What CACI's CEO move says about today's market
In a normal market, you’d look CACI International’s sudden announcement that it’s CEO had left, and that a new one had been hired, and think, What’s going on over at CACI?
But this isn’t a normal market, and that’s the message here. The departure of Dan Allen as CEO and the appointment of Ken Asbury say as much about today’s business environment as it does about CACI.
During the interview I had with both CACI Executive Chairman Jack London and Asbury, and during the analyst call that the company conducted later, the theme couldn’t be clearer: business development is paramount in today’s market.
Repeatedly, London and Asbury emphasized organic growth, win-rates and recompetes. They used words like “aggressive” and “robust” to describe the focus they’ll put on keeping their current work and targeting new business.
As part of this, CACI is revamping its business development organization, which will now report directly to Asbury. He described BD as a passion of his. The executive in charge of business development, Krisstie Kondrotis, also has left the company.
CACI’s moves may be dramatic, but the factors that the company is dealing with are not unique to CACI.
It’s a familiar laundry list of challenges: sequestration, budget cuts, continuing resolutions, fights over the debt ceiling, an emphasis on lowest price, fewer new starts, contracts getting consolidated, delays in awards. It goes on and on.
These factors have created a market rife with uncertainty.
Companies across the market are reacting in a variety of ways, depending on the type of work they do, and the kind of business they are.
On the negative side, we’ve seen executives fired or quitting, layoffs of workers, and divestitures of business units. On the more positive side, we’ve seen companies making acquisitions and investing infrastructure and new technologies.
But it isn't really an option to not react.
For CACI, London and the board looked at the market, and didn’t think Allen had demonstrated the ability to win enough recompetes or new business, so he was “removed” – the word they used in their 8-K filing with the Securities and Exchange Commission.
The company's organic growth stagnated in 2012, and it it had to lower its revenue guidance.
“The bottom line is we saw a world changing around us, and we didn’t feel we were adequately positioned internally for a focus on the organic competition that is coming,” London said on the analyst call.
Bringing on Asbury was a move to get ahead of the curve of what CACI, and others, see as an increasingly competitive market -- probably the most competitive it's been in many, many years.
“The objective was to get out in front of the issues that are looming and get ourselves in position to compete with a different style, a different leadership and a different expertise,” London said.
Does everyone need to make the kind of move CACI just did?
Probably not. I’m not advocating that you fire your CEO, but if London and other executives I’ve talked to are right, then you’ll need to be just as bold to win in this market.
Welcome to the new normal.
Posted by Nick Wakeman on Feb 21, 2013 at 9:48 AM