Background and Challenge
A major waste management business faced a period of considerable instability. The business was carrying excessive debt, and an anchor shareholder was seeking an exit.
The board sought L.E.K.’s support to lead a whole-of-enterprise transformation.
Approach and Recommendations
The overall goal of the project was to fundamentally restructure the business, reviewing and proposing changes in the operating model and portfolio of businesses.
Our involvement consisted of a three-to-four-month intense phase of strategy development, performance improvement target setting and initiative design, followed by a less intense three-month phase of activation and mobilization.
We were directed to work on identifying and capturing cost reduction opportunities in the corporate office, and in the direct operations of several of the major business units.
Our effort led to an evolution in the operating model, a rationalization of the portfolio of businesses, and the commencement of a period of continual improvement and productivity growth within BUs, which heretofore had been highly unaccountable for cost efficiency.
Immediate outcomes of portfolio reshaping included:
- Disposal of several businesses and over 40 small trading entities in order to stabilize the balance sheet and direct future investment into the rebuilding of the higher-growth businesses
- Decision to rationalize, redirect and then sell one region
We identified a small set of high-potential areas for productivity improvement, despite considerable pushback from divisional management. These were fully evidenced initiatives, developed and with targets locked in by the CEO and the board.
- The board approved the necessary resourcing to drive change through the recruitment of several new roles with “continual improvement” characteristics
- These changes, when released to the market, resulted in a 30% increase in the share price