Case Studies

The owner of a medium-sized business wanted help with his annual plan after two years of losses. After reviewing his data and the economy, I had to tell him that the economy had only caused a small portion of his sales decline; the bulk of the drop was a loss of market share. After we explored his cost problems, I told him that his cost-accounting system was not reliable.

The owner was discouraged by my assessment of his problems, but I told him this was good news because both his sales problem and his cost accounting problem could be solved. He used a good sales consultant to dial up his team’s performance, and a cost accounting expert showed him that bids could be lowered and still be profitable.

Eight months after my initial work, his company had ramped up sales, was running at capacity, and about to call up employees previously laid off. I did not solve his problems, but I provided the direction needed to address these challenges. My clients are generally good executives who benefit from outside insights about where they focus their attentions.

A financial services firm was entering a new market. In its home market it employed a dense branch network. The CEO asked for advice on where to set up its branches. I offered to work on the topic at the zip code level, but suggested other experts would be better at deciding street and intersection targets. The CEO agreed.

As I proceeded to understand the customer segments they intended to serve, I began to doubt the wisdom of duplicating the company’s strategy in the new market. I spoke with the CEO about this early in the project and was told, “Follow your nose. If you have a contrary opinion, let me know.” I investigated alternative service models used by other firms in other markets and applied that experience to the company’s target clientele. I concluded that the company could service its customers as well or better using a lean branch model. One main office should be opened, plus one branch in a particular community that had unique needs. With some training (provided by the company’s internal training department), the staff could provide good service using the new delivery methods.

The CEO asked me to present my findings to the board of directors, which asked good, hard questions and then followed my advice. In the years since, the company’s new region has done well, and the capital expenditure and operating costs have been much less thanks to the new delivery model that I recommended.

A company had grown profitably using a business model based on heavy use of bank credit. In the 2008 financial crisis, the company’s bank reduced the credit line and tightened up loan covenants. The company’s return on equity was severely hurt, leading the CEO to wonder about the long-term viability of the business model. I was asked, “Should we wind down the business and return capital to our investors, or wait for a return to old bank lending standards?”

I began with an historical study of bank lending cycles. Even though the 2008 cycle was far more severe than most business cycles, I concluded that banks would reverse, at least mostly, their credit tightening, and I provided a time range for this to happen. I developed a set of indicators that would show the likelihood of banks easing credit standards and provided these to the CEO monthly.

Despite my optimism about the eventual turnaround, the company’s largest investors decided to wind down the business. Then the management team formed a new business, with new investors, that implemented the old strategy. By the time that they had organized and secured an equity investment, bank lending standards had loosened up and the new company enjoys good returns. My research was fundamental to the management team pursuing this business opportunity successfully.