Synthesis, Capabilities, and Overlooked Insights: Next Frontiers For Strategists
We develop actionable strategic initiatives to exploit business opportunities in well-defined markets
A leading consumer-products company with a broad product portfolio and sales outlets in more than 150 countries faced stagnating sales, as fast-moving competitors were eclipsing it with fresh product offerings and services. At the same time, increasing cost pressure from retail partners was eroding revenues. Although the client had introduced growth-oriented strategic initiatives and products to reverse these trends, the impact on top-line growth had been negligible. To develop better solutions, the new CEO turned to Burk for support.
During initial discussions, the Burk team discovered that the client’s strategic objectives were sound. However, the scope of these plans was too broad, having been defined at the level of global category groups and regional organizations rather than being translated into more detailed initiatives supported by budgetary allocations. What’s more, the client was unable to fully track initiatives at the local market level to ensure that the right people in the organization were accountable for executing initiatives and measuring their progress. The client’s need came into focus: create a scalable approach to developing strategic initiatives that could be readily implemented at the business and market levels.
In addition to providing a clear and concise picture of the client’s vast portfolio, the matrix framework revealed a need to closely examine the allocation of resources to each of the strategic cells identified. The Burk team discovered that the client continued to invest significant resources in large mature markets instead of reallocating resources toward growth in emerging markets as its strategy intended. This incongruous allocation of resources was attributed to two factors: (1) inertia in the client’s planning, as it continued to set budgets based on previous years’ expenditures; (2) the information provided to the management team was not detailed enough to make swift, strategic decisions. Separately, the Burk team also uncovered an organizational bias that rewarded the achievement of short-term, bottom-line impact while discouraging strategic investment in longer-term growth opportunities.
To test the effectiveness of the matrix approach in strategic planning, the client selected a handful of cells to develop more detailed plans. The Burk team helped the client select the cell “owners” (that is, representatives from the business unit, marketing teams, and country organization) who would be accountable for the plan and worked with them to design pilot plans. Each plan set out detailed information about the cell, including sales and margin projections, pricing, channel and category dynamics, key competitors, new product requirements, and marketing and sales activities. It defined financial goals and the actions and resources required to achieve them. Burk team members actively reviewed the pilot plans and engaged Burk experts to provide insight on particular challenges in some cells. At the same time, the team challenged the client’s decisions and priorities by stress-testing the key financial figures underlying the plans.
The end result was a five-year plan for each strategic cell, which required the approval of the country manager, the category manager, and, ultimately, the top-management team. The client distributed the remaining prioritized cells to the appropriate cell owners, who developed their own plans using the pilot plans as a reference. The management team used all plans to strategically reallocate resources across priority markets and businesses.
In applying this new fine-grained strategic approach to target fast-growing markets, the client has reallocated 20 percent of its resources toward profitable growth—for example, shifting significant resources from large, mature markets to priority strategic cells in countries such as China, India, and Russia. The client has also eased its stringent adherence to margin targets by placing a greater emphasis on making well-considered investments in future growth.
In addition to being used for setting strategy, the plans developed for each strategic cell have become the basis for defining targets and measuring performance throughout the organization. It is a common format known to and used by all stakeholders across the organization.
As the client uses this strategic approach to chart a new course through global markets over the coming years, it expects to achieve a 0.6 percent increase in sales revenues and 1.8 percent increase in profitability—a substantive and likely game-changing acceleration of growth for this enormous, 100-year old company.