One of my CEO clients and I set out on on a bold mission for his sizeable and successful company: to double its EBITDA within 3 years. To achieve this big growth, the firm needed a large cost transformation and a more agile, proactive operating model. With my advice the firm executives took action to cut $30m in wasted expenses spending and by improving the cashflow cycle we added $70m for reinvestment in game changing initiatives to drive growth.

The Problem

The client is in a traditional industrial manufacturing sector. Doubling EBITDA meant cost cutting, changing the mindset of leaders, altering the business model, re positioning the offering, and reinvesting in new growth orientated activities. I coached the CEO and leadership on how to be much more flexible, move fast to change in the environment. I asked leadership to apply zero-based budgeting, which meant that every expense had to be presented, justified and approved. This got rid of a lot of poor expense decisions and freed up funds for high ROI activities.

The Solution

I advised the CEO to divide the transformation in four digestible phases: set up the program, identify wasted costs,find savings, and execute the ROI accretive plan.

1. Set up The Program

I started with a quick definition of the program's scopeinitialy hypotheses for improving value. We collected data on every cost lines like selling, general, and administrative (SG&A) expenses to see where money was being wasted.

2. Identify Wasted Costs

I spoke to leaders across all departments when reviewed the cost lines and put a plan for all leaders to report on spending patterns with precision. Through zero-based budgeting, I asked leaders to own cost-categorywhere they were asked to track, manage, and justify expenses. This transformation made a huge impact on the company’s cost management approach.

3. Find Savings

My review of the numbers made me focus on 4 primary categories, representing 80% of the company’s total spending, COGS, SG&A were the primary big buckets. We let go people who were underperforming, rationalised systems, outsourced functions, decreased fixed costs and increased variable costs.

4. Execute an ROI accretive plan.

I coached leaders in each department to teach their mangers to own their cost category, set targets and a tracking system with regular feedback on progress. This system drove massive momentum and results.

The Final Result.

The program resulted in circa $100m savings. We instilled a culture of practiveness, agility and cost-consciousness. We then used the savings partially for reinvestment in high ROI activities like redesigning the marketing and sales machine which drove massive growth in revenues over the next two years. The EBITDA of the business grew by 150% over three years, exceeding our goal. . Our CEO client was delighted as we had helped him re defined his business model, operating model, increased margins, lowered fixed costs and positioned his business to be even more competitive and resilient in the market.

If you have bold plans to double or tripe your EBITDA, let's chat about getting you there fast, with less mistakes.