BOSTON, Feb. 26, 2018 (GLOBE NEWSWIRE) -- Companies in search of successful turnarounds might want to look north—to one of the world’s most competitive business regions—for answers.
Seven Nordic firms—operating in a region where large-cap companies have vastly outperformed their global peers—reveal the three key ingredients needed for sustained breakthrough performance in a turnaround, according to The Nordic Comeback Kids: Turnaround Stars and Their Stories, a report from The Boston Consulting Group (BCG) being released today. The companies include such well-known names as Nokia and Danske Bank.
Their lessons should be of urgent interest to business leaders in the US and around the world who operate in highly disruptive markets and need to know how to turn a company around. At any point, about a third of large US companies experience a severe, two-year decline in their ability to create shareholder value, and about a third of those companies fail to recover the loss in value within the following five years. Most companies need to transform at least once during any five-year window, according to BCG research.
Large-cap Nordic companies in the top quartile of performance achieved an impressive average total shareholder return (TSR) of 41% during the five-year period ending in December 2016. That’s nearly double the 21.4% median TSR achieved by their Nordic peers, and it’s nearly four times the 10.8% median TSR of the S&P Global 1200 for the period.
“These remarkable results have powerful implications for any companies that are currently struggling to grow their revenues or sustain profitability,” says Mikko Nieminen, a BCG partner and coauthor of the report.
Three Steps to Sustainable Success
The seven companies represent a cross-section of industries, including financial services, industrial products, beverages, and paper and packaging; many are household names globally.
The companies took various steps, but all of their transformations had three elements in common. After quickly recognizing signs of decline, leaders acted decisively, focusing first on funding the journey through quick wins. Once their organizations were stabilized, the leaders strategically repositioned them for growth. Finally, they honed the agenda for lasting performance.
“This approach has had winning results among hundreds of companies throughout industry sectors and across the globe. We believe it is the only path to sustainable performance,” says Jesper Damm, a BCG partner and coauthor of the report.
Big Performance Gains, Big Prospects for Future Growth
Among the companies featured are these four:
- Nokia. A once dominant player in the mobile phone market, Nokia was on the verge of bankruptcy several years ago after the market shifted. In a series of bold moves, the company completely reinvented itself, becoming a global leader in telecom infrastructure. Since its turnaround, Nokia has seen its stock price more than triple.
- Danske Bank. Following the 2008 financial crisis, Danske Bank focused on boosting margin and streamlining operations. Then, to meet customers’ changing needs, the bank embarked on a big push to develop digital offerings. Between 2012 and 2016, its market cap grew 108% and its TSR soared (25%, versus 19% for its Nordic bank peers). Today, Danske Bank is one of the top-rated banks for customer satisfaction.
- Royal Unibrew. After a near brush with bankruptcy, this Danish beer maker parlayed a strategic acquisition into a corporate repositioning that enabled it to grow rapidly and expand into new markets. Immediately, the company beefed up revenues and EBITDA. In the five years since launching its turnaround, Royal Unibrew has tripled its market cap, from DKK 5 billion to DKK 14.3 billion.
- Husqvarna. In 2007, when the 318-year-old Swedish company hit a slump, leaders embarked on a sweeping reorganization that included making major improvements in manufacturing, sourcing, and the supply chain. By refocusing on the company’s core brands and reorganizing its core divisions by user segment, leaders ignited performance: EBIT nearly doubled, to 9%; revenues grew 19%; and market cap rose by 123%.
Nordic Comeback Kids follows BCG’s November 2017 report The Comeback Kids: Lessons from Successful Turnarounds, which profiles turnarounds from throughout the globe. The Nordic edition is also the first regional report in the Comeback Kids series.
A copy of the report can be downloaded at http://on.bcg.com/2FpFB1A.
To arrange an interview with one of the authors, please contact Eric Gregoire at +1 617 850 3783 or gregoire.eric@bcg.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients from the private, public, and not-for-profit sectors in all regions to identify their highest-value opportunities, address their most critical challenges, and transform their enterprises. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with offices in more than 90 cities in 50 countries. For more information, please visit bcg.com.