This real case is developed in a company with 20 years of existence, which had been dragging losses for the last three years, but whose Board of Directors has the firm intention of putting it back into profitability.
Starting situation
The company's situation was unsustainable since, despite the fact that the company had been very profitable in previous years, the prospects were not reassuring, quite the contrary.
The company had five business units, one of which was the star unit, since it accounted for more than 65% of the company's total turnover.
The profitability of this line was also positive. The problem was that this billing was divided only among three clients, with the consequent risk for the entire company.
Of the other four units, one offered the same products-services as the star unit but to another customer segment, with large sums of money being invested in it, although they had not yet achieved the expected business results. And the worst thing is that they were not expected either.
The remaining three were recently created and the product of internal innovation projects, although they did not reach profitability either, all of which required new investments.
Except in the star business unit, the company offered its wide range of products-services to all types of companies and sectors, being completely out of focus, without any segmentation either in product-services or in clients / markets. None of the sellers of these units managed to achieve their goals, with the consequent rotation and demotivation of the sales team.
In other words, the other four business units were a drag on the star unit.
On the other hand, the rest of the organization's employees were also completely unmotivated, ultimately affecting the lack of motivation of the management team, which did not know how to react. He only thought that the company needed a capital injection from the owners to undertake new and very expensive investments as the only solution.
Faced with this situation, the Board of Directors decides to trust the Senior Management team at Improven Consultores to help them get out of this situation and get the company back into profitability.
Proposed solution
Due to the need on the part of the company to improve this situation and achieve a positive impact on its income statement in the shortest possible time, the Improven Consultores team proposed a global project that included a review of the company's Strategy and the implementation of a Balanced Scorecard.
Due to the magnitude of the project, since there were two clearly differentiated parts, the project was carried out in two phases:
- PHASE I: Review of the Corporate Strategy and development of the Strategic Plan. PHASE II: Development, Training and Implementation of a Balanced Scorecard.
The objectives of Phase I, that is, of the draft revision of the Corporate Strategy and development of the company's Strategic Plan, were the following:
1.- Plan the development of the organization in a horizon of 3 to 5 years.
2.- Describe the market, existing or to be created, and financial justification of the means chosen to sell products or services in it.
3.- Obtaining sustainable competitive advantages over time and defensible against the competition.
4.- Definition of corporate, departmental and individual objectives.
5.- Align the entire organization with the strategy, from the structure to the people
Once Phase I was completed, it would pass to Phase II, which consisted of the Development, Training and Implementation of a Balanced Scorecard.
Goals:
1.- Relate the strategy with its execution defining objectives in the short, medium and long term
2.- Have a control tool that allows agile decision making
3.- Communicate the strategy to all levels of the organization, thus aligning people with the strategy
4.- Have a clear vision of the cause-effect relationships of the strategy.
5.- That managers have the necessary information at all times for correct decision-making.
All this was drawn up with a detailed plan for the implementation and management of change led by the Improven Consultores team, which allowed the project to be integrated into the company's human team.
Methodology
To analyze and approve the actions, plans and communication of the strategic management for the fulfillment of the Project, a Strategy Committee was formed. The Strategy Committee was made up of company executives, as well as key employees who could provide operational information and a strategic vision.
Methodologically, the project followed the following phases:
1.- Study of satisfaction of current clients
2.- Definition of the SWOT Matrix
3.- Definition of the competitive strategy
4.- Definition of the mission, vision and values of the company
5.- Definition of the strategic map
6.- Definition of the Key Success Factors
7.- Definition of CAME
8.- Definition of the strategic objectives s
9.- Definition of the strategic plan
10.- Definition of tactical plans
11.- Definition of goals and their relationship with strategic objectives
12.- Definition of the calculation method and definition of Indicators for the Balanced Scorecard, around four perspectives: financial, clients, internal processes and learning and growth.
13.- Definitive definition and validation of the Balanced Scorecard
14.- Internal Communication
The scope of these phases was both at the corporate level and for each of the company's business units. On the other hand, it is important to highlight that each one of the phases of the project were not closed once they finished, but rather that the project was fed back as each phase was progressed, so that until The last phase was terminated, the previous ones were not definitively closed.
Results
After reviewing the strategy, the company decided to divest two of the business lines and reinvest in two others, focusing on the star business unit on the most profitable products-services and those that provided the most value to customers.
In the second business unit, it strategically opted for a market niche hitherto unknown to the company, focusing and minimizing investments.
In the other business unit, it opted for two products-services that until then only represented a small part of its turnover in that unit, but also specializing in a certain sector, abandoning the company's umbrella brand and creating another, hoping to be profitable in two years.
Finally, in the fourth business unit, it clearly opted for internationalization, with an international marketing plan drawn up for this purpose, with the aim of being the third largest company in the world.
The results obtained are summarized in the following:
- Profitability on sales of 7% for that year, with forecasts of around 10-12% for the following years. Positive profitability for each of the business units. Increase in sales by 17% Increase in the level of satisfaction of customers by 34% Achieve competitive advantages over their competitors in all business lines. Significant improvement in operational efficiency. Decrease in costs by 7% Achieve the strategic, tactical and operational objectives with the Balanced Scorecard. Have a control tool that allows decision makingagilely. Communicate the strategy to all levels of the organization, thus aligning people with the strategy. Having a clear vision of the cause-effect relationships of the strategy.
