Case Studies
Doe & Co in The Standard Version
In this case we follow the discussions of the three directors of a medium sized family firm called Doe & Co. Their company, which they founded thirty years ago, manufactures fire engines, waste disposal trucks, road sweepers, and so on, which are built on to standard bought-in chassis. David Doe has been chief executive, his sister Deirdre the CFO and brother Daniel the R&D director since the beginning. The company now employs 300 people and is well established in UK and parts of Northern Europe.
Recently they have become dissatisfied with their company’s financial performance and have formed a Planning Team on to which they have invited Tom Smith and Fred Jones, their Marketing and Factory directors. They also invited Patricia Porter, a partner in the company's accounting firm, to act as outside Planning Facilitator. In these choices they faithfully followed the detailed advice on forming planning teams in Stage 1 of The Argenti System.
In Stage 2 this team decided that their top corporate aim was to grow Doe & Co’s earnings steadily over the years. To establish a secure starting point for setting a growth target they examined their past five year earnings performance, as required by their Argenti System, which revealed that earnings had fallen from $19m to $13.4m. This was even worse than they had realised and to make matters worse the earnings of their two main competitors had risen during that period. They determined to improve profits to at least $24m by Year 5 – a target growth rate of about 12.5 per cent per annum. They then forecast how their profits might move over the next five years using a special forecasting methodology detailed in The Argenti System. This showed that, on present strategies, they would miss their target by about $5m. The team members were much depressed by this result – but at least they now knew the size of the task ahead, namely that they needed additional new strategies to generate an extra $5m over the next 5 years.
In Stage 3 they invited a number of their colleagues in the next two levels of management to a one day Workshop. At this they discussed their strengths, weaknesses, threats and opportunities (SWOTs) - but in a very disciplined format set out in detail in their Argenti System. It rapidly became clear that a small number of supremely significant issues needed to be addressed – these are the ‘strategic elephants’ on which The Argenti System places great emphasis. The first of these was that the board – especially the three Doe family members – were seen as, to put it bluntly, aging and out of touch. The second was that there were a number of excellent middle rank managers who could quickly be trained up for promotion. A third elephant was that their factory had become old-fashioned and inefficient. Luckily another major discovery, now revealed by Deidre, the Finance Director, was that she had been quietly accumulating a substantial fund of capital over the past several years for a future new factory that had been discussed but never built.
In Stage 4 the planning team came to a number of, by now, fairly obvious strategies – the rapid promotion, perhaps to the board, of a number of young executives; modernizing the factory; accelerating the development of a promising new product, and so on. (Strategies do sometimes present themselves with startling clarity even in the early Stages of The System).
In Stage 5 the planning team supervised and co-ordinated the development of a number of Action Plans designed to give effect to the strategies determined in Stage 4. Then the team made some special new forecasts, as detailed in this Stage of The Argenti System, which showed that the chances of these new strategies achieving their earnings target by Year 5 were very good.
One effect of this planning exercise was the appearance of a new enthusiasm in the company, generated by the fact that the board was now alert to the problems that faced them and that the family directors had taken the trouble to bring the next levels of management into their confidence. Not only that but also that the directors had, at last, delegated wide responsibilities to these managers in discussing the strategies and developing the action plans. Another effect was that Doe & Co now had a template for the future; all the top managers knew what actions they intended to take over the next few years, what effect on earnings this should have, what major trends and events to expect – and therefore what changes to make to their strategies if these events did not take place as assumed.