TAP Case Notes 3 - Global Ops Strategy

Client            Advertising Distribution Company

Service         Global Strategy Review - London UK

Result           70% Cost Reduction in Regional Offices

Background

Our client was a technology business supporting the advertising industry with distribution and asset management services.  Following a period of significant expansion, they understood that the strategy to roll out their broadcast services globally was neither scalable nor financially viable. 

The challenge of business development in the Americas, Middle East and Latin America could only be achieved through a different strategic and operational model.

Challenge

We were appointed to manage a diagnostic review of global operations and to prepare an international expansion plan that would provide a strong operating profit while removing the requirement to build new offices in each market.  

Specifically our client needed help in understanding the priority for geographic expansion as the lack of a clear regional strategy had created inefficient local operations with high costs and much duplication of resource.  They needed a solution where the costs would scale with the opportunity.

Approach

Our approach was to clarify the business strategy with senior management and test it against operational realities.  We produced departmental audits of Traffic, Broadcast and TV Production discovering that market expansion did not match the sales opportunity nor was there visibility of the expense to service international markets remotely.  

Additionally, poor market research and inaccurate data had produced a flawed business case.  This led to poor results from new markets and a reduction in support from the Board for further expansion.  Our approach provided the support for a cost effective operational model and a strategy to prioritise and manage global expansion.

Results

The regional strategy that we developed, organized the client's 30 offices to report into three ‘centres of excellence’ aligned by operational similarities.  These offices were given extra financial support, allowing their ‘satellites' to be maintained at 70% lower cost.  Regional functions were standardised, ensuring that global decision-making was faster and more collaborative.  This allowed faster and more efficient business planning while reducing overall headcount.  

Our review of the operational cost to service specific countries produced a model allowing the country-by-country rollout to be prioritised on existing business, confirmed prospects and existing outsource costs. 

Our strategic recommendations have delivered on the global expansion imperative and kept operational costs to scale with revenue growth.  Finally, we proposed a structured business case process that is now required before financial commitments to new markets are agreed.  This safety net has avoided further investments in unprofitable markets.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scaleable to meet the challenges of technological change and international growth.

The Advisory Partnership assists its broadcast and creative services clients with operational strategy and review, delivering outputs that are sustainable and scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

More from us:

Sales vs Ops - Whatever happened to the operational review?
International Growth Cheat-sheet
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

TAP Case Notes 2 - India - Business Review & Diagnostic

Client         Global Advertising Tech Business

Service     Business Review, Product Review & Diagnostic 

Location  Mumbai, India 2014

Result       Reset Strategy Delivering 20% Growth 

Background

Our client was a technology business that supports the advertising industry with advertising distribution and asset management services.  Its Indian operation was a start-up, completing its first year of operations focusing on TV commercial distribution and managing clients from media agencies and post-production companies. The business was failing to achieve its targets; it was third to market with two strong competitors; one local and one, a long established international business.  Lack of active customers and low price yield meant that the operation had yet to break even and was becoming a critical drain on our client's global resources. 

Challenge

The Indian business was trading at 25% of the monthly revenue budget and was being supported by head office at $250k per quarter. We were appointed to to provide a diagnostic on why the business was failing to win customers and why the price had been driven to levels 80% below our client's global average. We were further asked to make recommendations on either the closure of the operation or to continue trading at a loss for strategic reasons. 

Approach

Our approach was to base ourselves on site to develop an intimate understanding of the local business and its potential.  We spent time reviewing daily operations and interviewing customers, broadcasters and staff.  We knew there was a strong and highly qualified management team so our job was to close the knowledge-gap between the international strategic plan and the operational reality.  

The key problem we found was with the practical usability of the product unique to the Indian market.  Our analysis revealed that our client's inability to provide bespoke systems for broadcasters had led to TV stations becoming advocates for the competition.  Our client then commissioned us prepare a gap analysis and business case to revise their product interface with changes specific to India.  We cross-referenced our work and found relevance for our changes in other operations in SE Asia and the Middle East.  This further supported our business case and product development was commissioned for 2015.

