When outdated technology loses customers

A major aircraft manufacturer needed to take drastic action. Underperforming new aircraft programs, among other problems, were dragging down its financial results. The company had already posted negative EBIT and its cash position was deteriorating by the day. Management feared that even a slight dip in the euro-to-US dollar exchange rate would put it at a big disadvantage against competitors. With a global downturn looming, the company was hindered by an engineering-heavy culture, a fragmented local supplier base, slow decision-making, and unclear accountability. They also lacked the lean manufacturing techniques needed to compete in today’s marketplace. Equally troubling, the company had lost the confidence of its big customers as its flagship programs ran into delay after delay. Recognizing that the company could soon head into a financial nose-dive, the CFO launched a performance improvement program aimed at correcting as many of the problems as possible within three years.

Big performance improvements make an impact

The company’s new COO brought in AlixPartners to assess its performance improvement program. Our proprietary QuickStrike^® diagnostic immediately generated recommendations for major changes to the program. The company acted quickly on the most crucial of those recommendations, which included moving the program under the COO’s leadership, shifting the operational focus to content and execution rather than process, instilling a sense of urgency, and pushing for short-term wins. The program was rebuilt on simple but sturdy building blocks: securing savings, “beating the drum” about transformation at very senior levels, and centrally monitoring and measuring progress against goals.

Throughout this project, we worked side-by-side with the aircraft maker’s managers at all levels—with an emphasis on speed. We helped make sure the program set ambitious first and second-year goals instead of focusing only on the third-year targets. Executive committee members went on road shows to champion the new program across the company, and management’s bonuses were firmly linked to its results.

When it really matters

The CEO of the company acknowledged that his teams produced strong results much earlier than anticipated. “AlixPartners have been instrumental in delivering our four-year EBIT and cash targets in three years,” he said. “They challenge, coach, drive, and execute faster than any other firm we have worked with, bringing small but senior teams with strong execution skills and superior knowledge of our Industry.” Overall, the performance improvement program rebuilt a strong cash position for the company, cut costs, and drove top-line growth. Specifically, it restored pricing discipline and delivered multi-billion-dollar cash and EBIT impact. The results proved so valuable that the company extended the program for two more years to capture further benefits.