An exciting success story...
In 2006, Frédéric Midy became Chairman of Ideal Standard, the European leader in complete bathroom solutions for major retailers, DIY stores and installers. At the time, this 800-strong company with sales of 100 million was in serious financial difficulty.
In 2007, following a series of far-reaching strategic changes, the company made a spectacular return to the black…
Problems encountered
In 2006, Ideal Standard posted negative earnings of 5%.
The problem was clear: The company had to be transformed internally to generate profits, while improving its competitive positioning.
Analysis & diagnosis
Two levers for action were identified:
- Some activities are non-profitable, and some products are sold at a loss.
- Some cost categories are too expensive: the supply chain is disorganized, some marketing costs are too high, sales costs are unstructured, too high and not in line with the company's strategy.
- The company's mindset is not focused on a performance culture.
Challenge, issues & objectives
The main challenge is to implement these major transformations despite considerable internal resistance to change. Added to this is the concern not to cut staff numbers, despite a tense financial context.
The challenge is to transform the company’s attitudes and beliefs towards customer satisfaction and a performance-oriented culture.
The objective is simple: to turn the company around within 3 years.
Solutions provided
- Stop selling non-profitable products.
- Compensate for the resulting drop in sales by intensively promoting profitable flagship products.
- Reorganization of logistics flows.
- Change of suppliers through calls for tender.
- Creation of a corporate project focused on customer satisfaction and performance culture through the implementation of variable remuneration.
- Reorganization of sales, with salespeople specializing in specific areas.
- Reduction of marketing costs outside the scope of the corporate strategy.
Key indicators used to monitor the implementation of solutions:
- Evolution of net income.
- Close monitoring of indirect costs.
- Evolution of customer satisfaction.
- Internal team satisfaction indicator.
Results achieved
The results were not long in coming: just 18 months after implementing these strategic transformations, a year and a half ahead of schedule, the company was back in the black, with a P&L margin of 10 points.
Key success factors
- Total cohesion of the management committee around its Chairman, Frédéric Midy.
- Company-wide implementation of strategic changes, without modifying existing processes.
- The full involvement of a shareholder who mobilized his network to find the world's leading tax specialists.
- Direct, transparent communication and sharing by the executive committee with the company, and in particular with its top managers.
Conclusion
Once again, strategic cost management proved highly effective, enabling us to avoid downsizing and put in place a vision that the whole company could support.