Results

Our work revealed that the client's business plan had not adequately considered operational processes unique to India and that they had underestimated their competition. Our competitive review revealed a bias towards local businesses so we recommended that they partner with their local Indian competitor to provide the best blend of local insights with their international experience in the sector.  This recommendation effectively removes a competitor, reduces price pressure and provides a real benefit to the Indian customer with a system adapted to their specific requirements.  

Following our briefing the client has decided to retain a strategic investment in their India.

Once the product changes are implemented, it is expected that their Indian market share will rise from 20 to 40% and through partnership they intend to they will be able to fund a broader range of services to the Indian advertising community.  

Our success was to provide the client with market knowledge that they did not previously have, giving them a detailed understanding of their Indian operation and enabling them to make more informed decisions in future.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scaleable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

What we have learned  in India, SE Asia and Latin American are captured in more detail the following articles:

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

TAP Case Notes 1 – APAC Centre of Excellence

Client      Global Advertising Technology Business 

Service    International Strategic Development

Result     Creation of APAC Centre of Excellence  

Date          2014

Background

Our client was a technology business that supports the advertising industry with TV distribution and asset management services.  Following our strategic and operational review of their existing operations in APAC, the client accepted our recommendation to create a joint venture with an existing Asian partner to service the region. This business already had a long standing relationship with our client; it serviced their print advertising distribution and had an operational footprint in Malaysia, Singapore and Hong Kong. 

The project was firstly to relocate the client’s APAC operations from Hong Kong and secondly to form a regional ‘centre of excellence’ in Malaysia to allow for expansion throughout the region.

Challenge

Once the regional office was established, we were appointed to provide the framework for the client to roll out their service to 17 Asian markets generating USD $23M at 48% EBITDA within 3 years.  Our role was to ensure that the Asian operation was fit for purpose both as a regional head office and as a ‘centre of excellence’, able to lead the direction of the business in the region.  We were required to implement the best of the client’s international experience while ensuring each Asian market's unique processes were fully understood.  

At the same time each of the 17 markets were transitioning from analogue to digital TV services so, with an industry in flux, we were required to include strategies for change across a number of markets with diverse, cultures, languages and processes.

Approach

We had already proposed the client’s global and regional models and had completed the transition of the Hong Kong office from a regional to a satellite sales office so we understood the task. 

To build the centre of excellence, and to meet the growth challenge, we appointed a ‘SWAT Team’ sourced from the client’s most successful operators worldwide.  This team was important to help with the digital change required within the region and to quickly instill values consistent with the rest of the the client's business.  We then focused on hiring an experienced local leadership team to build credibility and deliver the skills to quickly deliver transactional revenue.  We ensured that the model we prepared was scaleable and easy to replicate on a market-by-market basis throughout Asia.

Results

The relocation of the regional office from Hong Kong to Malaysia created a strong regional centre through which the client could direct its regional growth.  Despite obvious disruption, no customer was lost in the transition of the operation from Hong Kong and within 6 months, the Pan-Asian operation was servicing markets in Vietnam, China, Singapore, Thailand and Hong Kong.  

Asian business sourced from the client’s global client network could now be managed through Malaysia, and each of the client’s country operations can now sell Asian broadcast services to their local clients.  This was a significant win for the client who could add Asia to their many international proposals and tender requests a potential revenue lift of 20%.

Initial revenue was not however as budgeted. This was due to the TV product having limitations in dealing with local business issues specific to Asian markets.  However, we prepared a product review and business case for interface changes that is scheduled for completion in 2015.   Revenue is forecast to meet expectations by June 2015.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scalable to meet the challenges of technological change and international growth.

Post by James Douglas

www.theadvisorypartnership.com

Other Posts by The Advisory Partnership

Upscale your International Growth
Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography

Advisory #14 - International Growth Cheatsheet

As every business matures it seeks to extend its reach, seeking new territories for its products and services. 

You may be interested in opening your business in another state or you may be interested in expanding internationally or to emerging markets.  However, if 86% of businesses fail to achieve their strategic plans (Harvard Business Review), what are the skills that you are missing or need to be aware of to ensure that you can grow your business successfully into new and emerging markets. Just as importantly, what are the dangers you need to avoid?

Based on our experience in LATAM, Asia and the US, The Advisory Partnership has prepared a list of skills, essential to your interstate or international expansion.

