Central & East Europe business transformation and turnaround

Context

The sales and service business supporting ten countries across Central and Eastern Europe (CEE) consisted of 300 employees generating 300M€ revenue.  The product and services portfolio covered 14 different divisions including systems, valves and instrumentation.  The CEE market had grown at 4.5 annually over the previous five years, in the same time the company had grown by only 2%, and lost significant market share to aggressively priced competitors.  A series of low cost, low pain solutions has been implemented and had delivered brief top line improvements but failed to identify and correct the core issues.  Now the divisions were threatening to move their investment to more profitable regions.

Approach

The first step was to identify a team and to apply the six-step process including;

• Asking ‘how did we get here?’ (external and internal history);
• Blowing-up the current paradigm and designing a new approach to market
• Developing a strawman for board approval

Key findings

Multiple discoveries were made, top of the list were:

• INDIVIDUAL COUNTRY VALUE HIDDEN BEHIND THE ROLL-UP

  By breaking up the regional roll-up and reviewing each country by division we were able to assess the actual strengths and challenges of each country and provide a growth solution

• OPPORTUNISTIC INVESTMENT IN EAST VS WEST EUROPE

  The competition was growing above the market rate meaning the company was giving away market in this region.The story behind the numbers showed a consistently opportunistic vs strategic approach by the parent company; where western European investment used a long term, full-service sales company blueprint, eastern European investment continued to be opportunistic with funding fluctuating based on quarterly results

• OVER BUILT MANAGEMENT STRUCTURE

  Below the regional VP there was a layer of sub regional or multi-country leaders ostensibly providing a span breaker for the regional VP. Questioning this dynamic made it clear that roles and responsibilities had become foggy with resulting inertia on both sides and the stalling of critical business decisions

Solution

Commit to long-term sustainable growth and implement the following strategy:

• Simplify the organization structure
• Transfer P&L ownership to the country General Managers
• Strengthen full divisional representation across the region
• Build full-service sales companies covering the entire divisional portfolio for each country
• Consolidate country operational back-office activities into one regional back office to provide a critical mass of professionals to improve customer service and optimise costs (-15%)

Board approval & Implementation

Due to the number of divisions impacted by the proposal and the resulting changes to several long serving sponsored employees, board approval was requested at corporate level.  Following a speedy approval, the detailed change management plan was approved and implemented within three months

Results

The vision and strategy implemented through the change plan delivered 11% year on year 11% growth, over twice the market growth, and increased customer loyalty by 5%.  By leveraging the entire divisional product catalogue, additional market potential was unlocked. Finally, the transfer of P&L ownership to the countries unleashed a highly motivated and focused team who delivered demonstrable results and a sustainable leadership basis for the future.