Bumpy roads no more

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Bumpy roads no more

Author: Nguyen Minh Phuong – Principal, Mekong Capital
31 March 2022

Bumpy roads no more

Vua Nem’s Vision Day 2020

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When a company is operating at full speed, continuously offering actions but still not achieving breakthrough results, you will probably ask me as an investor, “what advice do we have for the company?” We do not have specific answer. Instead, the question for the leaders is whether they are willing to stand from the Vision and hire the right leaders that the Vision needs.

This question appears to be critical for many of Mekong Capital’s investee companies, including Vua Nem and its founder – CEO Hoang Tuan Anh.

Mr. Hoang Tuan Anh, CEO of Vua Nem

Mr. Hoang Tuan Anh, CEO of Vua Nem

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After re-creating the 2023 Vision in October 2020, Vua Nem is like a fully fueled car, breaking revenue records in November and December. The Vision has created a strong force of energy across the whole organization. I see the hunger for breakthroughs from CEO Tuan Anh and the management team of Vua Nem. They continuously declare their breakthrough results and never stop putting forth actions: At the front line, the Sales department launched multiple discount programs, the Marketing department came up with new creative campaigns; at the back office, all the capabilities of the Human Resources department were on track and well handled by the HR Manager – Ms. Diep Vu. Thanks to her dedication and love for the company, Vua Nem’s culture was built from a close-knit relationship, strong bonds like a family. Each of the managers was so committed to the Vision they created as they live in it. CEO Tuan Anh believed that the harmony of the current management team will win all the upcoming challenges.

During that time, I had also witnessed the disappointment when they tried a lot of new things, but little seem to work effectively. Vua Nem kept missing the mark, one after another. The company had extreme difficulties in hunting and recruiting talents. The bonus system did not motivate the sales team. The management team did not own and deliver on their KPIs as well as top company KPIs. This car kept running to the general direction of the Vision but somehow always hit the wrong track with many bumpy roads.

Like the hiss of a flat tire, 2020 results hit with huge disappointment. Total revenue in 2020 was a 30% distance from the target. Out of the 5 top company KPIs, none was achieved in 2020. This was Deja vu to Tuan Anh – Vua Nem has not been achieving its top company KPI and revenue target for 3 years since 2018. Clearly, the safety nest of harmony that Tuan Anh was trying hard to preserve was not what was required to bring performance.

With those thoughts, Tuan Anh took a huge step back and reflected: “The Vision is there. The commitment is there. But something—or someone—is still missing—someone who can ensure that every turn Vua Nem takes is a conscious, guided one. The road to Vision is still a long way ahead. Do I have the right drivers to lead this car in achieving a whooping 700% growth in just 2 years?”

The question helped him realize what Vua Nem needed right then was to elevate the culture of harmony to the next level by strengthening his senior leadership team, and the gap between the desired HR Director and the current HR Manager was too big to bridge in that short a time. Standing from the Vision, not only could he articulate vividly what the ideal HR Director looks like, he was able to enroll Ms. Diep Vu to partner with him in finding the best leader for the HR department.

And Vua Nem did succeed. In May 2021, Ms. Diep Pham (Pham Quynh Diep) was appointed as the new HR Director of Vua Nem.

Ms. Pham Quynh Diep, HR Director of Vua Nem

Ms. Pham Quynh Diep, HR Director of Vua Nem

Only 10 months upon joining, Ms. Diep Pham has brought incredible changes to the company. She quickly built an employer brand for Vua Nem, making it extremely easy for the company to recruit. Much less effort was spent on enrolling the candidates to interview, and not a single offer Vua Nem made was declined since. She also immediately saw the lack of competency required out of the current C-suite level, various positions have been and are being replaced with better fit leaders. In September, Vua Nem has a new Sales Director who has successfully driven the last quarter’s revenue to contribute 60% of 2021 total sales. Vua Nem’s new Chief Marketing Officer (also introduced by Ms. Diep Pham) has successfully put the name of Vua Nem in the mind of an increasing number of customers. Other positions are also appointed such as Chief Information Officer, Head of Merchandise, Head of Logistics, and Head of Learning and Development.

To me, the most profound impact that Ms. Diep Pham brought about is for CEO Tuan Anh to step out of his comfort zone, standing from the Vision to transform himself and transform the company. Now with the right drivers in the front seats, the Vua Nem car is speeding along the road to the Vision. That road now appears clear and within reach. The year 2021 brought confidence to Tuan Anh and the team when the company profited for the first time since Mekong Capital invested in 2018.

Although everybody knows that a strong management team is critical for a company to achieve its Vision, the signs that Vua Nem needed new management team members were far from clear when the company possessed a dedicated, passionate, energetic management team with very strong commitment but—when we looked close—insufficient experience and competency to successfully drive the car and identify the potential “bumpy roads” to avoid.

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Mekong Capital makes investments in consumer-driven businesses and adds substantial value to those companies based on its proven framework called Vision Driven Investing. Our investee companies are typically among the fastest-growing companies in Vietnam’s consumer sectors.

In January 2022, Mekong Capital founder Chris Freund published Crab Hotpot, a story about a bunch of crabs who found themselves stuck in a boiling pot. The colorful cover of “Crab Hot Pot,” complete with expressive cartoon crustaceans, looks like a children’s tale at first glance. But as one continues reading, it becomes clear that the work has an important message about organizational transformation, leadership and focusing on a clear vision for the future.

The book is available on Tiki (Hard copy): bit.ly/38baF8a (Vietnamese) and Amazon: amzn.to/3yWunzG (English)

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