How a Chilean training company scaled back, focused, then grew
A team of MIT Sloan students helps Lexian navigate out of a jam
May 5, 2015
Jude Richardson made a mistake. Sales at Lexian, the human resources training company he’d founded in Santiago, Chile, were up 60 percent in 2014. He started to expand. But at the same time the Chilean economy contracted, and his growth rate dropped to 20 percent.
“It got me into a situation that lost me a lot of money,” the entrepreneur said. But while meeting with a former Lexian student who was enrolled at MIT Sloan he learned about Global Entrepreneurship Lab, the action learning program at MIT Sloan that pairs students with businesses around the world for hands-on management projects. Richardson signed on as a host. Four MIT Sloan MBA students flew from Cambridge and stayed for three weeks, leaving Richardson with a roadmap for navigating Lexian forward.
“It was one of the seminal decisions in the life of the company,” Richardson said.
In Global Entrepreneurship Lab, also known as G-Lab, students build a relationship with their host company online before traveling to work on the ground in the company’s home country. Sherry Sirikunakorn, Pat Boonthai, Verawat Kirinruttana and Take Kunifuda, all second-year MBA students at MIT Sloan, arrived in Santiago in January. They analyzed Lexian’s core competencies and then went out into the city, seeking the bigger picture.
“It’s important for us to know how businesses interact in the host country, Kirinruttana said. “So we try to go out with the local people and see how they think.”
Richardson and his employees helped as much as they could, but the best resources available were MIT alumni who provided access to their networks in Chile. The team also relied on their mentor, Miro Kazakoff, a lecturer in managerial communications.
“He made practical recommendations,” Kunifuda said. “He helped us set up and revise the project scope.” And Richardson himself provided insights into Chilean economic and cultural trends. For example, the students were surprised by the huge width of the sidewalks in Santiago. Richardson explained that just a few families own all the businesses in town, and the buildings are centers of power.
“It’s not a place where increased bottom line through efficiency is at top of mind,” Richardson said.
Lexian was trying to serve many markets: retail stores, restaurants, and hotels. But the company was spreading itself too thin with little return.
“Take a niche and be there first: it’s not a concept that occurred to me before,” Richardson said. The G-Lab team helped him hone in on a beachhead market—namely, midsize hotels.
“In Chile, hotel investment is growing at more than two times the rate it is in the U.S. and the rest of the world,” Richardson said.
The team also advised Richardson to tweak what he was selling and how he sold it. In Chile, where the markets are not saturated, customer service is not a top priority, Kunifuda said. So the students steered Richardson away from customer service training and toward English language courses, already a strength at Lexian.
Another recommendation was for Lexian to position itself as a partner to help customers take advantage of a government program that reimburses the costs of training employees, especially low-income workers.
On January 20, the student team presented Richardson with its report. Richardson said it all made perfect sense to him, even though he hadn’t seen the team’s recommended path forward on his own.
“Receiving the roadmap was a big reality check—and a very valuable one—for us,” he said. He keeps it with him and reads it every day, absorbing it to the point where he has internalized it as a new philosophy.
A crucial move
Roadmap in hand, Richardson looked around at the plush office space he’d been renting for Lexian. In crowded Santiago, he realized, more people would come to training classes if they didn’t have to fight their way across town. The G-Lab team didn’t specifically tell him to move out of that office, but eight weeks after receiving the report, he closed down Lexian’s fancy digs and opened a few simpler spaces throughout the city.
“Within a week of being here,” he said, “we already have clients coming to us with business, just because we are closer to them. That’s the fundamental thing I have gained from this experience: an eye-opening, fresh view of the company.”
“If I had not gone through this process I really don’t know where Lexian would be today,” he said. “I would have saved the company—I’m resourceful—but I wouldn’t be clear about where I was taking it. [In the G-Lab team] I found what I was looking for: inspiration to not just dream big but be disciplined about it.”