CASe STUDY 1:
Unveiling Market Realities
to Drive Turnaround and Growth
Challenge
In 2018, facing declining revenues and eroding margins, our client, a historically successful company, initially believed in the scarcity of their core market—a conviction seemingly supported by data, given a prior consulting study labeled their market as mature, prompting the management team to prioritize production optimization over front-end capabilities.
Revenue plummeted by 11% and EBITDA margins sharply declining to single digits, the company found itself in crisis. Moreover, 85% of revenues were concentrated in just 5 clients, exacerbating vulnerability. Compounding matters, the company's competitive advantage dwindled as they resorted to lowering prices.
Solution
Upon our intervention, we challenged the entrenched belief of market scarcity, despite facing significant resistance. We unearthed two critical insights:
The client had misidentified their target clientele. By reevaluating their market position, we discovered a niche—companies requiring specialized, lower-volume products—that had been overlooked. These clients not only eluded previous research but also demonstrated a willingness to pay premium prices.
To complement the core business, we leveraged the client's production expertise and established an in-house service model to cater to a distinct client segment.
Despite initial resistance, our persistence paid off. The management team, led by the CEO, embraced the paradigm shift, realizing that the "scarce market" belief was unfounded. Rapidly, we executed on the strategy, resulting in a turnaround. By 2019, the company achieved record revenues and EBITDA, with sustained growth thereafter.
Results
Today, the client's portfolio boasts 180 clients, significantly diversifying revenue streams. The dependency on the top 5 clients decreased to 17%, from 85% in 2017. Furthermore, revenue CAGR and EBITDA margins have soared to historic levels, cementing the company's resurgence.
In conclusion, our intervention debunked the myth of market scarcity, igniting a transformative journey towards sustained growth and profitability—a testament to the power of strategic insights and execution.
Deliverables
Tangible Deliverables included:
Presentation Deck: A comprehensive presentation offering a nuanced exploration of key insights derived from rigorous analysis, coupled with a meticulously crafted strategic blueprint.
Strategic Plan and Growth Architecture: A meticulously detailed document delineating actionable steps, inclusive of business unit strategy, growth architecture, organizational structural reforms, and incentive frameworks meticulously designed to propel strategy execution and catalyze growth.
Organizational Structural Changes and Incentives: A strategic roadmap proposing organizational restructuring and incentivization strategies precisely calibrated to realign the organization with strategic imperatives and cultivate the desired behaviors.
BHAG with Key Achievable Indicators: A visionary initiative outlining a Big, Hairy, Audacious Goal (BHAG) complemented by a suite of measurable indicators meticulously crafted to drive strategy alignment and meticulously monitor progress.
Case STudy 2: Transforming Portfolios and Conquering New Markets for Sustainable GrowTH
Challenge
The company (medical device distributor) faced several challenges including misaligned accounting and reporting systems, stagnant core business revenues over a four-year period, an extended portfolio of 25 products within the core business, revenue concentration in one country, low profitability in three business units, and a lack of clear segmentation and value propositions for each business unit.
Solution
Core Business Analysis: Conducted a thorough examination of the core business, identifying hidden costs and resource allocation issues caused by an excessively broad product portfolio.
Portfolio Optimization: Recommended reducing the core business portfolio from 25 to 5 products to focus on high-value offerings and optimize resource allocation.
Geographic Expansion: Advised expanding geographically in Latin America to drive growth opportunities for the core business and other units.
Segmentation and Value Proposition Development: Led a segmentation effort for each business unit to identify target clients and developed tailored value propositions to address their needs.
BHAG Setting and Growth Architecture: Established Big Hairy Audacious Goals (BHAGs) at corporate and business unit levels and designed a growth architecture, including organizational structure changes, incentives, measurement systems, and capabilities required to achieve them.
Results
Core Business Revitalization: By reducing the product portfolio and focusing on high-value offerings, the core business experienced renewed growth and improved profitability.
Geographic Expansion Success: Expansion efforts in Latin America led to increased market share and revenue diversification for the company.
Improved Segmentation and Value Propositions: Targeted segmentation efforts and tailored value propositions resulted in enhanced client relationships and increased sales across all business units.
BHAG Achievement: The company successfully achieved its BHAGs at both corporate and business unit levels, driving overall growth and organizational success.
Deliverables
Tangible Deliverables included PowerPoint deck, Excel Sheets, and documents detailing long-term strategy:
Portfolio Optimization Plan: Detailed plan outlining the reduction of the core business portfolio and strategies for resource reallocation.
Geographic Expansion Strategy: Comprehensive strategy for expanding into Latin America, including market analysis, entry approaches, and growth projections.
Segmentation Report: Segmentation analysis for each business unit, identifying target clients and key value drivers.
Value Proposition Development: Tailored value propositions designed to address the unique needs of each client segment within the business units.
BHAG Setting Documentation: Clear articulation of BHAGs at corporate and business unit levels, accompanied by detailed growth architecture plans outlining necessary changes and capabilities.