MNJ Technologies Jump-Starts Business After Companywide TransformationMNJ Technologies Jump-Starts Business After Companywide Transformation
This company was stuck at a plateau two years ago. Just look at them now.
January 28, 2019
MNJ Technologies, a $125 million-plus channel company, is back in growth mode after several years of floundering. A switch to cloud services, accompanied by an overhaul to its go-to-market strategy, culture and technology portfolio, is a big reason why.
Here is the story of MNJ Technologies, a self-funded and founder-owned business, and what lessons its transformation can teach you.
In the aftermath of the dot-com economic meltdown, MNJ Technologies opened its doors in 2002. Founders Paul and Sue Kozak set out to be “a full-service technology solutions provider with a reputation for knowledgeable sales representatives and solution architects, as well as outstanding logistical capabilities.” Paul Kozak, a 14-year veteran of CDW who rose to the rank of executive vice president of operations before leaving, knew a thing or two about scaling a business.
MNJ Technologies’ Paul Kozak
For much of the decade that followed, MNJ Technologies, based in Buffalo Grove, Illinois, thrived reselling products from HP, Cisco, NEC and others. By 2012, the company had grown into a $100 million-plus company catering to small and medium-size companies in the greater Chicagoland area.
Beginning around 2013-2014, however, sales growth began to slow. Over the next three years, they stagnated as customers began looking more closely at cloud services sold on a monthly basis. Soon, they began diverting their IT spending from capital-intensive investments to more flexible monthly contracts that drew from operating expenses. The shift, MNJ COO Paul Kozak says, caught the company off guard.
After some soul searching, MNJ realized it didn’t have the right customer relationships, salespeople, business model or market insights needed to pivot in a timely manner. The company, which prided itself on customer intimacy and employee-friendly policies such as “free-lunch Wednesdays,” found itself losing influence with customers and alienating the affections of longtime employees.
The more that MNJ talked with its customers about their plans to shift to cloud and digital services, the more the solution provider realized that customers did not have a good handle on where their data would reside, how they would protect it, which applications they would choose and who would help them with their digital transformations. Kozak and his partner, company president Sue Kozak, saw an opportunity emerge before their eyes. As the picture became clearer, so too did challenges that went along with it.
“I recognized that we needed new capabilities, new players to work with and new ways to sell ourselves,” says Kozak.
MNJ Technologies’ Ben Niernberg
To jump-start the transformation, MNJ hired new talent, including Ben Niernberg, a onetime Canon copier salesman who was working as an executive vice president in charge of operations and business development at a title company. Though he didn’t know much about MNJ Technologies or cloud services, he did know a lot about turnaround transformations. After interviewing with the Kozaks, MNJ brought him in as senior vice president of operations and sales in April 2017.
When Niernberg arrived at MNJ, he found what he says was a “great company foundation” that wasn’t evolving with the rapidly changing times. “[MNJ] was struggling on making that transition from what the traditional VAR model used to be into what customers were saying what they wanted,” says Niernberg.
Not long after arriving, Niernberg recognized that MNJ needed to retrain its technicians and acquire new capabilities and insights. More to the point, MNJ needed the skills necessary to …
… sell services to line-of-business buyers whose objectives were measured in business results, not network uptime.
The latter proved to be especially difficult. After some deeper investigation, Niernberg discovered that MNJ had a sales force that didn’t know the difference between a P&L and a balance sheet. Unable to craft a message that described how technology investments would lead to improved business outcomes, sales continued to stall despite an improving economy.
So, management began retooling. Among other things, MNJ acquired in 2016 Chicago-based Equivoice, a high-end solution and services provider that specialized in network infrastructure management and cloud services. It also drafted new go-to-market strategies and embraced business models. This led to the creation of the Ignyte business unit, which today provides white-label services to fellow channel partners.
Transitions at the company didn’t happen overnight. Nor did they go down painlessly. Amid the company’s transformation, morale slumped and frustrations grew.
“MNJ Technologies Services [sic] is headed in a downward spiral due to personal bias that is allowed to affect management decision-making on a regular and ongoing basis,” wrote one former employee anonymously on Glassdoor in 2015. “MNJ is nothing more than a box pusher and cannot compete against CDW, Insight and many of the other real VARs,” said another in June of 2017.
As frustrations mounted, several salespeople opted to leave the company rather than commit to significant retraining. From a team of 42, the sales division shrank to a core of 34.
Hoping to reignite a spark with those who stayed, MNJ began to refocus its energies. Instead of the data center, it focused on the edge of corporate networks where customers were making strategic investments in preparation for a raft of new applications and devices.
“Everyone at the company had to change the way they looked at the customer journey,” explains Niernberg.
This went beyond the sales department and engineering team to the accounting department, warehouse and even facilities maintenance organization. Instead of boxes, he pushed the sales team to concentrate on business applications and supporting infrastructure.
The shift began to produce business gains. Though MNJ employed fewer salespeople, its sales jumped 10 percent in 2018 to $138 million. Most of the growth came from existing customers. This year, sales are expected to reach $150 million. One reason is the number of new salespeople now drawn to the company. With luck, Niernberg believes there could be room for as many as 50 sales specialists, and plenty more customers, too.
As for vendors, MNJ embraced a two-pronged strategy in 2018: Get close to its five largest suppliers – including Cisco and Dell EMC – and bring on new vendors in fast-growth areas such as UCaaS. This has led MNJ to establish close ties with Jive, RingCentral, 8×8 and other providers.
Today, MNJ finds itself in a stronger financial and competitive position than before. Once dependent on low-margin, high volume sales, MNJ has grown its monthly recurring revenue (MRR) from $500,000 per month in 2017 to $800,000 per month today. By the end of 2019, the company expects MRR to grow to $1.2 million monthly.
None of the newfound success now enjoyed by the company, Niernberg and Paul Kozak agree, would likely have succeeded without a conscious effort to overhaul the company’s culture. Among other things, the company embraced a more professional dress code. It adopted a more customer-centric mindset and a more salesperson-friendly compensation policy that paid upfront commissions on MRR sales. It also took steps to improve morale and communications. This included enlisting Jim Mercir, a former professional baseball player with the Oakland As, to come in and provide inspiration and motivation. Among other things, Mercir helped MNJ embrace a culture that was more responsive to customer needs.
That, along with the adoption of new business models, is helping MNJ, which was stuck at a plateau of mediocrity just two years ago, attain new heights.
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