Case 3: Aggressive Growth Through Focus
An international consumer product organization was made up of several regional markets that operated independently of each other with little direct involvement of headquarters. The primary goal of each region historically, was to increase sales of all the company’s brands in their respective markets.
Leadership had decided that a new focus was required, one that prioritized profitable sales growth above market rates. Key to this new strategy was the realization that low value projects inhibited focus on high potential opportunities. Market challenges presented by mass retailers and private labels created headwinds to maintaining high growth. Senior leadership decided that each regional management team must develop an innovative strategic plan to accomplish this new focus.
Initially, senior regional managers were dubious about this new focus and felt the aggressive financial goal of 20% plus growth in earnings, particularly in mature markets, was unrealistic. Leadership felt that resources in many of the regions was spread too thin. Essentially, there were too many products which stretched the scarce manpower and financial resources. The company’s senior leaders’ aim was to have the regions focus most of their resources on those products with the greatest upside. This was going to be challenging particularly for brand managers handling products that were judged not to have the same high growth potential.
It was critical to provide regional management teams with the support they needed to tackle this tough growth challenge and make the difficult resource allocation decisions required for the refocusing. In addition, each of the regional strategic plans had to align to the overall corporate strategy. Finally, the output of the strategic planning process had to be owned and committed to by all levels in the organization.
Each region was tasked with assembling key information about their products and market, which they were to bring to a 3.5 day working session held in their region and attended by all senior managers in the region and members of the senior leadership team. Some preliminary training on creative problem solving was conducted which included skill building on divergent thinking and most importantly convergent thinking.
The team spent time developing a list of challenges based on the regional background information. They then selected challenges which if solved would have the most impact on profitable sales growth. These preliminary challenges were organized into a strategic challenge map.
Four challenges were selected, which if solved would have the greatest impact on regional performance. The team then created solutions and action plans for each challenge which everyone understood and to which all committed to implementing.
Because each region created their plan using the same methodology and structure, it was possible for the Senior Leadership team to integrate regional plans into the one overall corporate strategic plan.
The plan was built from the bottom up as opposed to the top down. This was unique and essential for the leadership team because this approach established worker commitment at the regional level, critical for the success of the initiative.
Tough focusing decisions were made. Certain brands got the support they needed to maximize growth potential in each region. This focusing led to profit growth of 30% in the first year. The same approach was applied in the second year and an additional 35% profit growth was realized.
They key was to engage the regional teams to make tough decisions which they were committed to executing. The execution of the regional refocusing plans meant everyone understood the strategy and supported the steps needed to execute it. Bottom-up strategic planning worked.
