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.

Results

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

Background and challenge

The digital audio space has faced a great deal of change in the past 10 years due to shifting consumer preferences for streaming audio.

Our client was a private equity firm looking to invest in a major digital audio advertising player that was seeing declining revenue and many near-term competitive threats. The private equity firm enlisted L.E.K. Consulting to independently validate management’s growth forecasts. The client also asked L.E.K. to forecast the growth of digital advertising revenues for terrestrial radio and pure play ad-supported internet audio services. Additionally, we were asked to validate the target’s position with customers and noncustomers to identify share gains or losses, and to determine the robustness of the target’s “digital currency” and whether they have advertiser lock-in.

Approach and recommendations

L.E.K. assessed the target’s competitive positioning across three distinct digital enablement solutions, determining the likelihood for the target to gain or lose share. We also assessed potential additional upsides and downsides to the plan and investigated opportunities that existed within the terrestrial radio space for consistent revenue streams to supplement the company’s movement into digital products.

Then, L.E.K. utilized primary and secondary data to compile a topline revenue forecast for the business, and developed a detailed forecast of the growth of U.S. digital advertising revenues for terrestrial radio and pure play ad-supported internet audio services. In addition, L.E.K. scoped the growth potential in four international markets.

Results

L.E.K. provided the private equity client with a customer-by-customer detailed revenue forecast and variance assessment versus the management plan to inform the client’s bidding strategy.

Background and challenge

A well-known U.S. professional sports team wanted to evaluate the market potential for an interactive subscription product that included exclusive live game content.

The team’s leadership engaged L.E.K. Consulting to validate the size of the direct-to-consumer (DTC) market opportunity and provide recommendations on an executable go-to-market strategy.

Approach and recommendations

L.E.K. began by conducting a comprehensive analysis of the sports team’s fan base. The analysis included an online quantitative survey that defined:
•    Key customer segments
•    Local market vs. fans outside of market
•    Purchase and consumption behavior
•    Demand dynamics
•    Anticipated appeal of product and specific variants of it

Through the survey, L.E.K. was able to identify what fans really valued about the potential product, which was a radical departure from anything else on the market, and what they would pay for different variants being considered. Based on these customer insights, analog research and detailed financial modeling, L.E.K. developed an estimate of the opportunity size and projected growth for the service and helped team ownership make key decisions about the launch. L.E.K. also supported the fact base behind negotiations for accompanying linear rights and helped inform league strategy.

Results

Based on L.E.K.’s recommendation, the team was able to create a strong argument for building a DTC product, and clearly understand both the trade-offs and how to maximize odds of success.