Inside the glass box - Strategies

Innovation has been a hallmark of Brazil's Microsiga from the start. Now CEO Laercio Cosentino is breaking new ground for his company, with a cutting-edge management style and an IPO on the nation's newest exchange.

IF MICROSIGA CEO LAERCIO Cosentino were a software program, he would be an open access system. Voted last year's Brazilian entrepreneur of the year by Ernst & Young, his management style is transparent in the most literal sense: The walls and ceiling of his office are glass, and he regularly adjusts corporate policies based on copious feedback from employees.

Feedback is key not only to running Microsiga, Cosentino's software company; it is also critical to product development. With sales last year topping US$76 million, Microsiga serves the needs of small- and mid-sized businesses, tailoring business software to this specific niche.

As for innovation, that is a given for Microsiga, which Cosentino founded 18 years ago with former boss Ernesto Haberkorn. Cosentino was an engineer at the time, working at Haberkom's Sao Paulo punch-card data processing company Siga. Cosentino convinced Haberkom to invest US$5,000 to develop software for the new micro- and personal computers just beginning to appear. "We saw the potential of the microcomputer market when it was just getting started and believed it was the future," says Cosentino, now 40.

He was right. The computer industry exploded shortly after Cosentino and Haberkom founded Microsiga Software SA, which controls 50 percent of the low-to mid-end corporate software market in Brazil. Growing between 50 percent and 70 percent a year for the past seven years, the company has not only weathered Brazil's economic ups and downs, but has also thrived.

The strategy has been a simple one, says Cosentino: Concentrate on niche markets and distribution. Rather than compete directly with multinational software companies such as Oracle and Microsoft, Microsiga sells their software, installs it, maintains it, develops applications for it and trains the client's personnel in how to use it. Microsiga also develops its own Customer Relationship Manager (CRM) and Enterprise Resource Planning (ERP) software with a smaller client in mind, selling roughly US$25 million worth last year.

Taking his "think globally act locally" strategy another step, Cosentino has also spent the last decade developing a franchise network in Brazil, Argentina, Uruguay, Paraguay, Chile, Colombia, Mexico and Puerto Rico. "Globalization has to respect both the needs and cultures of each region. By following this model, we have created a global model with regional characteristics," he says. "We required each new franchise to have two partners -- one with business knowledge and the other with a technological background. We also sought people who understood local markets." The result is a network of 58 franchises in Brazil and abroad, along with a roster of some 2,000 employees.

While Microsiga continues its forays abroad -- the company plans to expand into Spain and Portugal this year -- the strength of the local software market remains a stalwart. Jose Miranda Dias, president of

the Brazilian Association of Software Companies, estimates that Brazil produced nearly US$3 billion of software products last year. "Brazil has a strong domestic market, unlike India, where most of their production is exported," says Miranda Dias, who suggests that even if Brazil's economy slows -- as is happening currently -- the demand from small- and mid-sized companies will keep the industry growing "especially now that the price of computers is becoming more accessible."

That positive growth outlook will be important to Microsiga as it begins to court new investors. Following a path more reminiscent of Silicon Valley businesses than those in Brazil, Microsiga in 1998 sold 25 percent of itself to Advent International, a US-based private equity firm. Having a foreign investor, says Cosentino, "gave the business credibility, not only abroad, but also within Brazil" where the Advent tie helped Microsiga clinch a recent deal to develop an online system for the 3,800 business units that make up the Kodak Express network in Latin America.

Now Microsiga is gearing up for an initial pubic offering on the Novo Mercado -- the new, Nasdaq-like market run by the Sao Paulo Stock Exchange (Bovespa). Cosentino would not comment on the details since the company has entered the 'quiet period" preceding its IPO, which UBS Warburg is managing and is expected to launch during the third quarter of 2001. But published reports say between 25 percent and 30 percent of the company will be offered to investors and around US$50 million will likely be raised. Some 70 percent to 80 percent of the shares should go to Brazilian investors with the rest to US institutional investors, say Bovespa sources.

Floating a successful IPO on the Novo Mercado will certainly distinguish Microsiga, but the company has already left its mark in management. Cosentino has substituted the stringent corporate style typical of many Brazilian companies with a more open, accessible model. Microsiga's Sao Paulo headquarters set the tone: Acting out the symbolism of his glass office, Cosentino makes an effort to get to know as many employees as possible, from the doorman to the managers. Twice a year, he spends 10 days reading a questionnaire that every employee fills out about how the company could be better run.

According to Cosentino, the company has made myriad changes as a result of employee feedback, ranging from changing the entrance of the building, to investing in different types of training, to expanding test runs for new products. The products themselves, as well as how there are sold and marketed, are constantly changed based on feedback from his favorite source, the sales staff.

Cosentino's relationship with his staff has made him something of a celebrity among Brazilian entrepreneurs. All employees are required to take two 15 minute breaks daily and Cosentino can often be seen chatting with them in the company cafe, which -- with a pool and thatched-roof snack bars -- looks more like it belongs on a tropical island than in Sao Paulo. And employees who meet their goals are rewarded with stock options, still a rarity in Brazil. In fact, employees have voted Microsiga one of the best places to work in Brazil for the past three years, with more than 97 percent reporting they were happy with their jobs, according to Exame magazine.

Not that all of this new-age management style comes without a price. Last May one of the glass panes in the roof of Cosentino's office was broken when a huge avocado fell from one of the trees that surround the building. Now that's risk taking.

COPYRIGHT 2001 Americas Publishing Group
COPYRIGHT 2003 Gale Group