Center for Leadership
Studies

Case Study One:

Producing Three Times the Predictable Revenues on a Commodity Product

The Situation:
This organization makes diagnostic equipment and assays to test blood for various diseases and conditions, including testing donor blood to help keep the blood supply safe. The MAOL candidate’s leadership initiative was to increase revenues by developing a strategy for changing the product pricing structure. The products were seen as a commodity, yet the candidate believed they were under-valued. He describes it like this: “Say you are on the operating table, and they have to give you a transfusion. How much would you pay to make sure that bag of blood was free of infectious diseases? Most people tell me they would pay anything I asked for, or they would give me a blank check. Do you realize that most labs pay less for those tests to make sure blood is safe, than the blood banks pay for the juice and cookie they give you when you donate blood?”

The MAOL: The candidate took on his project as a breakthrough, using the framework of the MAOL to establish the outcomes and a path to achieve them. He enrolled the President of the company, his boss, in approaching the project as a breakthrough, and requested that he be allowed to attend the MAOL as part of it, promising that the investment in him would help give the organization the results they wanted.

The Outcomes: The predictable outcome for revenue increase as a result of pricing changes was between $6 and $7 million. The candidate convened a number of work groups to brainstorm ideas and projects to increase revenues through pricing, and the total value came to $80 million in possibilities. They picked 5 or 6 to work on, based on size of return and degree of difficulty, and people volunteered to lead the teams and be a part of them. This organization has a history of declining extra projects because of the level of work already in the system – but when they saw the chance to do something that would make a big difference, they put their hands up to be included.

The actual outcome this MAOL candidate produced by the time of graduation was an increase of $20 million of recurring annual revenue – about 3 times the predictable number. At the end of the second year, this MAOL leadership initiative realized an additional $10 million in annual revenue.

Case Study Two:

Slashing "Order to Ship" Time to 1/10th of Original Schedule

The Situation:
The site manager for the German manufacturing facility of a Fortune 500 pharmaceutical company was faced with the closure of the plant if it did not improve profitability. Planned incremental cost savings from continuous improvement projects would not be sufficient.

The MAOL:
With the support of GLG's Strategic Design Services, a "postponement strategy" was created in which product is manufactured to a state where it is still customer-flexible, leaving the final finishing and customization as the very last step. Over a 10-month period, the company's management created an entirely new design for manufacturing and distribution, which was then implemented over the succeeding two years.

The Outcomes:

This strategy was applied for the first time in the industry by this site and has become a worldwide goal for the company's manufacturing reengineering effort. Meeting on their objectives for the project, they are now routinely delivering product in 24-48 hours (vs. 4-6 weeks).

Cost reductions were achieved in freight and distribution exceeding $4.5 million per year. Markets served expanded from Europe to Eastern Europe and North Africa.

The company is using the facility to create millions of dollars per year in incremental revenue and profits by producing product for other companies outside the parent organization. A new, patented system for on-line labeling and packaging was created, resulting in ongoing savings of approximately 50% of finishing costs. This system has been extended to other company operations, where it saves millions of dollars annually per line. Worldwide there are about 20 lines for which this is applicable.

The site went from being an isolated minor facility to a worldwide leader for change. A team- based organizational structure was created that has been a model for reducing layers of management and pushing accountability and responsibility downward.