The Midlands Military Auto Manufacturer ’s business was losing money on their 3 key projects and failing to get to grips with or plan for new business adequately. The upfront financial targets were unclear for projects and gross margins for new business were delivering a negative net margin.
The thinking that drive this behaviour was a focus on “winning new business at all costs” and the sales centrist Chairman imposing projects to deliver on the operations and financial team without their involvement, because they were “just too slow”.
The successful strategy in this environment was a design – cost methodology that required effective x functional teamwork as well as establishing the end – end business process from inquiry – evaluation – new product development – commercialization etc
From the top down the business had a legacy of recklessly over committing.
This over-commitment was driven by “we have been through worse” and firefighting rather than having an effective way of working or business process.
The most skilled employees were leaving due to threatening firefighting leadership culture, a lack of basic organisation and misguided blame, leaving projects under resourced, and a myriad of unapproved changes.
The main vehicle project constituting 50% of annual turnover was 18m late and £1.5m over budget. There was no adequate project management nor respect for a plan was there an appetite for establishing robust governance. When a plan was created the MD said “we have seen this all before”. This dismissed the value of aplan in the teams eyes and the capable PM left for this reason.
The development engineering change process was informal. Decisions were made without robust analysis nor proper sign off. The design engineering team lacked the basic skills on many levels leaving them unable to make good decisions and just muddle on.
Reviews were infrequent, and ineffective. Team members were unaccountable. The senior management team led the way in not completing their actions between their 3m reviews. The business lacked a clear product operational or financial strategy.
On the positive side there was plenty of business to win. The business was at a turning point. The culture organisation and recruitment was flawed vs the challenge. The business had grown past the point where the legacy unplanned approach was viable.
Ability to integrate into the client company
Tom joined as operations director to craft the strategy in 3 months. He coached the MD and Chairman and identified that the main vehicle project was restrained by a misaligned “firefighting all hands on deck culture” which whilst looked positive it prevented delivery. The project plan for completing engineering was created and an interim operations manager recruited to getting the manufacturing right first time and support the development of the team during the transition.
Tom established the weekly review and established accountability, brought in a program expert to train the program team for 8 days, created a war room, daily review and established the engineering change / approval process, establish the financial reporting BOM costing.
We established the strategic suppliers and self-reporting structure, end – end systems and the daily improvement / resolution process.
Tom established used the winningthinking team work / accountability approach to create the front end commercial process for evaluation and resourcing new products, and design – cost process to innovate at the front end to achieve margins and get external input to upskill the team, as well as defining the requirements and go/no go gates.
The business unit organisation structure was flawed so the vehicles director was moved into a commercial role. The other loss-making projects were contained and PMs established and allowed to do their jobs.
The front-end process created a fresh means of scoping, innovating using external resource up front to get the projects scoped to be achieved right first time.
Impact on the business / bottom line
Early milestones were achieved on the vehicles project, and customer confidence was recovered and the business went on to win much larger contracts with the potential to double their tirnwover. The end- end business process was established and front end commercial and engineering change and program management established.
we deployed the winningthinking approach to increase margins because they undersold their core business by unnecessarily “competing on price”, so the structure and deign – cost process was set up to achieve a minimum 12% increase in gross margin on new projects, reduce overheads by 15% and resource these projects flexibly and indicatively from a zero-cost base, retaining a core in house structure.
Achievement of objectives
The plan was put in place to recover the critical vehicle project and mitigate the gaps in accountability, and contain the profit and quality issues on 2 other key projects. The process to prevent re-occurrence, get resourcing and governance right and get ahead to achieve sustainable margins was established. A structure was created for the management to recruit into and retain the best people. The chair and MD were coached on the impact of their means engagement that had become the norm.
Because the team were so deflated Tom worked as operations director alongside the team members on the ground to support them directly and show them how to get things done and right first time.
Leadership / people management skills
Very supportive of the operational and commercial team and their development. developed the self awareness and held the mirror up to the executive team and coached them to identify their opportunities for personal growth to help mitigate the long standing cultural flaws of the past.