Case Study: Driving Profitable Growth

©2010 Schweiger & Associates www.SCAAS.com 17 Sweetspire Dr. Elgin, SC 29045 803.622.2659

1

The Client’s Challenge

In early 2004, the CEO of a Fortune

1000 industrial and consumer

manufacturing company approached

us with an interesting challenge.

While he continued to meet analysts’

earnings per share (EPS) estimates,

his share price was languishing –

even as the overall stock market was

somewhat bullish. While the

company had done a great job at

increasing earnings through

productivity improvements and cost

cutting, the message from the

analysts was quite clear, “more top

line growth. “ To that end, the CEO

committed to the analysts that he

would profitably grow revenue by

one third over the next 5 years.

The CEO approached us shortly

thereafter and asked if we would

work with him, his division

presidents, and numerous business

unit managers within each division to

achieve the promised growth. This

would require the company to both

look at adjacent growth markets and

to explore markets that were

potentially outside their traditional

sweet spots. In both cases it would

require breaking some paradigms

and traditions. It would also require

taking a hard look at the company’s

internal capabilities. Growth would

not come easily or quickly. It would

require focus, commitment, and

persistence, tempered with patience.

After discussion with the CEO, it was

apparent that there were three

important deliverables that needed to

be realized if the company were to

actually achieve the promised

growth.

1. A feasible set of new market

opportunities with clear analyses

of the nature and magnitude of

the opportunities, strategies for

capitalizing on them and the

resources needed to take

advantage of them (i.e., sound

business cases) needed to be

identified.

2. Executives and managers would

have to understand and buy into

the need to enter these markets,

commit to implementing the

changes needed to do so, and

subsequently execute them.

3. Executives and managers would

need to develop the individual

and organizational capabilities to

continue this process well into

the future after we departed.

How We Approached the Challenge

Based on the three deliverables, it

was clear that we would have to co-

design with our client both the

“technical” approach for evaluating

and deciding upon opportunities and

Case Study:

Driving Profitable Growth

Based on the three

deliverables, it was clear

that we would have to co-

design with our client both

the “technical” approach

for evaluating and deciding

upon opportunities and a

“social” process for

properly engaging key

executives and managers in

getting and implementing

the “right” answers.


2

a “social” process for properly

engaging key executives and

managers in getting and

implementing the “right” answers.

Without the latter, the results would

likely be a series of thoughtful

presentations that would wind up on

a shelf.

Over the period of several years we

worked with both the consumer and

industrial divisions and numerous

business units within them to identify

and assess growth opportunities. In

every case, core teams were created

with key company managers and

with Schweiger & Associates (S&A)

staff. The former brought with them

knowledge of their businesses and

markets, whereas the latter brought

a systematic process, frameworks

and tools for analyzing opportunities;

team facilitation and coaching;

independent research capabilities;

experience with numerous other

companies and markets; expertise in

developing and presenting work

products; and a dispassionate

objective eye. Since this effort was a

knowledge-driven activity, additional

people from within the company and

outside industry/market experts were

brought into the teams on an ad hoc

basis as needed.

At the outset of the project several

key issues were addressed to ensure

that each team’s efforts were

focused and productive. Specifically:

1. What was the scope of the

project?

a. What was within scope?

b. What was outside scope?

2. What were the deliverables from

the projects?

a. Challenge session meetings

(critical reviews at various

stages)

b. Presentations

c. Reports

3. What were the completion

timeframes and milestones that

needed to be achieved?

4. Who at the highest executive

level would champion the

project?

5. What key executives and

managers needed to be part of

the team;

a. Those with key knowledge,

b. Opinion/change leaders who

would help drive the execution

of the project results,

c. Those who were action

oriented and would help drive

the project

6. What roles would each member

of the team play?

7. How would we ensure that the

CEO and other key executives

and stakeholders were

committed to the outcomes?

Once the teams were established we

worked through a three-stage

process as illustrated and described

below. It is important to note that in

some cases the divisions and

businesses were very clear on which

market(s) they wanted to investigate,

whereas in others needed were more

open to exploration. In the former

case we focused on stages 2 and 3,

whereas in the latter, we included

stage 1.

S&A brought a systematic

process, frameworks and

tools for analyzing

opportunities; team

facilitation and coaching;

independent research

capabilities; experience

with numerous other

companies and markets;

expertise in developing

and presenting work

products; and a

dispassionate objective

eye.


3

In Stage 1 we focused on the

ideation or idea generation process

to generate a sufficiently broad list of

potential markets to explore. This

was done through a brainstorming

process that leveraged executive

and manager’s experience,

knowledge and insights with our

research capabilities, tools, and

facilitation. During this stage

executives and managers were first

encouraged to articulate those

markets that they believed were

worth looking into. To ensure that we

had a sufficiently broad pool of

potential markets, we explored:

1. Market value chains to determine

whether there are growth

opportunities for either forward

or backward integration.

2. New business models that may

supplant the existing model and

lead to significant market share

gains.

3. Opportunities for horizontal

integration.

4. How the company might

leverage its customer base and

offer new products and/or

services.

5. How the company might

leverage its

capabilities/products/services

into new customer markets

6. New markets that were beyond

both the company’s existing

customers and

capabilities/products/services.

We encouraged open mindedness

and creativity. While we knew that

some ideas might seem off-based at

first, we believed that it was

important to initially break some

strongly held paradigms before

arriving at a final set of markets. In a

number of cases, the S&A research

staff did some preliminary research

to better understand markets that

were unfamiliar, poorly understood,

We encouraged open

mindedness and creativity.

