The newly appointed CEO of a global hotel chain inherited a business in crisis. It had recently de-merged and was undergoing a brand name change. It had heavy bureaucracy and overhead costs 15-20% above industry average in an extremely cost-competitive industry. Externally, there was a global economic downturn and a massive slow-down in travel post 9/11.
Not surprisingly, it was being downgraded by analysts and faced a hostile takeover attempt.
The new CEO initiated an “organization review” and invited RBL to help turn the organization around.
The review began by clarifying the strategy, so the cost savings needed to turn the business around could be achieved without cutting the capabilities needed to survive and win in the long run. As the CEO and the design team of internal high-potentials and RBL consultants worked closely together, the process evolved to include a re-thinking of both the business model and the strategy.
Once the executive team was aligned to the new model (corporate center and three global regions) and strategy (brand-building), the design team designed and implemented bold actions to develop world-class status in efficiency and speed, including:
- Reorganizing to eliminate regional budgetary and operational independence
- Streamlining differences in regional operations and aligning/centralizing finance, human resources, and corporate functions
- Creating a global shared services center
The design process included transparency with markets on targets and timetables that restored analyst’s confidence and strong multi-direction communication and a participatory process that built employee engagement and buy-in.
RBL collaborated with the executive team to engineer a significant transformation and establish a redesigned business that was attractive for investors.
- Stock price rose by 71% in less than a year and it outperformed the FTSE by a factor of 2
- Operating costs were reduced by more than $100 million/year
- Employee surveys showed a dramatic increase in morale and confidence in company leadership
- The takeover attempt was defeated and the quality of management was no longer a matter of public debate