Scrutinise your business and then change your offering to take advantage ofnewopportunities here and overseas to survive the downturn
SOMETIMES TRANSFORMATION is in order. Joanne Stefani Germanotta failed to make her mark on the international music scene until the singer assumed the stage persona of Lady Gaga. Now she’s as big as Madonna. The ability to change direction to make the most of market opportunities is key to corporate survival too as the demand for many goods and services is at an all-time low. It also means gaining access to new opportunities that will remain open when the downturn is over.
Unlike Lady Gaga, few companies have the will, skill or resources to reinvent themselves completely. For most, it is neither necessary nor desirable. A process of gradual transformation that takes existing knowledge or core competencies and applies them in a new way is far more likely to work. That is the approach that Tom Phillips Associates, town planning consultants, is taking.
“We’re still one of the largest planning consultancies in the country but we’ve been through the painful process of redundancies and have had to take a critical look at how we needed to change to stay in business,” says Tom Phillips. It now employs just 24 people, down from 48 in 2007.
“Planning doesnt stop completely in a recession – and our work on non property development projects has continued – but the volume of business has collapsed.”
Phillips and his partners, Gavin Lawlor and John Gannon, began the process of transformation by brainstorming. “It felt a bit odd at the beginning because we had never had to do it before. However we got a lot out of it in terms of sharpening our focus. It also made us very aware of the necessity for strategic planning,” says Phillips.
The company now offers two new services based around its areas of expertise. It can analyse the potential for existing land banks for receivers, liquidators and financial institutions. Its also helps those affected by stringent planning laws that came into effect in August to interpret them.
The company is also looking at overseas markets and at potential synergies and strategic alliances with businesses in related sectors, which it has never done before.
The strategy was developed by the company’s senior management team. This approach is critical to success, according to Siobhan McAleer, director of the Transform programme at the Irish Management Institute. “Often chief executives attend a leadership programme and return with lots of ideas. They then have to spend a lot of time trying to get buy-in from senior managers,” she says.
“With Transform, the top team develops the strategy so they bring the same mental models and language back to the business. This ensures it gets executed – as there is a multiplier effect – and the passion and commitment gets spread through the company.”
Transform is an 11-month part-time course run by the institute on behalf of Enterprise Ireland, which will part-fund the cost for its client companies. It is open to senior managers from all sectors.
There are changes in train too at Windmill Lane, the recording studio probably best known as the place where U2 recorded their first five albums. Today its primary focus is on establishing itself as an international player in the world of digital media. To this end, the company spent €5.5 million last year relocating to a purpose-built facility on Herbert Street in Dublin.
“Digital media offers significant potential and we want to be at the cutting edge,” says Dave Quinn, managing director designate. “Put simply, we want to transform our business from a traditional TV company into a digital content media company. This will involve a mix of business from online advertising to creating apps for iPhone and Android . Technology, such as that used in iPhones and iPads, is radically changing the public’s patterns of accessing content. Access has become highly interactive and we see this as the future.
“Because we’re a technology-led company we are used to change but the recession has really spurred us on as we experienced a serious erosion of revenues.”
Declan Branagan’s business has changed dramatically since he set it up as an IT supplies company in the 1980s. Initially it was a broadly based supplies company but Branagan decided to take it in a new direction 10 years ago after a client asked him to provide it with a central database for consolidating client information.
Seeing the potential, Branagan started down a new path into software development. The result was eXpd8, a client management software solution, which is sold in five overseas markets including the US and Canada.
For a number of years, Branagan focused on eXpd8 but changing times have again required a rethink, this time in pricing. What the company used to sell for €1,200 per licence is now €1 per licence per day. This has helped to maintain volume sales, although revenues are reduced.
“Most recently, we have added a new dimension to complement eXpd8, this time as a best-value IT solution provider to the professional sector,” says Branagan. “This end-to-end approach includes hardware and software, coupled with a strong emphasis on online maintenance and training to contain costs. With companies now so stretched for cash, we felt we had to come up with a response.”
Get ahead: Make over your business
- Find new applications for existing knowledge
- Tweak a product or service to suit a new niche
- Look for opportunities in sectors you would not have considered previously
- Consider exporting
- Decide whether your firm could benefit from a strategic alliance
- Your business has changed but so has that of your customers. Talk to them to ensure you are still meeting their needs
- Look at your pricing model. Can it be reworked to offer better value?
-Try to add value for your customers without adding to your own costs
CASE STUDY: Nourish health food stores
Derek Kelly founded the chain 25 years ago. Since then, he has changed the name of his business and the range of products he sells to suit the changing tastes and interests of his customers.
Business is all about innovation and moving forward with new ideas, says Derek Kelly, the founder of the Nourish chain of health stores. “If you sit still you are effectively going backwards,” he says. “We are 25 years in business and have had to become adept at tweaking our model to suit changing circumstances, from changes in legislation to consumer tastes.”
Kelly set up the General Health Food Store in 1985 when wholefoods were just beginning to gain popularity here and customers bought brown rice and lentils from big open sacks. Since then, wholefoods have gone mainstream and interest in the associated areas of natural cosmetics and food supplements has increased. In 2004, it rebranded as Nourish.
“Probably our biggest transformation took place ,” he says. ”We felt the General Health Food Store had had its day and that we needed something new and modern. This gave us more general appeal and attracted a younger clientele.
Kelly now has six shops including a new outlet in Donnybrook. It employs four staff, bringing total numbers at the company to 45.
Kelly is not afraid to try new things and is philosophical about the fact that not everything will succeed. In 2006, the company took a completely new direction and started to manufacture its own brand of chocolate. “It didn’t work, Kelly says bluntly.
“We got the timing wrong and were ahead of the market in terms of adding unusual ingredients (herbs) to chocolate. Had we waited two years, I think it would have been a different story. It cost us a lot of money but we learnt a lot in the process.”
Since then, he has continued to make changes at Nourish – from refitting stores to changing the product emphasis.
“There is EU legislation in the pipeline with the potential to dramatically cut down the number of products we can stock in the so-called interest of harmonisation, he says. “With this in mind we have ramped up our natural skincare range and have been changing our store layouts to reflect this.”
At its Liffey Street outlet, Nourish cut back on the amount of food in stock to concentrate more on skincare.
“That experiment hasn’t been successful, again due to timing,” he says. “We did it just before people started cutting back on discretionary purchases. We’re now in the process of changing the mix of products in Liffey Street back to more of an emphasis on food. In a downturn, the customer is king: with this in mind we have recently introduced a loyalty card for which the uptake has been much higher than we expected.”
