Strengthen your balance sheet. Most Executives tent to focus on P&L improvements. No matter how good the business ideas are on how to improve the bottom line, you might run out of time prior to deliver results. A strong balance sheet is the only way to “buy time”: a sort of insurance against the time you might need to face and overcome adversity prior to unleash your full potential. Strategies to strengthen the balance sheet should be a primary goal for a CEO and the Board.
As part of my series about prominent entrepreneurs and executives that overcame adversity to achieve great success”, I had the pleasure of interviewing Nicola Gallotti, President & CEO of Kayser-Roth Corporation.
Nicola Gallotti is President and CEO of leading legwear and lingerie corporation Kayser-Roth. He is behind the invention of the innovative antimicrobial hand protector Ghluv launched during the first phase of the COVID-19 pandemic. Through his career Mr. Gallotti had many breakthrough moments managing complex international acquisitions and business challenges. He learnt that developing the ability of asking the right questions always leads to finding simple and effective solutions, even to the most complex problems. Key to success also lays in an out-of-the-box problem solving attitude fueled by constant curiosity.
Thank you so much for doing this with us! Can you tell us the “backstory” about what brought you to this specific career path?
Curiosity! I really think the backstory is that curiosity has been a major driver for achievements. Curiosity has progressively allowed me to familiarize with multifaceted and out-of-the-box solutions and ultimately inspired and fed the ability to expand my vision and broaden scopes in almost any business situation I’ve been in. Curiosity has given me the energy to roll up my sleeves to search for that very specific x factor that needed to be fixed to drive a turnaround and /or to fuel growth. Curiosity has allowed me to progressively refine my emotional intelligence and the soft skills required to inspire and manage performance-oriented teams. In the end, curiosity allows me to have “fun” and when you truly have fun in the pursuit of business success, that is when you give the best and you will most likely achieve the best results.
Can you share your story of when you were on the brink of failure? First, take us back to what it was like during the darkest days.
We had just completed the transition to a more focused organization, with clarity and alignment on how to deliver strong financials and possibly exceed shareholder’s expectations. It was early March 2020, two months only into the new year and slightly ahead of what we promised to deliver. At that point the pandemic hit the US, and, to a certain extent, it was not a big surprise since we already saw what was happening overseas. But the speed at which the pandemic was threatening not only our growth, but our survival has been unprecedented, leaving no time to brace for impact. The entire supply chain collapsed in a week with working capital facing one of the most brutal situations you could possibly simulate on a business case:
- Retailers moving from ON to OFF by closing doors and canceling Spring/Summer orders: overnight, revenues (receivables) falling to zero and inventory ready to be shipped now left in our warehouse (and balance sheet) with vendors to be paid
- Far east vendors (half-way through the pandemic and reopening factories) expected to be paid as usual to secure Fall/Winter collections to be put in development and avoid a disruption late in the year
- Projections on how much merchandise to buy for Fall/Winter supported by no commitment from retailers- which did not know if they re-open and when- leaving the entire opportunity risk dilemma on us. Not buying inventory would have translated into no revenues and driving the company to drastic P&L losses; buying inventory would have given hope to ink revenues but at the expenses of a liquidity crisis if orders from customers would have not come in.
- US manufacturing (we do own 3 main facilities in North Carolina) facing business continuity and crisis management due to COVID-19 spikes.
- Fixed costs that could not be reduced and overheads to be managed avoiding drastic decisions that would have impacted our colleagues and their families ….and many more other challenges.
I had experience in crisis management as I successfully run the Geneva Watch Group turnaround through the 2008 crisis after leading the acquisition from a PE through a 363 procedure only two months before it all started in September, but that was a very different story. The company had issues and the financial crisis just added an extra challenge by limiting the financing options we could look for on the way to bring the Company back to positive cash flow. In that case though, most commercial options were still a possibility, and I could rely on certain businesses. This time around, with the COVID-19 pandemic, the challenge was different. A true nightmare with broader impact where the whole system collapse and you need to act fast and to tap into a completely new mindset.
What was your mindset during such a challenging time? Where did you get the drive to keep going when things were so hard?
At first, my brain was spinning all over the place. I think it is just a natural reaction to a drastic and complex situation. It is your mindset though that drives how fast you will recover from the punch allowing you to stay unemotional, explore options, define your agenda, and execute.
I have been working on a few start-ups in my career and that is the kind of mindset I relied on. A mindset where you accept reality, learn and move on by adapting to circumstances. It is a very fast and concrete mental exercise that drives actionable solutions to be tested in a matter of days.
The underlined mindset behind a start-up is to never-give-up and to prove yourself by following a vision with calculated risk that move the venture forward at a speed that nobody else could ever envision for you. I would say that my management consulting background also helped me a lot in these situations where you need to see the big picture, strategize and focus on what can impact the fundamentals of the Company.
