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Case Studies

Case Studies

What we have achieved with our clients.

The best way to tell the story of VISION is to describe what we've achieved with our clients and how.

Along our journey we have been fortunate to work with companies such as IBM, Cemex, General Motors, Lloyds TSB, Citi, Scottish & Southern Energy (SSE), RSA, Telefonica, Warner Music and many others.

We pride ourselves on delivering major operational and financial benefits - fast. Here is a summary of some of our results.

We have assisted:

  • One of the UK's fastest growing utility companies to grow its customer base from 2.5m to 5m customers.
  • A major financial institution arrest a 9-year run of falling revenues to 30% growth in 12 months. 
  • One of the largest UK banks develop a mortgage service line that moved from under a 1% market share to a 10% share in 18 months. 
  • A major international mobile telecommunications company to realign its management and culture to meet  the challenges of rapid revenue growth and geographical expansion.
  • A leading North American cement manufacturer to transform into a global industry leader.  
  • One of the world's leading ATM manufacturing and servicing companies to  raise their Net Promoter Score from 6% to 66%.
  • A leading German engineering company to earn the highest profit margins in their industry.

At VISION we like to tell our stories so please contact us, and we will share with you how we have worked alongside our clients to achieve such transformational results.

 

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IT

VISION: Case Studies: IT

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CEMEX: Patrimonio Hoy
CEMEX

Culture and service reinvention to reposition a commodity business as a service business

Donald Sull, Harvard Business School Professor, on CEMEX's work with a consulting team which is now part of VISION:
"CEMEX has a distinct approach to innovation: it strategically exploits an intimate knowledge of its customers' mindsets, it innovates around (rather than through) technology, and it scours the globe for good ideas. These strategies are as important for managers in developing countries as they are for executives in the developing world."

Strategic situation

By 1995, the consolidation in the cement industry was moving very quickly. CEMEX had already risen from tenth in the world to third - behind Holderbank and Lafarge with $2.6 billion in sales. By 2004, its combined revenues would be $6.5 billion, and it would operate in more than 30 countries and have customers in more than 60 nations. To fund its growth, CEMEX already had cut costs by automating extensively, instituting worldwide, 24-hour monitoring of its processes, and studiously finding new ways to share risk and gain best prices from suppliers. Because Lorenzo Zambrano, CEMEX's CEO, needed higher margins to fund his acquisition strategy, cost cutting was always a strategic initiative. But Zambrano was not interested in growth for its own sake. He had a distinctive vision of the industry. For him the cement industry was really a culture industry, not a cyclical commodity industry as most other leaders and analysts thought. The industry's growth was not limited by a country's development but by a country's monumental desires and the cement industry's ability to stimulate them. Therefore, he sought every opportunity to develop highly differentiated offers that would stimulate more monumental building.

315x180 - CEMEX2a-line

Ready-mix cement afforded such an opportunity, particularly in Mexico, where inclement weather, unpredictable traffic, labor disruptions, and arbitrary government inspections caused 50% of the delivery orders to be changed at the last minute. Such changes meant that huge amounts of cement spoiled - either at the site or during delivery and that put a huge surcharge on monumental building.

Senior management's strategic declaration

CEMEX's senior managers declared that they would acheive a significant competitive advantage in ready-mix cement by the end of 1995.

Engagement strategy

The challenge was complex and the consultants needed to find a successful blend of team, listening, inter-industry skill appropriation, and Commitment-based Management (CbM).

This engagement would draw on most of the consultants' competencies. It would require redefining a market through new offer development, motivating a successful organisation to change its own structure and culture, drawing from other, unlikely, industries, and managing the change with low stress so as not to upset the cash flow required for the ongoing international acquisitions.

The consultants established a joint team that included external innovation and management-process experts along with CEMEX's management and ready-mix cement experts. They applied VISION's customer listening techniques, cross-industry skill appropriation techniques, and commitment-based design techniques to reshape the offer of ready-mix cement.

Intervention

The first part of the engagement used VISION's articulative listening and Value-Conflict Resolution methodologies to get to both large and medium-sized building contractors in Mexico, who liked to think of themselves as engineers who could both design buildings and the building projects in great detail for maximum orderliness. But with labor and weather problems, success in building came from the quick-thinking ability of contractors to manage the disorder. Success depended on honouring the value of opportunistic ingenuity, always making the best of circumstances to keep the maximum number of productive operations going. The joint team learnt to see the ready-mix customers as more like emergency-room doctors than engineers.

CEMEX too had an engineering culture. Ready-mix managers at first sought to respond to senior management's strategic directive by drawing on high-speed computational power and chaos theory to map more efficient truck routes and set up schedules. They relied heavily on demand forecasts to determine the next day's loads. But due to last minute cancellations, they still lost a lot of cement. The joint team appealed to them to begin looking at their customers as involved in emergency situations and to look at how teams worked in such high stress situations. Visits were made to military assault teams, overnight mail delivery teams, and an Italian company that retooled the immense drills overnight to cut different types of Channel tunnel rock the next morning, and finally, the Houston 911 service.

In the end, the 911 service produced the shift in vision. The idea emerged of sending the emergency vehicles (ready-mix cement trucks) into the areas where the greatest activity (on the basis of pre-orders) was expected. Then as customers confirmed orders and times, dispatchers would send the nearest truck whose cement was closest to spoiling. The idea was to appeal to order with the initial scheduling and the emergency ingenuity with the confirmation. Thus the value conflict was resolved.

The management processes of the ready-mix business were redesigned in imitation of those of the 911 emergency workers. The core conditions for providing customer satisfaction changed from meeting schedules to taking care of the contractors' "emergencies." Appropriate kinds of commitments among drivers, dispatchers, loaders, and others were mapped, designed, and rolled out.

Results

The jooint team implemented its version of the famed "Domino's Pizza" promise. Either CEMEX delivers concrete within 20 minutes of the scheduled time or the contractor gets a 5% reduction in price. The response was enormous. In one region where a pilot study was done, the return on investment was 700%. And there was no interruption of cash flow from the ready-mix business. CEMEX is now seen as the most reliable provider of ready-mix cement. Order changes and same day delivery are standard services that customers have come to expect. Daily deliveries per truck increased from an average of four to ten. Reliability also improved dramatically: 97.63% of deliveries are now delivered within ten minutes of the promised hour, as compared with a previous rate of 34.4%. CEMEX dominates this market with a noncommodity offer.

While it is hard to determine if this offer alone has made Mexico more monumental, it has certainly changed the market dynamics, leaving CEMEX a clear advantage: it is now regarded as a growth company by financial analysts.

Client satisfaction

This case has been celebrated by many, both inside and outside CEMEX. Our competitors have even written about it. We have offered our version. Here are some of the comments this project has generated.

"I've seen a lot of companies undergoing change, but nothing so dramatic as the operating turnaround at CEMEX."
Thomas Petzinger Jr, The Wall Street Journal

"In its Venezuelan operation, which is described as low-tech, CEMEX achieved an ontime delivery rate of just over 33% in the first half of March 1996 (nearly 60% were delivered "ahead" of time). The Guadalajara operation achieved a 98% on-time delivery rate, as Wired magazine reported in July 1997. In essence, CEMEX treats its trucks like taxicabs by dispatching the closest vehicle to the most immediate need."
Best Practices: Building Your Business with Customer-focused Solutions by Robert Hiebeler, Thomas B. Kelly, and Charles Ketteman of Arthur Andersen. Published by Simon & Schuster, 1998.

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