Fortunes Saved! - Alexander Proudfoot

project snapshot
Fortunes Saved!
Eight month turnaround delivers global chemical company €9 million in savings
PROJECT AT A GLANCE
„ Costs reduced by €9 million
„ Able to run the business with 130 people less
„ Substantial ROI achieved
„ Managers and supervisors trained in active
supervision
„ Project duration: 34 weeks
„ Improved business processes and systems,
better adapted to business needs
„ Modern and effective management practices
introduced and adopted by the team
www.alexanderproudfoot.com
project snapshot: fortunes saved
Enter Proudfoot
location in Germany was assigned to
Alexander Proudfoot had already worked
work full time with Proudfoot as part
with the company , so the CEO asked
the internal “Task Force”. In those ten
them to assess the situation. After a
months, the CEO says that hardly a single
two-week business review across four
employee was left untouched by the
locations, Proudfoot determined that the
company’s restructuring, and Proudfoot
company could make significant savings
implemented dozens of changes in an
by eliminating duplicate functions and
extremely short time. The biggest change
employing more appropriate management
was a restructuring of functions into three
tools, amongst other changes.
smaller Regional Business Units which
The CEO checked a few references on
Proudfoot and then satisfied with the
One of the world’s leading suppliers
of fluorine compounds and chemicals,
decided on and implemented a drastic
change of course last year. What could
have been a simple cost-cutting project
became a total reorganisation of the
potential for operational improvements
Proudfoot identified, gave the team
the green light. The Proudfoot team
immediately began defining what
now report to a single Strategic Business
Unit.. Proudfoot introduced Portfolio
Management to help the company set
priorities for projects and tools for more
effective project management of R&D,
called Funnel and Gate management.
needed to change. In the process, it
“We reorganised the entire company
became clear that the scope of the
structure and the majority of our
company’s structure, securing its position
as a top industry player.
Given the company’s long-standing
leadership in the market, it came as a
surprise when the part of the business
producing fluorine compounds swung
from a profit to a potential loss in a
We ensure that every member of an organisation
undergoing a change programme feels a personal
connection with the process and by extension feels
more closely aligned with the performance of the
company itself.
startlingly quick nine month period.
In the few years prior to this, the
European chemical industry had been
project should go beyond cutting €7.3
management processes and systems,”
under increasing pressure from low-
million in costs in a socially friendly
said the General Manager of the
cost Chinese imports. Some European
way – i.e. through early retirements
Chemicals Sector and Member of the
companies responded by dropping their
and transfers rather than layoffs.
Executive Committee.
prices to Chinese levels, putting the entire
In close partnership with the CEO,
industry under extreme price pressure.
Proudfoot defined a new company
At the same time, labour and production
structure, discussed this with the
costs rose in Europe, the weakened dollar
management team and finally secured
hit the bottom line and environmental
approval from the board. , It was also
regulations got tougher.
agreed to streamline the company’s two
The worsening situation led the chief
plants and its headquarters in Germany.
New Organisation: A Global
SBU and Three RBU’s
Many companies within the larger global
group were already operating with
Strategic Business Units (SBUs) and
Regional Business Units (RBUs), but
within the German operations managers
executive officer to call an extraordinary
The project was completed in record time
often had responsibilities that fell into
meeting of his top managers to discuss
and within ten months, the company’s
multiple categories across different
potential routes to avoid bankruptcy.
future was secured. One person at each
functions and geographic regions.
The team came up with several ways to
cut costs and improve sales. However,
the CEO quickly saw that his company
could not go it alone: “We had too
much going on internally already. And
we didn’t have a manager who could
lead the project without risking his
career – without getting burned.”
www.alexanderproudfoot.com
The lifetime of products are short.
The more time you take to make them,
the less time you have to sell them.
“At our company, SBU functions and RBU
Who is Accountable? Who is
functions were mixed. It was a mix of SBU
Informed and who is Consulted?
and RBU functions, a mix of operational
business and management,” said the
Portfolio Management
CEO, adding, “It was crucial that the
New tools were introduced to make the
functions be separated.”
work of the SBU and RBU organisation
more efficient and effective.
