Strategy right-sizing to survive
A top-ten commercial training service provider’s cost-to-acquire and cost-to-serve model had spiralled to a level threatening its ability to survive.
A recent Board reshuffle afforded management the opportunity to look again at its capability to execute its inherited business strategy. A period of introspection was constrained by functional bias on the importance of the status quo, whilst inadequate corporate governance resulted in a significant write-down that threatened business survival. Management asked Focus Solutions to assist in helping them alter the current performance trajectory.
Our approach was to support a deep-dive into the operating cost structure and its relationship with sustainable profit generation by product and market segment. This identified savings of £350k over 18 months through a combination of stopping unnecessary activity (CAPEX and OPEX), re-purposing resources and re-negotiating some key contracts. We also worked with the Board to restructure and focus the marketing and sales function, introduce new performance metrics and withdrawal from sectors where long-term profitability would prove difficult.
The solution was to understand the core capabilities required to execute the strategy effectively – putting in place an investment plan to strengthen these capabilities in the medium-term whilst pruning back legacy activity, processes and systems that didn’t support the strategy.
Profitability returned to its long-term average after 12 months.