Escolar Documentos
Profissional Documentos
Cultura Documentos
RAMON BAEZA
LARS FÆSTE
CHRISTOPH LAY
TUUKKA SEPPÄ
SIMON BARTLETTA
AMIT GANERIWALLA
RALF MOLDENHAUER
DAVID WEBB
35 Note to t h e Read er
The results of that analysis are the Comeback Kids, companies that
“
range from technology players such as
Olympus and Nokia to health care compa-
For leadership
nies Boston Scientific and Bristol-Myers
Squibb, paper manufacturer UPM, Qantas,
HSBC, and more. These 11 companies rep-
resent some of the most successful come-
teams, turning
backs in the world over the past decade. around a company
On the basis of their stories—along with represents the
truest test of their
our research and experience with hun-
dreds of turnarounds—we’ve identified
five critical elements of a successful turn-
around.
performance.
The Boston Consulting Group | 3
1. Develop a clear-eyed, objective understanding of the company’s
situation. Rather than stalling or waiting for external conditions to
change, strong leaders get ahead of the problem with an ambitious
program to change the company’s trajectory. In fact, some anticipate
problems even before they show up in the P&L, under the logic of “If it
ain’t broken, fix it anyway.”
As the profiles of the Comeback Kids show, these measures can lead to
dramatic improvements in performance and create substantial value
for shareholders. (See Exhibit 1.) Collectively, the margins of these com-
Share price
(Indexed to January 1, 2013) Share price
change
200
Comeback Kids 87%
150
S&P Global 1200 41%
100
50
0
2013 2014 2015 2016 2017
Note:
1. The S&P Global 1200 includes the S&P 500 (US), the S&P Europe 350, the S&P TOPIX
150 ( Japan), the S&P/TSX 60 (Canada), the S&P/ASX All Australian 50, the S&P Asia 50,
and the S&P Latin America 40.
I n the wake of the financial crisis of 2008, HSBC faced rising costs
and regulatory challenges. From the 1990s to 2006, the bank made a
series of acquisitions and grew its balance sheet fivefold. It ended up
with operations—many of them standalone entities with their own
processes and IT systems—in 88 countries. The result was a complex
operating environment and few economies of scale.
When Stuart Gulliver (who started at HSBC at age 21) took over as CEO
in 2011, he immediately launched a turnaround, starting with rapid
streamlining and simplification measures to fund the journey. The com-
pany reduced its head count by more than 20% and the number of
countries where it operated from 88 to 67. (See Exhibit 2.) Despite this
geographic contraction, HSBC still covers 90% of global trade and capi-
tal flows, more than just about any other bank in the world. In all, these
measures saved $4.7 billion by the end of 2016 and are expected to
amount to $6 billion in savings, mostly from middle- and back-office
functions, by the end of the turnaround, in 2017. In terms of operations,
HSBC improved its capital performance, reducing risk-weighted assets
by nearly $300 billion.
($) ($)
+42%
100
0.6
40
0.2
20
0.0 0
2009 2010 2011 2012 2013 2014 2015 2016 2008 2010 2012 2014 2016
2009 2011 2013 2015 2017
•• Follow the science. The company has also made changes in the
ways that drug development teams are managed and rewarded,
creating mechanisms that encourage project teams to “follow the
science,” even if it means their projects might be terminated.
10
5
0 0
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016
These moves have paid off. Over the past six years, the company’s total
shareholder return (TSR) has outpaced that of its peers by an average
of five percentage points per year, and its R&D productivity has been
among the highest in the industry. Since 2013, revenue has increased
by 18%, and EBITDA margins have increased by 15%. (See Exhibit 4.)
During the same period, the company’s market cap has nearly doubled,
and management has satisfied investors by steadily increasing its divi-
dend. The newer, streamlined organization can better allocate resourc-
es to strategic goals, focus its R&D efforts on value, and react more
quickly to changes in the health care industry.
5
2
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016
Overall, profits are now strong and growing in all of Boston Scientific’s
business units. Revenue is up nearly 20% since 2013, and EBIT margins
are up 30%. (See Exhibit 5.) Shareholders have benefited: the compa-
ny’s market cap has nearly quintupled in that period. “Our strategy of
category leadership in key markets and diversification into high-growth
adjacencies is working, and enabling continued investment in innova-
tive medical technologies,” said chairman and CEO Michael Mahoney.
After the divestment, Nokia was a portfolio of three fairly different busi-
“
nesses: network infrastructure, mapping
services, and technology and patent li-
censing. This brought the company to its
next big strategic decision: Should Nokia Should Nokia
develop itself as a portfolio company, or
should it focus its activities?
develop itself as
The network infrastructure business was
a portfolio
Nokia’s largest. But from 2007 onward, company, or
Nokia had been operating it as a 50-50
joint venture with Siemens and had should it focus
planned to reduce its involvement by pre-
paring the unit for a full spinoff and IPO.
its activities?
