By Penelope Pangalos
SITUATION
Our client’s main customer had so severely miscalculated their inventory that they would not place their expected yearly orders. These orders had been budgeted, so our client’s predictable result of this loss in revenue for the end of the year was zero EBITDA. The effect of this loss in revenue was compounded not only by rapidly increasing raw materials, energy, and transportation costs but also by the beginning of our client’s plant expansion in anticipation of the increase in orders.
CHALLENGES
– How to create new revenue streams
– How to cover increasing costs
JAL APPROACH
1. Strategy & Design: To turn the predictable future around, the whole company would need to get behind the common goal and own the actions that would:
– Increase market and client diversity
– Reduce inefficiencies and increase productivity
– Utilize the additional capacity provided by the plant expansion
2. Implementation & Monitoring:
– Create an environment where employees were alignable and free to think beyond what they knew to be possible
– Turn suppliers into partners by creating new ways of working together and designing different collaborations
– Alternative energy sources found
– New markets, clients, and products were developed
– Investment in new machinery to satisfy new products
3. Monthly leadership team meetings and 1-on-1 meetings with members of the leadership team and JAL:
– Leadership team and managers went through every employee’s accountabilities and KPIs to identify gaps, duplications, and bottlenecks
– Everyone focused on producing specific and measurable outcomes rather than focusing on activities
– Meetings became outcome-focused with a clear structure and adherence to time
– Dynamic action plans with milestones were created and regularly monitored
– Top-down demonstration of accountability and insistence on keeping agreements
RESULTS
– United organizations working towards the same goal
– Efficiencies from clarification of individual accountabilities and KPIs
– Completely new business model created
– €500k profit at the end of the year instead of the predicted zero