The Challenge

A US RBOC wished to purchase a minority stake in a government-owned European telecom company at a relatively low price, with the objective of adding value by transforming the company into an efficient, modern telecom operation. The company's problems included excessive employees and inefficient processes, a civil service culture, emerging competitive threats, a burdensome obligation to fund its pension plan, significant debt, and a need for new revenue sources.

The Solution

In consultation with the European company's managers, a five year business plan was developed and the telecom expert team designed a performance improvement plan with over 50 initiatives. These were prioritized and implemented with the help of US managers assigned to the European company for 2 to 5 years. In addition to functional and technical experts, the team placed US executives in key positions where they could advise or supervise local managers in the transformation of the company culture through new hires, downsizing, project prioritization, and introduction of modern business techniques. Several of these executives were members of the analysis team.

The Results

Key performance measurements reveal the extent of the transformation after 2 years:

• Customer Service: % calls answered rose from 35% to 92%; customers satisfied rose from 32% to 71%; sales increased by 250%; headcount dropped 30%
• Supply Chain: warehouses reduced from 84 to 3; inventory value reduced by 75%; headcount dropped by 67%
• Network: cost per switch reduced by 30%; number of switches reduced by 30%; operations centers reduced by 80%; headcount reduced by 25%
• Marketing: 7 major new products; hundreds of new distributors; thousands of new sales agents
• IT: new systems included billing, SAP, several new operations support systems; new processes for change management, release management, application development, service failure investigation
• HR: 20% fewer employees company-wide, 50% fewer in HR; 15% of staff retrained company-wide
• Finance: book closing interval cut from 20 to 8 days; new processes established; new support system for financial planning; capital spending reduced by 33%.