14 | The Comeback Kids
Exhibit 6 | Nokia’s Market Capitalization Fell Dramatically
as the Market for Mobile Phones Shifted
–96%
153
150
100
50
6
0
2007 2012
The full extent of Nokia’s grand plan for the network infrastructure
business was revealed in 2015, when Nokia announced its intent to
acquire Alcatel-Lucent. With this industry-shaping $16.6 billion acquisi-
tion, Nokia expanded from a mobile-network provider to a full-service
network infrastructure provider (including such services as IP routing
and optical networks), and it strengthened its presence in North America.
During the same year, Nokia further sharpened its focus by selling its
mapping business to a group of German car companies (including Audi,
BMW, and Daimler) for $3 billion.
To illustrate how drastically Nokia has changed in this journey, one can
look at Nokia’s workforce: from the start of the turnaround through ear-
ly 2017, the company turned over 99% of the employee base, 80% of the
board, and all but one member of the executive team. Chair of the
board Risto Siilasmaa, who took over in May 2012, at the height of
35
30
25
20
15
10
6
5
0
2012 2017
Nokia’s troubles, described the journey as follows: “It has been a com-
plete removal of engines, the cabin, and the wings of an airplane and
reassembling the airplane to look very different.”
Subtitle
two lines
Several forces have been behind the decline. Readers are increasingly
consuming information digitally. And in the wake of the financial crisis,
companies have scaled back their marketing budgets for print cam-
paigns. Environmental concerns have been a factor as well, as consum-
ers in many developed markets seek to limit their use of paper. From
2006 through 2012, demand in Europe and North America declined by
an average of 5% each year. Worse, excess capacity across the entire
paper industry pushed down prices. As a result, UPM’s paper business-
es were facing pressure.
“
further consolidated those assets, leading
to about $240 million in annual cost syn-
ergies. In 2013, it launched another round
of cost reductions, closing several more
The company
paper facilities, reducing head count, and focused on
selling some forest property.
shifting to
UPM then restructured its organization
into six businesses: paper in Europe and
growth segments
North America, specialty paper (still a
growth market), plywood, pressure-sensi-
and increasing
tive labels, biorefining (including pulp, efficiency.
timber, and biofuels), and energy. In addi-
5
5 10
0 0 0
2010 2012 2014 2016 2010 2012 2014 2016 2010 2012 2014 2016
2011 2013 2015 2011 2013 2015 2011 2013 2015 2017
After losing $5.4 billion in 2012 and $2.5 billion in 2013, Groupe PSA
struck a deal to sell 14% of the company to Chinese competitor Dong-
feng and another 14% to the French government, for $870 million each.
With that capital, the company launched a turnaround program in
2014—called Back in the Race—with several main objectives.
First, the company sought to differentiate its brands in the eyes of car
buyers in order to regain pricing power. Citroën was positioned as a val-
ue brand, Peugeot as more of a mid-market brand, and DS as the com-
pany’s premium brand. With a clearer market position and stricter
rules regarding discounts, the company was able to increase prices by 3
to 10 percentage points.
Next, the company thinned out its portfolio of models from 45 down to a
projected 26 by 2022. That reduced manufacturing complexity, leading
to significant cost savings. Selling some assets and modernizing some
manufacturing facilities increased efficiency and yielded a further $2.5
billion in savings. Capacity utilization at plants is up to 98%, capital effi-
ciency has increased, and labor costs (as a percentage of revenue) are
down. The overall breakeven point for Groupe PSA dropped from 2.6 mil-
lion cars in 2013 to 1.6 million in 2015. As the company began to gener-
ate excess capital, it invested in higher-growth markets, such as Asia
(through its partnership with Dongfeng) and Latin America.
4 15
3.1
2 1.8 10
1.5
0 5
–0.7
–1.1
–2 0
2010 2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2017
Overall, the combination of higher prices and lower costs has led to an
increase in gross margins of 35% since 2013. Over that same period,
Groupe PSA has rebounded from losing money to an EBIT margin of
6%, in line with competitors such as General Motors and ahead of
Hyundai and Kia. Perhaps most impressive, the company’s market cap
has increased more than 700%. (See Exhibit 9.)
I n 2012, Olympus was at one of the lowest points in its history. The
company’s imaging unit in particular suffered from the introduction of
smartphones, which dramatically cut camera sales. Olympus’s medical
unit also saw a drop in profits as a result of government constraints on
health care spending. Revenue and profits for the company overall had
been flat or falling since 2008.
