Avigilon COO Schmode Ousted

IPVM called for Avigilon's COO to be fired last week.

Today, he is gone.

In this note, we examine the factors behind this and what this means for Avigilon going forward.

Ousted

Avigilon has 'streamlined management structure', specifically removing COO Schmode as well as the SVP of Global Operations. The announcement noted:

"This refreshed structure brings [Avigilon CEO] Mr. Fernandes closer to Avigilon's day-to-day operations while empowering department leaders with greater authority.... our refreshed leadership structure supports this fast pace by facilitating efficient decision-making and innovation." [Emphasis Added]

The implication from these statements is that department leaders were undermined and decision making was poor, which is not surprising from what we have seen and heard.

This follows the EVP of Engineering, the SVP of Sales and the VP of Marketing all quitting or being fired in the past few months.

Problems With Schmode

As we reported last week:

"COO Bryan Schmode 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."

At that time, over 80% of 200+ IPVM members agreed that Schmode should be fired and replaced.

Upside

One person close to Avigilon explained the upside:

"This gives me hope that the company has a stronger future. Schmode was essentially holding up everything. It literally seemed like no decisions could be made without his blessing.

In order to continue to grow, Avigilon needs to empower people to make decisions on their own and evaluate what is right for the company. Fernandes would preach this a lot, but Schmode would essentially prevent it."

We believe this is, minimally, addition by subtraction and if that Fernandes does re-engage and allow the team to execute, that things could get a lot better.

Risks

A few things remain to be seen:

• How active can or will Fernandes be? He has delegated to Schmode for some time now and the company has grown far more complex and larger than it was when he was intimately involved.
• What happens to sales? Presumably it becomes less cut throat, which certainly has some benefits. On the other hand, will this slow growth? Whatever criticisms of Schmode exist, clearly his main strength was driving sales numbers. Now both Schmode and the SVP of Sales are gone in a one month period.
• What happens to the stock price, at least in the short term? Does it bounce as investors see a brighter future or does it plunge as investors realize the issues many have been calling out are for real?

Overall, it is definitely a good, promising move for Avigilon. Plus, Avigilon's CEO did it relatively fast which is another good sign.