Transformational value creation through a rigorous and pragmatic approach to strategy development
We apply a four-stage approach to strategy development:
1. Clarify the key strategy objectives:
In general, when devising strategy, our aim is to identify the long-run value-maximising approach for the business. Within this though, it is important before commencing any new strategy engagement to ensure that we fully understand the key objectives of the principle stakeholders. In some cases, particularly turnaround situations, the focus may be on a more short-term, tactical approach to re-positioning the business. In other cases, there may be potential future risks of disruption to the business model that need to be addressed as part of the strategy.
2. Undertand the context for the strategy
Every strategy is unique, and reflects the optimal approach given both the positioning and core capabilities of the business, as well as the market environment within which the business operates. A clear grasp of the strategic context is therefore critical. This begins by clearly defining the market segment (or segments) that are relevant for the strategy. For each segment, the market outlook, competitive environment and other key structural forces impacting on the market must be clearly understood to enure the strategy is tailored to the specific circumstances facing the business.
3. Define where and how to maximise strategic value
For a business unit, its ability to create value is a function of both the attractiveness of the markets it chooses to compete in (participation strategy), and its specific positioning and sources of competitive advantage within those markets (competitive strategy). Furthermore, the competitive strategy must be supported by an effective operating model for the business (its internal organisation, processes and systems). We support clients in navigating an optimal path through each of these critical strategic considerations.
4. Set out how the strategy will be delivered
Having the right strategy counts for nothing if it cannot be delivered. It is therefore critical that implementation planning is considered as part of the strategy process. This ensures that the strategic recommendations remain grounded in the practicalities of what can reasonably be delievered over a realistic timeframe.
Strategy Design Principles
Reflecting the background of the senior team in leading tier 1 strategy firms, we adopt a hypothesis-led approach to strategy development. At an early stage in the process, we will map out the potential answer and supporting logic structure. Although the initial hypothesis rarely proves to be entirely correct, this approach helps to focus the analytical work on testing those elements that are really key to the strategy. We refine the hypothesis as we progress and learn more about these areas. This approach to strategy development is focused and nimble, avoids expending signficiant resources on tangential issues, and drives rapid results.
2. 80/20 approach
In many different business situations, 80% of the value is driven by 20% of the effort. For example, when segmenting a customer base, we often see that a disproportionate amount of the total revenue is driven by a minority of highly engaged customers.
In conducting strategic analysis, we avoid ‘boiling the ocean’ and chewing up hours of analytical effort on tangential issues. Our hypothesis-led approach informs which areas we should focus on. Within these areas, we then take an 80/20 approach to the analysis to ensure that each element of the hypothesis is tested rigorously and efficiently. This ensures not only are our strategic recommendations robust, but that we also deliver these insights rapidly, efficiently, and cost-effectively.
Strategy is best developed as a collaborative process between consultants and key company staff. This can be through the establishment of combined consulting / company staff teams, or through a series of workshops to review and challenge preliminary conclusions. This collaboration is essential to ensure that the strategic recommendations reflect the specific context of the client business, and are backed up by a realistic path to implementation.
4. Multi-disciplinary, flexible consulting teams
We tailor our project teams to meet the unique requirements of each client engagement. Where necessary, we supplement our in-house teams with external experts who can bring knowledge of specific industry niches or prior experience from the sector. Unlike some larger consulting firms that have a one size fits all approach to the composition of project teams, we have no preconceived target for the size of the project teams that we deploy. We work with clients ensure we bring to bear the right combination of skills and capabilities for each engagement. Our project teams range from single individuals working closely with the management team, through to large-scale multi-disciplinary transformation teams.
We partner with our clients to generate sustainable and enduring sources of value creation. A combination of our pragmatic approach to strategy formulation, and highly-collaborative approach to partnering with management teams, significantly improves the results that we achieve for our clients.
Selected examples of strategy engagements
We were engaged by this private equity-backed business to support the management team in a strategic review of the business and development of a medium-term growth strategy for the business.
We undertook a review of the external market environment, and assessed the competitive positioning of the business. This included primary customer research, as well as a number of internal strategy workshops.
Following successful execution of the strategy, the business doubled EBIT and secured a successful re-capitalisation of the business.
Medium-Term Corporate Strategy
Following the appointment of a new senior management team, we were appointed to develop a medium-term corporate strategy for the group.
This involved reviewing the industry structure and current approach to vertical integration within the business. We then worked with individual business units to identify medium-term value creation opportunities in each area. These were combined and incorporating with a series of initiatives to enhance the enabling group capabilities.
The work provided the business with the most comprehensive assessment of their buisiness and strategic context, and identified significant scope for value creation despite a challenging market outlook.
Following a substantial decline in the share price due to an increasingly challenging competitive and regulatory environment, we were engaged by a leading provider of consumer and commercial credit to conduct a strategic review of the business.
We worked with the management team to review each revenue-generating area of the business, and to evaluate their competitive positioning in the context of the changing market environment. We identified a series of initiatives to support medium-term growth creation, as well as near-term tactical measures to ensure profitability.
Following the communication of the strategy and execution of near-term initiatives, the share price increased by 53% in the 6 months following the work.