained the same, almost everything else changed. We needed different employees, managers, skill sets and departments. Building those while not damaging the existing structure — which was providing the cash for the new structure — has been a delicate dance between moving too fast and disrupting morale and processes, and not fast enough which could let new competitors get the edge.

5. Be honest with your staff.
It's tempting not to share information that you know will be seen as bad news by some. For example, we knew that certain departments would eventually be no longer needed and those staff members would have freaked out when they heard the news through the rumor mill. But at some level it was obvious to everyone, which made it imperative to get out in front of the rumors and misinformation. So we made our plans about how those departments would wind down, what the final dates would be, and how we would try to transition those employees to the new areas. And then we shared those plans, well in advance, with everyone.

The result was great; everyone understood that we needed to change and employees started to position and train themselves for the future. So far we've had zero layoffs due to the acceptance by our people and their willingness to buy into our future.

6. Be realistic.
It's easy (for me at least) to be overly optimistic going into a new venture. For example, as we started developing digital products, many people would say, "Your cost of content delivery will drop to zero … it's just electrons … think of how profitable you'll be!" True, our delivery costs did drop, but that was made up for several times over by other, higher costs such as software engineers and tech support staff who are expensive and hard to find.

7. Be prepared to disrupt yourself.
Today's hot concept is to develop a product or service like Uber or Airbnb that will completely disrupt some old-line industry. In our case, that old-line industry was ourselves. There was considerable pressure from managers and board members, especially in the beginning, not to let our new, unproven products harm our bread-and-butter ones. But we had to … it was clear to me that if we didn't do it to ourselves, someone else would. By embracing that philosophy, the potential friction and wasted energy was soon channeled into our future in a positive way.

Transitioning the company to completely new products and technologies has been challenging but very rewarding … even fun. The keys have been always to look ahead, imagine what could be, and then take concrete steps in that direction. Building consensus early on was critical with all stakeholder groups — employees, senior managers, stockholders and board members. It's been important to listen to their concerns while gently, consistently pushing ahead.

— By Frank Kenna III, CEO, The Marlin Company, and a member of the CNBC-YPO Chief Executive Network

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