IPO: Preparing for competition

Case Study

IPO: Preparing for competition

Situation

In readiness for a restructuring of the market, this public sector client needed to transform deeply conservative operations – driven by years of regulation – to entrepreneurial behaviours fit for unprecedented competition.

Strategy

With neither the time nor appetite for a traditional culture change programme, this client chose to implement a radical new business operating model.

Intervention

We established this client’s aspirational behaviours by simulating the new market, and embedding them as normal practice.

All of the group’s companies, business units and support functions were required to compete for business with each other, using external market models and prices.

Directors and managers negotiated terms, service levels and prices, with rates provable by comparison with external suppliers in equivalent operations. The new model exposed uncompetitive internal suppliers and demonstrated that several companies were not as profitable as previously believed. Where these operations were unable to improve, they were sold or otherwise replaced.

We designed, built and facilitated the market simulation. We trained and rehearsed leaders to negotiate for services on terms and prices they had never previously been able to influence. We corroborated market models and prices where there was doubt or dissent. We chaired many key negotiations. This market simulation and pricing methodology was formally agreed with the regulatory body and used by the client in their subsequent negotiations.

Impact

The client quickly disposed of inefficient businesses.
They became one of the most effective competitors in the industry, with a share price which reflected this performance.
Following this successful implementation, several other clients in similar industries adopted the market simulation approach.