“Strategic direction is more important today. It's about providing a framework for managers to navigate through the fog of complex chokes. No company can avoid this."

– C.K. Prahalad –

Case 7: Pulling back from the brink!

Client: Indian software products company in medical application.

Background: Promoted by Indian entrepreneurs, the company creates software products that substantially enhance the utility of medical imaging equipment of world majors like GE, Philips, Siemens etc. Substantial investments by two private equity funds were at risk because the company was unable to leverage its significant expertise to create a steady stream of profitable revenue.

The company had many new products at various stages of development. Several MNCs had initiated trials but none had progressed to the stage of a trial order. The lone customer – one of the world’s largest corporations – was buying the product for a song.

Cash available was sufficient for only a few months.

Task: Extend lease of life by cutting costs and establishing necessary management processes. Develop appropriate business strategy to arrest decline and chart the course for future growth.

Methodology: Consulting with deep involvement.

Engaged the senior management team to discuss and agree on focus areas for business and relegate all else. By creating intra-function and cross-functional task forces, the team was encouraged to evolve strategies, measures to control costs and expedite recoveries to beef up cash flow. During the period of engagement, the management team’s progress was guided and closely supervised.

Result: The team developed strategies and action plans on four fronts.

  1. Revenue growth.
  2. Cash Flow – generate positive cash flow in two months and grow steadily thereafter.
  3. Costs and Expense Control – reduce monthly operating expenses by a third.
  4. Performance Management – robust monitoring, review and accountability processes.

The core of the strategy was in focusing on a single product-technology platform. This single platform, they recommended, would be customized to meet the requirements of select overseas OEM buyers. All other product and application development would be stopped. The spare software development capacity would be utilized to create a new revenue stream from software services.

They also prepared an action plan to release locked up receivables and inventory. A key recommendation involved placing a time lock on all future sales of their software. If unpaid, the software will cease to function after thirty days.

The senior management team had developed the plans themselves, something they had not done previously. It was remarkable they had done so in the short span of five weeks.