FMCG Conglomerate Realigns to Boost Value by 70%

Situation Analysis

The CEO of a multi-billion dollar division of a high-tech, fast-moving European goods conglomerate was at a strategic crossroads when he asked SDG to help them with their corporate strategy. A few years previously, management had decided to move away from low-end commodities toward more integrated high-end product offerings, but the division had not been able to align the organizational capabilities with this new direction. As a result, the division was under-performing and its strategic intent was neither understood nor had credibility internally or in the stock market. Consequently, operations were scrutinized at many levels with little or no focus on long-term strategic issues.

Discovery & Solution

The CEO engaged SDG based on SDG’s track record for robust and often counterintuitive findings that unlocked substantial new value. Shifting executive involvement away from the details of operational results to focus on improvement released executive time for strategy and allowed the operational managers more time for improvement and forward planning and less time for explaining the past. A value-based management program was implemented covering four phases:

• Assessing the risk and value of each value center of the organization
• Reducing barriers to value creation and agreeing on focus for going forward
• Shifting corporate direction from products to customer solutions
• Implementing this direction and building capability to sustain momentum

The initial analysis showed the value of the business to be a factor of three higher than previously rated by stock market analysts or internal assessment. Immediate portfolio decisions were taken to align the portfolio with the strategic intent to move away from commodities. A number of strategy projects were undertaken at the value center level that resulted in new strategies and additional value creation.

Results & Impact

As operational performance improved and confidence in the strategic value grew, the division decided to articulate a bold vision for its growth aspirations, targeting emerging markets and describing the supporting business model. SDG’s work with the client to transform the organization increased shareholder value by 70% within two years.