Strategy case studies

Irish interior design company

This company specialised in designing interiors for leisure outlets such as pubs, bars, restaurants and nightclubs. They had been particularly successful in transforming bars worldwide into ‘Irish pubs’ in conjunction with a leading producer of stout. The company’s owner and founder and his marketing director had secured funding from the local development agency for a consulting project aimed at making them more innovative. The former was the driving force of his company in terms of creative ideas but he left the day-to-day management of his 100-strong team to his immediate subordinates. On questioning, their ‘problem’ is not that they were short of good business ideas: in fact, they had too many, resulting in a lack of focus and follow-through.
I worked with them in two areas: one was the implementation of the ideas and the other was the on-going management of projects. I held a workshop for the ‘senior management team’ aimed at identifying new projects and the start of an implementation plan for them. At the end of the day, over 100 new ideas were generated with ten of them being taken forward. These were then taken away to examine how to implement them by the business.
The client recognised the difficulty in properly developing new ideas at the expense of on-going business. They became more focused on getting their core business right and only taking up new ideas when they would be an addition rather than a distraction.

Global lubricants company

They were an autonomous part of a multi-national oil company, having been acquired ten years previously as part of the latter’s strategy to diversify away from its core business of drilling and refining oil. Having been largely left to its own devices, the lubricants division pursued its own strategy for growth, based largely on developing strong relationships with its customers. These ranged from large multi-nationals to smaller regional players. All had been given the same level of high customer service and typically offered bespoke products to suit their exact needs. The parent company though was not happy at the declining profitability of the division and brought in a well-known strategy consultancy to review and recommend a new approach. The consultants delivered their report and one of the areas that they have highlighted was the number of products that the division offered. This had mushroomed from 2,000 ten years ago to now nearly 8,000. Without doing any detailed analysis, the consultants believed that this number needed to be significantly reduced, based on the ‘Pareto’ principle. This is where typically 80% of sales comes from 20% of products.

The division's Board thought at first that they could do the product rationalisation themselves but on closer examination realised they have no idea where to start. Just getting rid of the low sales products would not be easy. Quite a few were supplied to their major customers. The risk was that by removing some of the products available to these key customers, the latter may take all their business away. There was also a culture of innovation, which on the positive side meant that the division was continually offering new and better products to its customers. On the negative side though, it may be construed as merely tinkering and a lot of supposedly different products in fact fulfilled a very similar function. The Board decided that a new approach was needed.
I broke down the very long list of products into more manageable groups. The first split was by broad product function i.e. what it does and the second was by customer. The first was a nice short list of 8 but the latter was over 500. The technical team thought that we should use the former as the basis for this product rationalisation exercise but the sales team thought you should use the latter. I realised that both sides had to be looked at in order to come up with the best, i.e. most profitable solution. So in a series of workshops, I got the technical and sales members of the client team to work with me on a solution.
A three stage plan:
* Deletion immediately of any duplicate products and those with low sales to just small customers
* The migration of medium sized customers with similar products to one single one over the next six months
* NPD programme for next two years to focus on developing new products that would replace a range of similar ones for large customers
The company now has a more manageable range of products of around 200.