Process Re-Engineering and Organisation Strategy
for Managing Director, Granada TV Rentals Ltd
March 1988 through June 1988
Objective: to reverse loss of market share and improve profitability through existing and new product/service lines
Granada TV Rental held a leading position in market share in the UK consumer electronic equipment rental market, and was developing new services in corporate electronic equipment rental, computer and small electronic equipment servicing, and financial services products. It was losing market share in its main business lines, only offset by corporate acquisitions and the fast growth rate of some of the new product/service offerings.
Methodology / Analytics: market segmentation, activity and process analysis; internal benchmarking; business processes redesign; organisational review, resource allocation and IT strategy.
After an initial review of marketing strategy, interviews were conducted on the key issues facing the company, and activity time and cost data collected for all main departments. It transpired that certain key processes needed re-engineering to improve quality, although very substantial improvements could be made simply by transferring best practice from one division to another and from the new industries into which the company was moving with its new product/service offerings.
Organisational issues were addressed based on real communications needs and those business processes which did not need substantial IT investment were redesigned and implemented first. Different scenarios were described which required different resource levels but no substantial extra capital investment. These scenarios were prioritised according to their relative cost/benefit ratios, and a cut-off point chosen by top management.
In parallel, a more radical “no-exclusions” redesign of the basic business processes was completed which took advantage of the potential for modern technology. This included a high level specification of the systems required, and the processes for producing them using state of the art development methodology.
Results: market share decline reversed, substantial profit improvements identified and achieved, enabling further acquisitions.
The company realised 87% of the £12.5m annual profit improvements identified in its core business, quality improved and their market share decline was reversed. The computer servicing division, given the autonomy recommended for it, became one of the leading players in that sector of the market. The financial services products also became a strong profit contributor.
(The above project was carried by R Hirsch while at A T Kearney)