The Consulting Playbook, Edition #6
Welcome to our new series, the Consulting Playbook, a collection of posts designed to offer insights into how businesses and their executives can utilize consulting as a strategic lever to boost performance. Each Consulting Playbook post is broken down into a few elements: Case Study, Additional Information regarding the technical application, and Additional Links related to the topic.
Organizing for Growth – Risky but Rewarding Approaches – a Winning Strategy for Survival
How Can You Boost Your Company’s Growth?
The most recent economic downturn had lasting effects on many industries and businesses. It presented serious challenges to many organizations that had to embrace big changes in order to survive. But as it often happens, instead of simply adapting to the new market conditions, it is far better and more rewarding strategically as well as financially, to chase growth and expansion rather than mere adaptation.
Large Chemicals Conglomerate Rides Out the Recession
In the aftermath of the economic crisis a large Chemicals manufacturer was recovering. And in order for the company to overcome the effects of the downturn, the senior management decided to aggressively pursue growth. It was a tough call since the company has gone through many years of restructuring. As the project commenced it became clear that the company would need a solid and ambitious growth vision and a deep transformation. The CEO and the executive team agreed that a complete new management model was necessary to develop. Among the top priorities of the new vision were innovation skills, further development of the entrepreneurial culture and customer focus. They decided to hire a consultancy specialized in transformation.
Two-Phase Ambitious Approach Designed to Achieve Desired Transformation
The integrated team of consultants and the company’s executives decided to proceed in two phases.
The First Phase of the Transformation consisted of:
- Establishing the architecture and the design principles of the new ensemble
- Collaboration with the key stakeholders, the new governance and management model
- Framing the desired behaviors with a specific focus on commitment and initiative
- Reinforcing accountability and engagement by simplifying the organization’s set-up and reducing the levels of management
In Phase Two the focus was on further implementation of all the components and new policies such as:
- Developing the Growth vision
- Establishing a new management model based on the desired behaviors
- Setting up the New Governance Placing strategy, P&L accountability and levers at Business Unit level
Re-organizing and decentralizing many of the functions to allocate necessary resources (procurement, research, etc.) under the authority of the reshaped business units, direct the remainder of corporate functions to excellence.
The Successful Completion of the Project
The consultant developed and launched a growth program that was the blueprint for the changes the company was planning to undertake. The official restart laid the foundation for the revamped structure of the company. The organization started a new chapter. Fast forward a few years, and now the company has stopped the continous restructuring, has an EBITDA growth in double digits, and is far exceeding its competitors.
The main area of transformation included simplified decentralized management model favoring effective leverage of entrepreneurial culture, growth dynamics, better responsiveness, and speed of decision making and execution.
Additional Information –
Achieving Growth by Exploring New Markets with These Four New Strategies
Growing your business is very much about growing your markets at the core. Many new markets are promising but hard to penetrate. And that’s quite logical. An organization needs effective new strategies to enter uncharted territories. Only uniquely suited strategies for the new emerging markets are sufficient enough to bolster your chances for success in these areas.
History is full of business success stories from McDonald’s to Google showcasing the principle that if you are able to tap into newly-minted social trends, rapidly expanding technological innovations among consumers, and new types of consumption, communication, shopping, media and entertainment you are essentially capturing new trends and scaling up your business. These new markets can generate additional revenue, sizeable profits, solidify your share and extend your brand’s awareness. You can dominate your competition in most cases too.
But such lofty goals are not easy to achieve. First and foremost, you need the right strategies and quite often a new perspective to see things in a new light. Even though virgin markets are so attractive and rightfully merit companies interest, to succeed in them, requires new strategies.
Most of the familiar market measuring tools and techniques (such as tracking market share, profit margin trends and so on) do not work well in new markets since there are many variables and an uneven market terrain.
When developing strategy for new and emerging markets, here are 4 top trends that need to be addressed:
1. Educating Customers in New Markets by Uniting with Your Competition
In a new market, when dealing with recently and currently forming trends of consumption, consumers tend to be reluctant and just not used to the products or services in question. In these conditions, overcoming customer’s inertia will be priority. Addressing competition at that stage should not be a main concern. The real battle here will be winning the consumer’s trust and choices, and in many cases teaming up with competition in educating the customers, can be a win-win approach.
2. Selling Directly Can Work Better Compared to Using Established Channels
Selling directly to customers, especially in new and uncharted markets, offers a lot more freedom. Well-established channels can take time to develop, and you can exploit early opportunities via direct commerce with the end-user.
3. Timing Your Market Entry For Better Opportunities
There is no point to enter the game if you cannot capitalize on your advantage now, and stay ahead. It’s rather easy to lose your advantage of being the first in, so well-timed steps will be way more effective.
4. Aiming Small But Playing Big Actually
Tailor your offer and product features to target only a segment of the market. To be all things to all customers is most often a losing proposition. You simply can’t. And there is no point in it either.
There are many and substantial differences between new and old markets. But you can navigate through them very successfully using these ideas above.
For Further Reading: