Companies that have enjoyed success over a sustained period invariably have leadership teams that aren’t afraid to go into uncharted territory. Whether it’s the likes of Apple, Samsung or Virgin, there’s an appetite from the top team to recalibrate strategy so that they can take advantage of new market conditions.
High-quality leaders are defined by their ability to step back and understand why changes have to be made and how they can be executed. Vanda Murray
, Criticaleye Board Mentor and Non-executive Director at distribution and outsourcing group Bunzl, says: “A strategy should be dynamic and constantly monitored to see what parts need to be adjusted to fit the marketplace, your customers’ needs and your competitors’ actions. It’s easy to say but quite hard to do in real time.”
, CEO of Criticalaye, comments: “From a leadership perspective, when seeking to improve performance it’s essential for CEOs to have the strategic ability to judge an organisation’s capacity for change. They should also be able to create a sense of trust and shared purpose among the senior executive team that enables them to outperform.
“By contrast, mistakes are made when change is pushed through too quickly. All too often, executives are traded in rather than supported, largely because tactical decisions are mistaken for strategic ones. Nearly all great companies take a longer-term view so that they invest and develop top talent throughout the organisation.”
Criticaleye spoke to a range of business leaders to look at how, in very different circumstances, they’ve set about making decisions that have led to an uplift in performance.
Until recently, IFG was quite a diverse company but it decided to refocus about 18 months ago. We changed the emphasis from international expansion to being really clear about our target market. By playing to our strengths and capabilities we’re growing profitably.
We had eight businesses where now we have two. We sold subsidiaries including an advisory arm in France, an employee benefits business in Ireland and a small insurance brokerage.
IFG is now very focused on UK high net-worth individuals. We give financial planning advice through our subsidiary, Saunderson House, and also wealth platforms through James Hay. We were able to demonstrate returns from our new strategic focus and in the six months ending June 2015, revenue from James Hay and Saunderson House were up 10 per cent to £34.5 million.
The important part was figuring out how to accelerate the plans and proposition for the two core businesses and understand what was critical to their success. For example, we needed to get James Hay’s infrastructure, IT and processes really fit for purpose and future-proofed. We also upgraded the whole leadership team other than the managing director.
While executives sometimes fear that shrinking business scope could lead to lower profits, we have shown that narrowing our focus has allowed us to increase our return to shareholders.
During my first 60 days as CEO of BSI Group, I realised that the company needed to change and that meant changing the leadership team.
The organisation was successful despite itself, rather than because of itself. It had a great legacy and customer loyalty but it was full of managers, not leaders, and offered jobs but not careers.
While everyone was very happy to take orders, when I looked around for people who could make a difference, I didn’t see them. I wanted to build a more collaborative, market-based organisation, which needed to be more open to taking business risks.
Over a period of 18 months, I changed almost all of my senior management team and they then changed a lot of their people.
A large part of my effort, and that of the HR Director I brought in, was leadership development. We set programmes to help people on their journey.
After three years of change and three more years of consolidation, we’re in good shape. We’ve invested heavily, made acquisitions and expanded geographically. We’ve had six years of continuous revenue growth and are heading towards another record profit this year.
But it took a lot longer than we expected. It takes time for people to warm up to the idea. Don’t assume that everybody is thinking the same and running at the same speed as you.
One of our successful investments was CeDo, which sells household disposable products such as bin bags and tin foil. When we acquired the company in September 2009, it had a dysfunctional management team and no clear strategy. It was a market leading business, but there was significant scope for it to improve. We sold it last year and made 2.8x our original investment.
We worked closely with the UK MD, who was promoted to CEO, to develop the strategy. The main tenets were factory and operational improvements, the reduction of overhead costs and efficiency gains.
The lesson was to have clear alignment of the strategy and the right team to execute the plan. In this instance we made wholesale changes to the executive team. Getting the right people in place is critical, because that can cost you a lot of time otherwise.
We also had to be reactive. For example, we had a Chinese factory that was making some of the more labour intensive products, Chinese wage inflation went up considerably so we set up a new factory in Vietnam from scratch. That wasn’t in the original plan.
Criticaleye Board Mentor
I worked at a company that produced high-end security systems which it sold through distributors. We were getting stuck and couldn’t grow, so we decided to change the way we sold.
We moved away from trading exclusively through distributors to selling to the installers of our equipment as well. We had to put a lot of support in place to enable us to do that; much bigger and better customer services and technical support. It required total commitment from the whole team and everyone had to upskill.
We had a good strategic plan in place and that gave us the confidence to begin, but you also need the right people and an understanding of the business, its market and customers.
We tested our strategy with customers and knowledgeable people in our industry. We had a hit list of 100 installers that we wanted to work with. We talked generally with a few of them and had a day when we met them all, which changed the dynamic of the business completely.
We immediately improved the profitability and quadrupled it in three years. I started out as marketing director, led this change and then became managing director.