Case Study

Enterprise Turnaround: Building Confidence in the Future

The Problem

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 on profits.

Not surprisingly, the chain 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 Solution

Recognizing the need to make and keep their promises to stakeholders, the CEO and design team took a critical look at the business model and strategy to ensure alignment with their professed values. The review began by clarifying the strategy, the process evolved to include a re-thinking of both the business model and the strategy. This required understanding what capabilities would be essential for future success, how to achieve industry distinctiveness in them as well as where to reduce costs.

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 reputation 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.

The Outcome

RBL collaborated with the executive team to engineer a significant transformation and establish a redesigned business that was attractive for customers and investors.

  • Stock price rose by 71% in less than a year
  • 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