5
2
0 0
2009 2010 2011 2012 2013 2014 2015 2016 2009 2010 2011 2012 2013 2014 2015 2016
The operational focus has paid off in dramatic fashion. From 2012,
when the turnaround started, to 2016, the share of revenue from the
medical imaging business grew from 56% to 76%, and that division now
represents nearly all of the company’s operating profit. It is the main
growth engine for the company, and it has the resources and manageri-
al attention to thrive. Overall, Olympus is roughly the same size in
terms of revenue, but it is far more profitable, with a 100% increase in
EBITDA margins. (See Exhibit 10.) Since 2012, the company’s market
cap has increased 12-fold, to nearly $13 billion.
“
nutrition business, and it expanded beyond food in-
dustries with several health care products, which are
used in areas such as regenerative medicine. Ajinomoto has
The company sold some of its bulk business units expanded
beyond food
and expanded into the markets it identified as its
Five Stars: Thailand, Vietnam, the Philippines, In-
donesia, and Brazil. Ajinomoto also invested in
processed food companies in the US and Africa, ingredients.
24 | The Comeback Kids
Exhibit 11 | Ajinomoto’s Turnaround Has Made the Company More
Profitable and Valuable
Operating
6.3% 8% 8%
profit margin ✔
5
Shareholder KPIs
ROE 7.1% 9% ✔ 9%
$6.67 $12.2
Market billion $8.9 billion
capitalization (February billion
✔ (August
2013) 2016) 0
2010 2011 2012 2013 2014 2015 2016 2017
giving it a base for expansion. The acquisitions will continue. “Over the
next three years, we are going to pour over 150 billion yen [nearly $1.4
billion] into M&A,” said president and CEO Takaaki Nishii in early 2017.
Since 2011, domestic food sales have contracted, and international food
sales have risen sharply. In all, the company is on track to scale back
the percentage of revenue from bulk products across multiple product
lines through 2020. And for the bulk products that remain, Ajinomoto is
using technology to cut production costs, reducing the raw materials
and energy required for some of its processes.
(% of revenue) ($billions)
15 +44% 8
13.4
12.9 +60%
12.5
10.8 6
10 9.7
8.7
5
2
0 0
2011 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 2017
ty with demand, the company improved its sales, distribution, and sup-
ply chain functions through automated order processing. That gave man-
agement better visibility into demand and a more efficient value chain.
Finally, the company restructured the organization for sustained perfor-
mance through a series of acquisitions and partnerships. It bought
Chemtura, a US-based company, for about $2.1 billion, reinforcing Lanx-
ess’s North American footprint and helping it diversify away from syn-
thetic rubber into more-promising product segments: flame retardants
and lubricating additives. Lanxess also bought a division of Chemours,
another US player, which should ultimately deliver more than $30 mil-
lion in annual profits by 2020, once synergies are fully realized.
Most important, Lanxess forged a 50-50 joint venture with Saudi Aram-
co, the world’s largest oil and petrochemical group, on a synthetic rub-
ber operation. Lanxess contributes manufacturing expertise, and Saudi
Aramco ensures access to feedstock at competitive prices. (Along with
energy, feedstock accounts for about 75% of the total production costs
of synthetic rubber.) In addition, Lanxess received $1.2 billion in cash,
part of which it used to pay down debt and fuel new growth initiatives.
As of 2016, the joint venture made up about 35% of Lanxess’s revenue.
Since 2013, revenue has stabilized, and EBITDA margins have increased
more than 40%. (See Exhibit 12.) Both metrics should continue to im-
prove over the next several years, as the company continues to inte-
grate its recent acquisitions.
Another key measure was Qantas’s loyalty business, which has devel-
oped into the country’s leading affinity program. Corporate partners
such as banks, retailers, and telecom companies purchase airline points
to reward their own customers. The program lets Qantas book revenue
years in advance of when people actually redeem their points, and it
generates anonymized customer data that both the airline and corpo-
rate partners can use to improve marketing. Thanks to additional in-
vestments in a set of breakout ventures—including a travel money card
and health insurance—the loyalty program has continued its strong
profit growth trajectory while maintaining healthy margins (24% in
2016); profits are forecast to continue growing by 7% to 10% through
2022.
(%) ($billions)
30 +235%
8
23 24
22 22
20 6
12
10 11
10 8 9 4
6 7 7
5 4 3
2
1
0 2
–4 –4
–10 0
–9
Domestic International Jetstar Freight Loyalty 2010 2011 2012 2013 2014 2015 2016 2017
2013 2014 2015 2016
To fund the journey, the company took several steps. In 2014, it canceled
the interim dividend to shareholders (something that had never hap-
pened in Acciona’s history). Management also scaled back capex spend-
ing to only those projects where it was committed to move forward. From
2012 to 2015, capex declined by 73%. The company launched several
cost reduction initiatives, including steps to reduce energy costs by near-
ly $90 million in 2013 and 2014. Those measures alone were enough for
the windpower unit to return to profitability in 2014.
