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Blackvan Case Study: Developing Cost-Savings Initiatives at a Telecom Company
The Problem:
As a way of remaining competitive in a relatively mature industry, the fixed wireline division of a leading Scandinavian telecommunications provider was looking for ways to save $110 Million over the next three years. Each business unit in this division was charged with identifying initiatives that would carry them to this mark. However, two attempts had yielded a set of initiatives totaling only 10% of that amount. One of the main reasons this group was unable to identify significant cost savings was because different business units unaccustomed to working with each other failed to recognize synergistic opportunities.
Our Approach:
Blackvan designed a two-day workshop attended by 80 people from the organization, including the senior management group as well as representatives from the different business units. Because this organization had already experienced two failures with this cost-savings initiative, a certain amount of trust and buy-in had to be re-established with the leaders of the different business units. Therefore, a small one-day work session was conducted with these leaders a week before the actual workshop to establish the new methodology and approach that was going to be applied at the full-scale workshop.
The main two-day workshop began the senior management team having an open and detailed conversation about the context of the work and the level of support they were going to commit to the outcomes.
In a series of exercises designed to stretch their thinking, participants learned about leading practices for cost-savings in their industry, parallel industries and far-reaching natural biological ecosystems in order to encourage their visioning. They soon realized there were tremendous opportunities that would be made available to them if they could collaborate across business units and tap into synergies among them to create a shared vision.
Once a shared vision had been established, the participants were broken into small groups to work through a series of future-state scenario exercises that revealed the major opportunities as well as the major pitfalls that lay ahead of them. They were then able to develop, test, and refine models of cost-savings initiatives that capitalized on these opportunities while at the same time having accounted for major risk factors and obstacles. The action items to support the major initiatives were detailed in a plan with accountable and, due to the workshop process, enthusiastic owners.
The Results:
By the end of the two days, this team of people had identified a set of initiative totaling $223M, more than double their stated goal. A conservative analysis of these initiatives yielded a figure of $165M in cost savings, an amount still 50% more than their already ambitious initial goal. Because this figure was only made possible by identifying synergistic opportunities across business units, the company was also able to form a more unified and more collaborative culture. One member of the senior management team remarked, “I overheard people talking as they were working today that for the first time in their years with the company, they felt like they were all a part of the same organization. To me, establishing that alone would have made this workshop worthwhile.”
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