This is a true story that happened during the mini-crisis that affected global trade and logistics companies about 7 years ago. Of course, there are a few more elements than a simple dashboard delivering millions in profit, but it’s a prime example of creative business strategy and powerful data analysis that essentially 50-X’ed the return on investment for this global transportation company.
For background, the transportation and logistics industry saw a lot of consolidation after the 2008 market crash. Global inflation had peaked at over 7% and a major recession was expected, with most smaller business owners forced to close down as trade volumes were reduced. The market was a small number of very large players so there wasn’t much more new business to bring in commercially.
So we focused on operating expenses. The corporate ambition was to reduce an already tight operating expense margin by $2 million.
Strategy 1: Integrated Metrics
The first piece of the strategy was to create a visual of the current state. After compiling the data for over 100 assets, we built a simple report in MS Excel showing expenses by asset and by category. We shared the numbers and ambition to all the assets.
Here’s where it got interesting.
When you look at $2 million in savings, it seems like a lofty task, but split it across 100 assets, that leaves just $20,000 per asset. Granted that this task was still quite difficult, especially for older underperforming assets, the ambition still sunk in.
Strategy 2: Competitive Incentive
The next step was to offer an incentive worth MORE than the potential savings. But we couldn’t give away $2 million to save $2 million. So can you guess what our incentive was?
We offered a bonus to ONE asset that managed to save the most that year. When you take the $20,000 per asset savings expectation, and offer DOUBLE the value as the incentive, what do you think happened? Well when given the prospect of a friendly competition…
EACH ASSET WORKED THEIR HARDEST TO SAVE FROM THEIR BUDGET!!
But we needed a way for them to track their progress every month. And who doesn’t love a leaderboard?
Strategy 3: Transparent Action
So now that we had a solid target and an attractive prize, we had to show the competitors how they were doing and more importantly – WHO WAS WINNING. So using the data that we prepared in the first strategy, our analysis yielded a dashboard of twelve parameters that directly impacted the budget (for example, maintenance costs and headcount). We then spliced the data into MS PowerBI and shared the performance live with all the assets.
Each asset got a “performance score” which was a weighted total of each parameter multiplied by an importance factor determined by the business. This created the Leaderboard where each asset could track their place. And we gave the granular data regarding which parameters the asset was winning or struggling in.
By giving the full transparency, each asset could then take appropriate action to improve on those categories and by sharing the importance factor, the assets would learn which areas to focus on to get the highest score.
I’ll let you do the math to understand how much was saved versus the investment from the business.
The lesson here is that creative strategies can actually produce results at scale! Each of the strategies we employed served a specific purpose in achieving the goal.
- Without integrated metrics, we wouldn’t know where to start and how to get to the target
- Without competitive incentive, we wouldn’t have a motivation for the assets to strive for
- Without transparent action, we wouldn’t be able to execute and exceed on our expectations
Darkhorse is all about creative solutions that take your business from 0 to 100 – regardless of your current state. We expect our strategies to achieve 100% of your goals, minimum. And it doesn’t matter if your starting point is $0 or $1 million, we work at scaling your business STARTING FROM DAY ONE!
If you’d like to see how we can help, we’re offering an hour’s worth of ideas, completely free!
DISCLAIMER: Any results or data mentioned on our website are for general information purposes only and should not be considered as typical. Results for your specific situation are dependent on a variety of factors and are therefore not guaranteed.