Here's What Avigilon Should Do Now

An Avigilon partner asked:

"What would be your Goal if you run Avigilon?"

Given Avigilon's 60% stock price drop since last year, the continued executive exits / ousters, the declining growth, and weak profitability, Avigilon needs to change. However, the company has a strong product offering that can help in a turnaround.

To answer the Avigilon partner, here are the top 4 things I would do:

• Fire Schmode, Hire Nilsson
• Divest or RAND the Patents
• Launch a Low-Cost Line
• Push Video Analytics Development Hard

Inside, we break them down, including polls / voting on each one.

The Problem

The problem for Avigilon is that their fear and intimidation management style neither scales nor lasts. Early stage companies in high growth markets can temporarily do this but now that Avigilon is approaching 1,000 employees in a market that has matured / cooled, they need to change.

Fire Schmode, Hire Nilsson

COO Bryan Schmode [link no longer available] is undoubtedly the main driver of their fear and intimidation management style. In talking to numerous former employees, the consistent negative theme is Schmode and his tactics. By contrast, the CEO Fernandes receives generally positive comments.

Equally important, the results have been worse and worse since Schmode was promoted from sales to COO at the beginning of last year. Schmode demanded numbers yet has now failed to deliver himself. At the same time, the management team around Schmode is either quitting or being ousted, including the 'resignation' of his long-time lieutenant / ally Pedro Simoes.

UPDATE: Nine days after publishing this, Schmode has been ousted. The CEO will take over the COO role, at least for now.

Axis' North American GM Fredrik Nilsson [link no longer available] is the antithesis of Schmode - politically savvy, diplomatic and charming. He will be able to foster / lead a mature, productive culture. Equally importantly, he already manages an organization (Axis North America) with $350 million annual revenue so he has large-scale experience. Plus, he will bring goodwill and relationships with hundreds, if not thousands, of potential employees and partners.

With Axis now a Canon subsidiary, this might be an attractive opportunity for him. And he lives in Massachusetts, near one of Avigilon's 3 North American bases. 

Vote:

Divest or RAND The Patents

Like most technology markets, the video surveillance industry largely views patent licensing 'campaigns' (like Avigilon's) very negatively. This creates significant issues for Avigilon. Besides the risk of competitors trying to invalidate Avigilon patents (much higher because they view Avigilon as a threat), running such a campaign is negative for Avigilon's employees, integrator and technology partners.

Many, if not most, quality people and companies do not want to be associated with patent lawsuits and legal fighting between companies. This can not only hurt morale for existing Avigilon employees but make it harder to recruit veteran industry people (who generally do not want to be in an adversarial position against their potential future employees in a relatively small industry). Likewise, many companies (both integrators and manufacturers) will not want to partner / associate with companies they see doing this.

Avigilon would be best off either divesting the patents, or if not feasible, than to offer then on 'Reasonable and non-discriminatory terms' (RAND), rather than as the weapons Avigilon is now positioning them.

Vote:

Launch a Low-Cost Camera Line

Avigilon's product portfolio is weak at the low-end, low-cost segment (see Avigilon HD Micro Dome Test). Though Avigilon likes to ignore / deny the impact of super low-cost Chinese products, it is clearly impacting all Western companies.

The good news is that Avigilon can fairly easily counter this, by releasing fixed focal, integrated IR minidomes and bullets, basic offerings they lack and most everyone else offers. To further differentiate, they can add in their analytics. To incent these cameras being used with Avigilon's own VMS, they can offer a higher MSRP price but with moderate discounts for using with ACC.

Push Video Analytics Development

One of the best recent moves for Avigilon has been their acquisition of VideoIQ and their focus on video analytics. The megapixel market is maturing and with 12MP open cameras becoming increasing common, it is harder and harder to win on pure pixels. 

Avigilon is already doing a good job, lowering the cost of analytics significantly compared to VideoIQ, keeping similar performance (see Avigilon Analytic Cameras Tested).

Focusing more on analytics development, whether it is new variants, new applications, integrating into lower cost cameras, making it simpler to work with remote monitoring providers, etc. could provide Avigilon with their key technology differentiator over the next 10 years as megapixel was in the prior.

What Would You Do?

Suggest in the comments below.