Tell us how you were able to overcome such adversity and achieve massive success? What did the next chapter look like?
The more you can stay calm the more your prospective isclear, becauseyou can be receptive to the signals from the entire eco-system around you. This is how I got inspired to invent the GHLUV hand protector: a game changer not only for our Company in that very critical moment in a time full of uncertainness, but also for any individual trying to adapt to this new normal and stay as safe as possible.
From a pure business case standpoint, I found the solution in 5 simple steps:
- First: find a sizable new consumer need — how to prevent hands to be infected while touching communal surfaces.
- Second: identify an effective scalable solution we could manufacture ourselves in the USA thus to speed up time to market -the hand protector — and sample in a day
- Third: protect the idea by filing a patent to be the first to partner with a very effective brand-new antimicrobial technology (V-Block NPJ03) and be included in the launch press release
- Fourth: go direct to consumer by opening our ghluv.com ecommerce site
- Fifth: sell into retailers that were guaranteed to stay open as essential businesses (food and pharmacy) and that would not stress the working capital (Food & Drugs chains usually pay 30-day terms)
Based on your experience, can you share 3 actionable pieces of advice about how to develop the mindset needed to persevere through adversity? (Please share a story or example for each.)
- Make it simple by asking the right questions. People tend to look for complex solutions to complex dilemmas. Most of the time the X factor needed to overcome adversity is very simple. To find it though, you have to ask the right question. Think of some of the most impactful innovations: they are obvious to everyone once they are done. An example: the chewing-gum business was collapsing under the blame of being bad for your teeth. One day somebody swapped the formula eliminating some bad ingredients and adding beneficial ones to a point that doctors were able to certify that chewing gums could be a good alternative when brushing your teeth was not possible. Not a complicated idea at all! What do all simple solution to complex situations have in common? Executives were able to ask the right question. If you have the right question the answer is simple and self-explanatory most of the time.
- Strengthen your balance sheet. Most Executives tent to focus on P&L improvements. No matter how good the business ideas are on how to improve the bottom line, you might run out of time prior to deliver results. A strong balance sheet is the only way to “buy time”: a sort of insurance against the time you might need to face and overcome adversity prior to unleash your full potential. Strategies to strengthen the balance sheet should be a primary goal for a CEO and the Board.
- Stay nimble. It will not be the last time Executives are required to adapt. Get a broader prospective, stay curious, have fun in solving business games, even when they do not seem connected with your business. Talk to trustees and mentors, share thoughts and you will be inspired on what to drive next.
None of us are able to achieve success without some help along the way. Is there a particular person who helped get you to where you are? Can you share a story about that?
There a several people I’m grateful for. Some gave me the right mentorship at the right time; some are colleagues that were able to execute my agenda and lift me higher. In the end, I think you need to be given an opportunity, the chance to emerge. You have to earn that opportunity and also be lucky enough to have someone willing to take the risk of trusting you when putting you on the fast track. It happened to me when I was working on the acquisition of Geneva Watch Group on behalf of my European employer. Upon completion of the complex acquisition, the Group Managing Director Gianni Pieraccioni — now a top Executive in the cosmetic world- asked me to move to the United States and lead the turnaround of this newly acquired company at the age of 36. A game changer in my career and personal life.
Are you working on any exciting new projects now? How do you think that will help people?
Personal protection apparel is one of the projects we will keep developing. I truly believe in the importance of helping people to regain emotional health and stay as safe as possible. GHLUV fully embraces what I call “The Ease Factor”: solutions able to “ease” adaptation to the new normal. We are finalizing the best personal protection outerwear jacket…. Follow #ghluv to keep abreast of the progress.
You are a person of great influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂
I would probably start with the basics and I believe education should be made accessible since it is a true source for creating your own chances in life. I recently read about ISA (Income Share Agreements) as a new form of education financing. An individual pays studies for a student in exchange of a revenue share after the student is up and running and earning their own salary. Somebody takes a chance empowering your ability to succeed in exchange of a remuneration afterwards. I think this is a beautiful way to share love and appreciation.
Any parting words of wisdom that you would like to share?
I’m positive by nature and I always see the glass half full. It is clear that the pandemic will drive a fantastic acceleration to a new mix of remote and in-person working habit allowing to have a better work-life balance, where work and personal life will organically feed into each other. Trustworthy, accountable and result oriented individuals will appreciate how things will be redefined in their life soon.
How can our readers follow you on social media?
LinkedIn is probably the best way to follow me. I am looking forward to actively sharing my thoughts and insights more actively on this platform so that they can be of inspiration and motivation for others.
Thank you so much for joining us. This was very inspirational.