Turnaround Process Automation Business

Context

The sales and service business, which supports ten countries across Central and Eastern Europe (CEE), consisted of 300 employees and was generating $310M in revenue. Its product and services portfolio covered 14 different divisions including systems, valves and instrumentation. The CEE market had grown at 4.5% annually over the previous five years, but the company had grown by only 2% over the same period and had lost significant market share to more aggressively priced competitors. A series of low-cost, low-pain solutions had been implemented and had delivered brief top-line improvements, but it had failed to identify and correct the core issues. Now the divisions were threatening to move their investment to more profitable regions.

Approach

The first step was to identify a team and apply the six-step process including;

• Asking ‘how did we get here?’ (external and internal history);
• Looking beyond the current paradigm and designing a new approach to market
• Developing a strawman for board approval

Key findings

Multiple discoveries were made, top of the list were:

•  Individual country value hidden behind the CEE roll-up
 By breaking up the regional roll-up and reviewing each country by division, we were able to assess the actual strengths and challenges of each country and provide a tailored growth solution
• Opportunistic investment in East vs West Europe The story behind the declining market share revealed a consistently opportunistic vs strategic approach to the region, with funding fluctuating on the basis of quarterly results, blocking any investment in infrastructure or talent and resulting in single salespeople covering multiple divisions inadequately.
• Over-built management structure A layer of sub-regional, multi-country directors had been implemented as a span breaker for the regional VP. This layer clouded the accountability of these Directors and the country General Managers, inertia set in and critical business decisions were being put off.

Solution

Commit to long-term sustainable growth and implement the following strategy:

• Simplify the organization structure
• Transfer P&L ownership to the country General Managers
• Strengthen full divisional representation across the region
• Build full-service sales companies covering the entire divisional portfolio for each country
•  Consolidate country-specific operational back-office activities into one regional back office to provide a critical mass of professionals, improve customer service and optimise costs (-15%)

Board approval & Implementation

Due to the number of divisions that would be impacted by the proposal and the resulting changes to several long-serving employees, board approval was requested at the corporate level. After rapid approval, the detailed change management plan was approved and implemented within three months

Results

The vision and strategy implemented through the change plan delivered 11% year-on-year growth, over twice the market rate, and increased customer loyalty by 5%. By leveraging the entire divisional product catalogue, additional market potential was unlocked. Finally, the transfer of P&L ownership to the country level unleashed a highly motivated and focused team which delivered demonstrable results. There is now sustainable leadership for the future.