While we knew that some

ideas might seem off-based

at first, we believed that it

was important to initially

break some strongly held

paradigms before arriving

at a final set of markets.


4

Before we began, we

examined all research

that had been previously

purchased or conducted

by our client. There was

no need to reinvent the

wheel! Essentially, we

worked as a tight-knit

team to do whatever it

took to get the job done.

or not considered by client members

of the team.

Once the initial list of markets were

identified, a first cut analysis of each

market was conducted. We

developed preliminary standardized

(e.g., market size, growth and

profitability, ease and cost of entry

and barriers to entry, commoditized

or differentiated products/services)

and customized (i.e., tailored to the

company’s strategic and financial

orientation) “go no-go and weighted

criteria to develop a rank-ordered set

of markets that warranted a “deeper

dive” and further validation. It is

important to note, that constructive

debate among team members was

encouraged and was critical in

deciding which markets to further

investigate. This was especially

important, as the research needed

for a deeper dive would require

significant time and resources.

In Stage 2 we focused on the

validation of those markets that

survived stage 1. The objective here

was to rigorously analyze each

market to determine:

1. Whether the market was worth

entering.

2. What it would take to effectively

compete.

3. What were the most effective

strategies for entry (e.g., organic,

merger or acquisition, joint

venture).

4. What types of profits and return

on investment could be

expected.

Using a fact-driven protocol

developed by S&A we systematically

examined an array of elements

including:

1. Market structures, value chains

(supply through distribution) and

business models

2. Drivers of growth and profitability

3. Drivers of industry changes and

disruptive transformations (e.g.,

technology, demographics,

social, legislative and regulatory)

4. Customer key success factors,

competitors, winning value

propositions, and bases of

competitive advantage

5. Market entry strategies and

investments

6. Financial impact analysis

To analyze all of these elements for

each market, both primary and

secondary research needed to be

conducted. (Please see an overview

of S&A’s market research

capabilities). Before we began, we

examined all research that had been

previously purchased or conducted

by our client. There was no need to

reinvent the wheel! We found, as is

the case with many of our clients,

that there were many studies floating

around. Once that step was

completed, we defined what new

research needed to be completed

and worked with our client to

determine what they were capable of

doing and what the S&A staff needed

to do. Essentially, we worked as a

tight-knit team to do whatever it took

to get the job done.

After pouring over the analyses,

conducting many facilitated debates

and discussions within the team and

with senior executives, decisions

were made as to which markets to

go after. Often, the research yielded

one or two markets worth pursuing.

Once those decisions were made,

we developed an execution strategy.

http://www.scaas.com/services-solutions/market-research-solutions/


5

In Stage 3 we focused on developing

an execution plan to translate the

opportunity into a reality. This

included a plan on how we would

enter the market with detailed

initiatives for getting the job done.

For example, in the case of an

acquisition strategy, we identified

specific acquisition targets, many of

whom were identified as potential

competitors in stage 2. We

thoroughly analyzed each target,

identified whom to contact at the

target, conducted a preliminary

valuation of the target and even set

up meetings between the target and

our client’s senior management.

Throughout the acquisition process,

we worked with our client as needed

to complete the acquisition, right

through to developing and executing

an integration strategy. In the case of

an organic entry strategy, we

developed complete plans for

securing and deploying the

necessary resources (e.g., people,

assets, systems, processes,

organization structure) to

successfully enter and compete. All

execution plans included key

initiatives and activities, due dates,

milestones and reviews,

responsibilities, contingencies,

stakeholder analyses, and financial

and people resources needed to

complete the plan.

Although many of the entry

strategies have been implemented

and the teams disbanded, S&A

continues to assist our client as

needed in helping ensure that the

execution continues to go well and

new opportunities are considered.

However, our client is successfully

performing many of these activities

on its own.

The Results

Overall, the process we employed

achieved what it set out to do. Within

less than 5 years, the company had

achieved its revenue and earnings

per share growth goals. More

importantly, it achieved more than

50% growth in its stock price within

3 years and 40% growth within 5

years (taking into account the great

recession). Further, the company is

well positioned within growth

markets.

There are a number of managers

who participated on the teams that

have been promoted to key

positions within the company. The

company readily acknowledges that

the process not only helped develop

these individuals’ capabilities, but it

gave them exposure with the senior

executive team that enabled them to

demonstrate these capabilities.

Moreover, the company is better

able today to drive growth alone

than before it began working with us.

However, S&A remains a trusted

partner with the company and

continues to provide support when

needed in identifying, validating and

supporting the execution of the

company’s growth strategies.

About Schweiger & Associates We are a team of experienced consultants with both applied and academic strategic management and organizational expertise who are committed to helping executives and their managers and employees build sustainable profitable organizations. We accomplish this by providing life-cycle strategy solutions across the Ideation, Validation and Execution phases. There are five key areas in which we offer solutions: Strategy Development Solutions

Strategy Execution Solutions

Strategy Leadership Solutions

Market Research Solutions

Mergers & Acquisition Solutions

Reach us: Dr. David Schweiger, President [email protected] Vishal Khushalani, Vice President [email protected]

mailto:[email protected]

mailto:[email protected]

Case Study: Driving Profitable Growth

Business

Transcript of Case Study: Driving Profitable Growth