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Lessons Learned from 19 Transformation change programs
- 1. Charles Darley A 16 year track record of organisational transformation investing in growth at the same time as cutting costs “Delivering growth driven turnarounds demands the same skills whether it is for large complex organisations or smaller not-for-profit entities or Commercial entities…read on”
- 2. 16 years of delivering business transformation • Few business transformations are achieved just by cutting costs most transformations require an investment in growth • See the common solution needed in;- • 10 successful not-for-profit transformations • 8 successful commercial transformations • Only 1 not-for-profit that is still delivering a deficit
- 4. In Suffolk (Diocese DBF) Darley engaged Mid 2016 • Loss reduced from £1m in 2015 to a modest surplus planned in 2017 • Invested in 4 major change & modernisations projects • Reduced staff FTE cost by £225k and clergy FTE by £200k. • Reduced staff pension costs by £210k • Reduced supplier costs by £150k • Increased Parish income by £260k (4%) • Secured grant of £470k from Church Commissioners to cover all restructuring costs -2 0 2 4 6 8 10 2015 2016 2017 MILLIONS Diocese of St. Edmundsbury and Ipswich - 248919 Income Costs Deficit/surplus
- 5. Darley engaged Mid 2015 • Loss reduced from £4m in 2014 to surplus of £1m in 2016 • Surplus forecast at £1.7m in 2017 • Won tenders worth £25m (over 4 years) to reverse the income decline • Raised £3m investment from pension fund secured against property assets to invest in 4 major modernisation projects • Secured £750k bank overdraft -10 -5 0 5 10 15 20 25 30 35 40 45 2014 2015 2016 MILLIONS NatCen -1091768 Income Costs Deficit/surplus
- 6. Darley engaged Late 2014 • Increased sales for the language school to the point where breakeven was achievable within 2 years • Sourced external investors and grants to replace the charities sunk costs and liabilities • Minimised impact of possible closure to PCP in case of business failure • Found trade purchasers for sale and exit • Handed over to long term Managing Director -500000 0 500000 1000000 1500000 2000000 2014 2015 2016 Praxis Community Projects - 1078945 Income Costs Pre-tax losses
- 7. Darley engaged late 2014 Exited early 2015 • Notably the only failure! • Proposed 3 major change projects • Exit 2 of senior management team reduction in staff costs by £400k • Reduce strategic dependence on HR service profit margins • Develop profitable building management & School business management/book-keeping services • Pace of change proposed was rejected by CEO and Board as ‘too much too fast’ • CD exited after 12 weeks, Chair also resigned and offered CD a role as Non- Executive Director on another Board -2 -1 0 1 2 3 4 5 6 7 8 9 2014 2015 2016 MILLIONS NPW Income Costs Pre-tax losses
- 8. 0 5000 10000 15000 20000 25000 30000 2012 2013 2014 FSB Ltd 1263540 Subscription Income £'000s Shareholder funds Darley engaged Early 2014 • Invested in 3 major change projects • Membership numbers increase for the first time in 5 years from 184,000 to 202,000 • Subscription income increases by £1m (versus £0.46m in previous year). • Shareholder funds increase by £400k
- 9. -200 -100 0 100 200 300 400 500 600 700 800 2011 2012 2013 2014 Association of Local Authority Risk Managers Income £'000s Costs £'000s Surplus/Deficit Darley engaged end 2013 • Losses of £44k to surplus of £28k • Income no longer declining • Costs down by 12%
- 10. -500 0 500 1000 1500 2000 2500 3000 3500 2011 2012 2013 2014 Age Concern Norfolk - 1077097 Income £'000s Costs £'000s Surplus/Deficit Darley engaged mid 2013 • Losses of £26k to surplus of £706k • Income up by 15% • Costs down by 11%
- 11. -500 0 500 1000 1500 2000 2500 3000 3500 4000 4500 2011 2012 2013 2014 The Jubilee Sailing Trust - 277810 Income £'000s Costs £'000s Surplus/Deficit Darley engaged mid 2013 • Losses of £251k to surplus of £174k • income up by 58%
- 12. Darley engaged early 2013 0 500 1000 1500 2000 2500 3000 3500 4000 4500 5000 2011 2012 2013 2014 Petans - 290458 Income £'000s Costs £'000s Surplus/Deficit • Surplus of £336k to surplus of £997k • income up by 37%
- 13. (mental health - charity) -1000 0 1000 2000 3000 4000 5000 6000 2010 2011 2012 2013 Julian Support - 1067883 Income £'000s Costs £'000s Surplus/Deficit Darley engaged late 2012 • Surplus of £27k to surplus of £250k • income up by 86%
- 14. EV offsh (Global Oil Services) -5000 0 5000 10000 15000 20000 25000 2012 2013 2014 EV Offshore Income £'000s Costs £'000s Surplus/Deficit Darley engaged late 2012 • Losses of £1.2m turn to profits of £6.7m • Income up from £6.6m to £19.7m
- 15. Darley engaged Early 2003 • Membership increased by 100,000 (20% year on year) • Profits increased from £9m to £16m • Income up from £150m to £240m • Market Cap up from £150m to £500m 0 50 100 150 200 250 300 2003 2004 2005 MILLIONS Fitness First UK Income Costs Pre tax profit
- 16. Darley engaged Early 2001 • Led the rationalisation of IT platforms and data bases, reduced the number of call centres from 10 to 3, terminated leases and exited 7 buildings reducing staff by 2500. • Part of as £110m cost reduction program • Increased broadband membership by 100,000 (total membership from 2.9m to 3.0m). • Income up from £1,300m to £1,350m • EBITDA increased from £450m to £610m
- 17. Darley engaged early 2000 to deliver 4 year turnaround • Restructured 7,000 sales, customer service and marketing staff reduced call centre staff by 1000 (15%) generating savings of £20m a year • Created national sales force and national customer service based on industry sector structure. Increased revenue by £290m from 2002 and 2003 • project delivered a £254m increase in pre-tax profits contributing to nearly half of the turnaround result which reversed losses of £318m in 2002 to deliver profits of £220m in 2003 • Profits grew to £537m in 2004 due to staff cuts of 10,0000 in operations -1,000 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 2001 2002 2003 2004 MILLIONS Royal Mail Group income costs pre-tax profit
- 18. National (part of Royal Mail Holdings Plc). Darley engaged Early 1996 -1999 • Reversed previous decline in mail by restructuring the strategy to focus on growing Direct Mail as a media • Profits increased from £409m to £450m • Income up from £2552m to £2940m • This was the only profitable division within the whole Royal Mail Group 0 500 1,000 1,500 2,000 2,500 3,000 3,500 1996 1997 1998 1999 MILLIONS Royal Mail National – UK Income costs Pre tax profit
- 19. Does your organisation need some transformative development? • It might;- • be running a deficit or a loss • just benefit from a review of the growth opportunities • be considering an acquisition or merger Then call Charles Darley on 07802 907631 Charles.darley@bgd-group.co.uk