Project Management

You need to be efficient.  You need to have a tight project team with clear roles so that you can make decisions quickly and change course if operational realities reveal that you need to head in a direction other than you anticipated.  

Your project needs clear leadership and a decision-making hierarchy but be careful not to over-manage; too many layers of management will stifle decision-making. Your start-up needs to be able to act dynamically and respond nimbly to situations as they develop.

Research Skills

Find out everything you can about your target market. Make no assumptions.  There are no short cuts here.  Working in isolation from your desk at head office will not be enough to get the feel of an international market and to understand how it works on the ground.  You have to get on a plane and spend some time there. Don’t spend a day; spend a week or a month if you can.  It will pay you back with speed to market; delivering faster revenues and fewer expensive mistakes.

Networking Skills

You need to find businesses and individuals that have entered similar markets and learn about their experiences.  You need friends who’ll tell you how it really is.  What worked for them and what didn’t? 

How a market presents itself externally will be very different to how it operates internally.  You need to know the difference.   Find a local consultant who can partner with your own project manager to help you understand the market intimately and be sure that your consultant has the credentials and contacts to deliver the connections that you don’t have on your own.

People Skills

Your business will rise or fall on the success of your people so you need to have the right team before launch. A key appointment to your new market should be an HR manager or agent and they need to be a key part of your start-up leadership team.

Hire people who have done what you do before; people who are already credible and trusted in your area of operation and who’ll be able to hit the ground running with your product and service. Hire the best people you can within the available budget and don't make any false economies.  Low cost labour with limited experience will slow you down, they will require induction and training.  Start-up is not the time to be moving slowly.  


When you start to make appointments, hire a mix of local employees and trusted experts from your business.  This way you’ll have the best combination of skills to deliver not only your company’s expertise but you’ll also have local credibility and a built-in understanding of cultural sensitivities.  

Structure your operation in this way to help you successfully navigate sales and operational issues in the local markets. 

Multi-Tasking.  

As you expand, it's very likely that you’ll be performing a local and international role at the same time.  This means you’ll be working on your new markets at the same time as your home operation, probably across different time zones. This is exhausting so you need to be highly organised for it to be sustainable.  Structure your meetings formally to a tight, action-based agenda and allow for separate informal catch ups to understand any day-to-day personal challenges. 

Culture

There’s no such thing as a unilateral 'global' approach because you need to adjust your behaviour for different types of interaction with different locations and work to overcome language and cultural barriers.  Employment expectations, language capability, education and culture may all be markedly different to how you normally operate and you will have to make some allowances in your process to ensure that you get the best from your team.  

There is your way of operating and the local way, the right way for each new market will be somewhere in the middle and you need to find that sweet spot. Your success is dependent on working out which is the right approach and managing accordingly. 

Operational Excellence 

Once you’ve hired your local talent, you must now surround them with everything that is great about your organisation.  Send in an "SWAT Team" from your own business and surround your new team with all the skill, passion and enthusiasm that has made your business great at home.  Avoid a fly-in-fly-out approach.  Give them some time to bond and to really share the essence of what your business is all about. The time and energy you put into helping your new team out now will save you in the long run. 

Product Management

You may have a product or service that has been hugely successful in your own market but you still need to be sure that there aren’t regional variations that may completely negate the effectiveness of that product in a new environment. Be prepared that your product or service may need to be adapted to cater for the requirements of the new market.  Do your research and test the market in advance before committing to a costly launch of an inappropriate product. 

Technology 

Make no assumptions about technology; particularly if your product is within the digital or online sector.  Public internet and business connectivity are not a level playing field worldwide. If you are entering emerging markets particularly with a new technology product, be mindful that traditional processes can still dominate due to poor Internet performance in some countries.

Growing your business into new markets can be one of the most rewarding things you can do in your career but keep in mind that whatever new market you enter, it’s is not your home territory. You need to continually compare your strategy against operational reality to ensure you have the best set up for success.

The Advisory Partnership assists its clients with operational strategy and structural change, delivering outputs that are scalable to meet the challenges of technological change and International growth.

Post by James Douglas

www.theadvisorypartnership.com

Other Posts by The Advisory Partnership

Over Promise, Under Deliver
Partner Smarter, Grow Faster
International Strategy - How to Get an A in Geography