As part of the restructuring, the company diversified away from its reli-
ance on the domestic market, instead identifying five strategic coun-
tries where it could grow: Mexico, India, the US, Australia, and Chile.
Once it had reduced its debt, the company scaled up capex spending,
from $141 million in 2015 to $531 million in 2016, primarily in energy
investments in India, Chile, and the US. The company also sold off
more than $1 billion in assets that were not relevant to the three busi-
ness lines, reducing its debt load. In 2013, it sold holdings in Germany
and Korea—two markets where the company did not have a big enough
presence to dominate.
2
5
0 0
2011 2012 2013 2014 2015 2016 2011 2012 2013 2014 2015 2016 2017
Acciona was hit with the kind of market disruption that can put a com-
pany out of business. However, by aggressively reducing its debt, cutting
costs, tapping into new sources of financing, realigning its portfolio to
higher-growth markets, and investing in innovation, Acciona’s manage-
ment team has created a bright and sustainable future for the company.
The Boston Consulting Group has Desperate Times Call for Effective The New CEO’s Guide to
published other articles and reports Turnarounds Transformation
on the topic of transformation and An article by The Boston Consulting Group, A Focus by The Boston Consulting Group,
turnarounds. Examples include the November 2016 May 2015
following.
Transformation: Delivering and Transformation: The Imperative to
Sustaining Breakthrough Performance Change
An e-book by The Boston Consulting Group, A report by The Boston Consulting Group,
November 2016 November 2014
About the Authors The authors are also grateful to Amit Ganeriwalla
Ramón Baeza is a senior partner Katherine Andrews, Gary Callahan, Partner and Managing Director
and managing director in the Madrid Kim Friedman, Jeff Garigliano, Abby BCG Mumbai
office of The Boston Consulting Garland, Maya Gavrilova, Amy Halli- +91 22 6749 7232
Group. He leads the firm’s TURN day, and Peter Toth for their contribu- ganeriwalla.amit@bcg.com
business in Western Europe and tions to the writing, editing, design,
South America. Lars Fæste is a se- production, and marketing of this Ralf Moldenhauer
nior partner and managing director report. Senior Partner and Managing Director
in BCG’s Copenhagen office, where BCG Frankfurt
he leads the firm’s transformation For Further Contact +49 69 9150 2423
and TURN business areas globally. If you would like to discuss the moldenhauer.ralf@bcg.com
Christoph Lay is a knowledge ex- themes and content of this report,
pert in the Düsseldorf office of BCG. please contact: David Webb
Tuukka Seppä is a senior partner Senior Partner and Managing Director
and managing director in BCG’s Hel- Ramón Baeza BCG Philadelphia
sinki office, where he leads BCG Senior Partner and Managing Director +1 267 773 5757
TURN in the Nordics, Central Eu- BCG Madrid webb.david@bcg.com
rope, Middle East, and Africa. Simon +34 91 5206 112
Bartletta is a senior partner and baeza.ramon@bcg.com
managing director in the firm’s Bos-
ton office, and the North America co- Lars Fæste
leader of BCG TURN. Amit Ganeri- Senior Partner and Managing Director
walla is a partner and managing BCG Copenhagen
director in the firm’s Mumbai office, +45 77 32 3409
where he leads the TURN business faeste.lars@bcg.com
in Asia-Pacific. Ralf Moldenhauer
is a senior partner and managing di- Christoph Lay
rector in BCG’s Frankfurt office, Knowledge Expert
where he leads the firm’s TURN BCG Düsseldorf
business in Germany. David Webb +49 211 3011 3424
is a senior partner and managing di- lay.christoph@bcg.com
rector in the firm’s Philadelphia of-
fice, where he coleads BCG TURN in Tuukka Seppä
North America. Senior Partner and Managing Director
BCG Helsinki
Acknowledgments +358 9 8568 6027
The authors would like to thank the seppa.tuukka@bcg.com
following people for their contribu-
tions to this report: Jamie Carr, Mar- Simon Bartletta
co Dassisti, Colm Foley, Jérôme Senior Partner and Managing Director
Hervé, Kelly Leadem, Maija Maanav- BCG Boston
ilja, Syed Mehdi, Akira Morita, Lauri +1 617 973 4330
Potka, Teemu Ruska, Aymen Saleh, bartletta.simon@bcg.com
Mathias Tauber, Peter Tollman, Tet-
suya Uekusa, Tom von Oertzen, An-
drew Wilson, and Magín Yáñez.
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