______________________________Organisational Transformation & Renewal__

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TAKING A STRATEGIC APPROACH TO RESTRUCTURING THE BUSINESS AND REDUCING COSTS

Restructuring is an integral part of a cycle of organisational transformation and renewal (shown below) the exercise is pointless however, when conducted in isolation or as a means to merely reduce cost.

HCP’s Strategic Management Institute (SMI) has confirmed this through research that found that:

• when an organisation commences a restructuring program in isolation to strategy, it risks entering a downward spiral of downsizing and cost reduction delivering limited long term benefit, however
• if an organisation enters a restructuring program that does have a strategy that leads to revitalisation and regeneration, it is much more likely to emerge in a stronger position than before.

There is therefore an imperative for organisations to take a strategic approach to organisational transformation and renewal. With an emphasis on protection of Core Competencies, HCP assists clients to design and implement such programs. A foundation for our approach is Porter’s Value Chain, it provides an ideal medium to structure our thoughts and to ‘position’ potential opportunities internally.

The Value Chain represents one of many strategic and non-strategic methodologies that make up our organisational transformation toolkit. When applying our total toolkit, we are seeking to:

• realign and reduce overhead burden classified by Porter as support activities in the Value Chain
• realise improvements in the processing capability of the primary (mostly Supply Chain) activities
• deliver increases in revenue through better pricing policies, market positioning, product attractiveness, promotional support and customer service

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UNLOCKING THE VALUE

UNLOCKING THE VALUE: DEVELOPING 'RAPID RESPONSE' STRATEGIES TO DELIVER HIGHER PROFITABILITY, STRONGER CASH FLOW AND A SUSTAINABLE FUTUREThere has never been much tolerance for poor performing Business Units. In the face of unprecedented financial pressure though, the CEO is forced to be far more rigorous with such entities. What are their options?

1. Close the business: Develop plan, manage expectations of stakeholders, minimise cash outflows.
2. Sell the business (as a whole or in parts): Define divestment program, dress to kill, sell.
3. Unlock the value:  Return the business to profitability, sustainable cash flows and growth.

Option 3 can be a worthwhile exercise in the long run, as long as their value can be realised. HCP Management Consultants has assisted many Business Units to do just that through our Unlocking the Value, specialist consulting methodology. Case Studies: Results from our past work can be summarised as follows:Short term quick wins and future positioning: Strategic solutions are articulated in a Rapid Response Strategy. Results are realised over an elapsed period of 2 to 3 years. Short term results (Quick Wins) are also identified and are often substantial:

Rapid Response Strategy:

• Foundation for Quick Wins and actions to be undertaken over the next two to three years.
• Owned by the executive team it provides greater focus on outcomes, alignment, and articulates target outcomes, Key Performance Measures, Action Plans, managers responsible for outcomes.

Quick Wins: Examples include:

• Leadership and Culture: Following our review, we understand the issues and can advise the CEO about issues concerning leadership or if necessary, the entire structure of the organisation.
  Benefit: Stronger leadership, better structure, focus and attention.  

• Redesigned business processes: Delivers faster throughput and requires fewer resources.
  Benefit: Cost reduction, increased customer service and greater efficiency.

• Technology: Often shrouded in mystery, technology can confuse and inhibit rather than enable. Simplification or replacement can deliver significant cost reductions (even after investment).
  Benefit: Greater efficiencies, faster processing time translates to higher revenues, lower costs.

• Contract renegotiation: Review can deliver better terms, lower risk, and greater freedom.
  Benefit: Increased revenue, lower insurance premiums and lower costs.

Long term, turning operating losses into profits: The time required to turn an operating loss into a profit is highly dependent upon the circumstances of the organisation. HCP’s contribution is to assist with the strategy development, target setting and development of the value program.

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__________________________Organisational Transformation & Renewal__

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