SERVICES
Implementing a New Strategy — With Zero Margin for Error
This global company experienced an accounting and reporting breakdown that forced the resignations of its CEO and CFO, sent share prices tumbling, and brought the company to the edge of bankruptcy.
It was clear that a completely new strategy needed to be developed — one which restored investors’ faith in the company and fundamentally improve its profitability and return on capital. It was equally important to rebuild associates’ trust in leadership and confidence in the company, to ensure that key talent didn’t leave, and to refocus the organization on a new set of success measures. The senior leadership team developed a comprehensive “Road to Recovery” strategy that addressed these points. The strategy required major divestitures, a cost reduction of €500M, increased cross-company cooperation, new procurement practices, and fundamental operating and financial changes. Getting the organization to buy into the new strategy, to focus on it, and to execute it would ultimately determine whether or not the company could survive. There was no margin for error.
ALIGNING PEOPLE AND STRUCTURE WITH THE NEW STRATEGY Working with the senior leadership team, Jim Lawler established two-way communications forums where employees and senior leaders were able to discuss the strategy, its implications, and their concerns and suggestions.
He also facilitated the design and implementation of new organizational structures that improved controls, clarified authority and accountability, and reduced layers so that senior management was closer to operations. Jim also put in place a cost-effective retention program for selected key senior executives. In addition, he oversaw the well-executed restaffing of critical senior management positions within the corporation and several of its operating companies, resulting in new perspectives and new talent while ensuring business continuity.
As part of the strategy, the company made a series of divestitures to improve its return on capital. In each divestiture, tailored actions were taken to ensure retention of key talent and focus on delivery of business targets. In each case, the company was able to achieve the desired sale price for the divestiture, aided significantly by its ability to retain key talent and to deliver business results in the period leading up to the divestiture.
REINFORCING THE NEW DIRECTION On a parallel track, Jim drove the development of new company values and leadership competencies, which were reinforced through a broad communications strategy. The new leadership competencies were used to reinforce the refocused strategy and culture. He also led the creation of a new performance-driven compensation system which focused the organization on the strategy’s critical business measures, clearly required and rewarded performance, and reestablished credibility in the compensation systems.
MISSION ACCOMPLISHED Ultimately, the company retained the key players it needed and reestablished a culture built on integrity and results. The company regained its sound financial position as evidenced by its return to “investment grade” status, and an appreciation in share price of over 25% during the 36-month period during which the strategy was in effect.