Re-booting a loss-maker onto a profitable growth path.

A loss-making B2B subsidiary of a FTSE 100 company required 're-booting' and setting on a profitable growth path. Operating in an intensely competitive environment, with little to differentiate itself and selling to major retailers and multinational consumer businesses, the company was under constant margin stress, increasing customer turnover and lost business.

The resulting volume chase at nearly any cost increased complexity and costs, both at take-on and ongoing. Shorter runs, poor disciplines and a reactive, fire-fighting culture had taken hold throughout the business. Quality, on-time and in-full delivery, efficiency and effectiveness were declining rapidly; teams were at war with each other in entrenched silos; inertia was setting in and two-way communication was being lost in translation.

The team understood the need for urgent change but was struggling to define the challenge properly and develop a good strategy that was fit for purpose, focused on what was critical, and in what order.

An in-depth quantitative and qualitative assessment was conducted of the business, its core competence, current situation and direction, its 'soft and hard' inputs and its strategy. The assessment made one thing clear: the business did not have an identifiable core competence, nor one which could be developed quickly enough to create leverage and sustained competitive advantage. The strategic objective was therefore re-configured: within 18 months, reverse the losses, optimise sustainable earnings and ensure the business was an effective low-cost manufacturing platform for a bolt-on reverse acquisition or potential acquirer.

The strategy was re-configured into three phases: four months of platform simplification and stabilisation; six months of operational optimisation; then eight months of targeted, value-added sales growth. A phased and prioritised input management framework focused actions and resources on a small number of opportunities and key strengths, grafted onto a simplified operational platform. This built a strong manufacturing base and freed machine time for sales.

Critical control points and an early-warning system were established, with dashboards focused on key inputs so individuals and teams could cascade actions and intervene early and decisively. Cultural cues bound it together: a change programme, 'Freshstart', empowered the wider team to act promptly and keep the business on track. The customer was treated as an input throughout.

Profitability returned, improving by more than £3m. SKUs were rationalised by 34% with no volume or customer losses. OEE improved from 70% to 92%. Internal waste, complexity, fixed costs and working capital all reduced as processes were simplified.

A coalescing cultural 'totem pole' proved key, creating a sense of urgency that improved the speed of change and the probability of success. Critical to the project was involving the wider employee base, especially opinion formers; aligning the control system to inputs at a detailed level empowered individuals and teams. And a lesson that travels: don't mistake motion for real action.