€9
million
The joint Proudfoot and client team
redesigned the company structure,
Proudfoot brought in the concept of
creating one SBU focused on global
Portfolio Management, or the constant
functions and a model RBU for Europe
monitoring of the “mix” of portfolio
that the company rolled out to Asia
components. Portfolio management
and the NAFTA countries as well.
was used to examine the portfolio of
One of the areas of focus for the SBU
existing and new products and thereby
processes faster and more effectively by
was completely new for the company:
re-examine which products best fitted
approaching them in a highly structured
Innovation Management. The position
the company’s strategic aims from a
way. In Funnel Management, ideas
commercial, technical and regulatory
enter a filtering system at the top of the
perspective. The Proudfoot/client team
funnel; as they pass or fail to pass certain
applied Portfolio Management to many
milestones and tests, the ideas are either
areas of the company, including projects,
rejected or move on to become full-blown
was created such that the manager of
this global function would be responsible
for developing and implementing the
company’s innovation strategy plus
applying and coordinating Funnel and
Gate Management for more commercially
Total saving delivered to
client in 34 weeks
products, markets and production sites.
projects. Each milestone or test is based
An immediate success, it is now helping
on pre-set criteria (such as economic
the company focus on its strategic
feasibility or likeliness to pass regulatory
priorities and undertake the right projects
hurdles) and takes place at a “gate,”
to optimize return on investment.
hence the name Gate Management.
The Proudfoot/client team applied Funnel
and responsibilities of all SBU and
Funnel and Gate
Management
RBU functions. RACI methodology is a
Once portfolios were aligned strategically,
weed out unprofitable projects. Before
tool to assist in the definition of inter-
other tools came into play. Proudfoot
Proudfoot came on board, people
related roles based on the following
implemented Funnel and Gate
scattered across the company were
questions: Who is Responsible?
Management, systems for managing
working on more than 100 research
oriented R&D project management.
Once the new structures were in place,
Proudfoot used RACI methodology to
define with complete clarity the roles
and Gate Management to R&D to
simultaneously, the CEO said.
“If a request came from the market,
people would begin a project without
analysing the short and long-term impact
on the entire company,” he continued.
Now, his company uses the steps
prescribed in Funnel and Gate
Management to better assess the
manager and a project with clearly-
training for managers and supervisors
defined milestones that must be reached.”
to support workers who were at first
He added: “The lifetime of products are
sceptical that they could accomplish more
short. The more time you take to make
tasks with fewer people.
them, the less time you have to sell them.”
After the concept of Funnel Management
partners expect the company to save
was introduced, the company’s
in excess of €9 million as a result of
employees were trained in the system
the more efficient processes and the
and its software tools and coached
lower head count, achieved through
through initial implementations.
early retirements and job transfers. It
project’s potential. It examined all ongoing
was important for the CEO to undertake
R&D projects and selected five or six
“Our employees were skeptical at first,
high-priority projects to focus on.
but now they’re happy about Funnel
This new system of Funnel and Gate
Management showed immediate results:
During the course of the ten month
Tallied up in the end, the project
this in a socially positive way and
avoid forced redundancies. The CEO
Management. They now know exactly
rounded up the project by saying : “We
what they have to do,” said the CEO.
now have a healthy basis to further
develop our company. I would like to
project, an R&D project regarding
Major Changes in
Record Time
solvents for lithium batteries sped through
Throughout the project, Proudfoot held
the funnel in record time, allowing the
strategic discussions with executives and
company to make an investment decision
managers to solidify their commitment to
on it. The CEO was delighted with the
change in a variety of project alignment
impact the new ways of working were
workshops ranging from three hours
For more information:
having on the R&D team: “This was a
to two days. With the full backing of
great success for me. Many people had
management, Proudfoot implemented the
Alexander Proudfoot
10 Fleet Place, London
EC4M 7RB, UK
Tel: +44 20 7710 5100
Fax: +44 20 7710 5101
have more such profitable projects.”
been working on this R&D project with
new tools and more: It developed and set
very little preparation and direction. This
up management operating systems in all
is all different now. Now we have a project
project areas and provided necessary
PROJECT AT A GLANCE
CEO KEY LEARNING POINTS
„ Costs reduced by €9 million
„ Approach all projects with a commitment to change
„ Substantial ROI achieved
„ Assign a full-time senior task force to the job using quality people
„ Project duration: 34 weeks
„ Give change projects the highest priority
„ Improved business processes
and systems, better adapted
to business needs
„ Operate with an open-door policy, giving people the chance to discuss
critical aspects of the project at any time as to avoid losing momentum
and focus
„ Able to run the business with
130 people less
„ CEO should be a part of the project management team
„ Modern and effective management
practices introduced and adopted
by the team
„ Managers and supervisors trained
in active supervision
„ Hold regular formal and informal project review meetings
„ Constantly review project process from a critical point of view
„ Where difficult situations arise confront them head on with a constructive
joint problem solving approach
Copyright © 2009 Alexander Proudfoot. All rights reserved. 30175 UK PS 0110
www.alexanderproudfoot.com