Case Study 1 - Using Driver Tree Analysis to develop an ambitious Improvement Plan
The Business
A small, international minerals processing business. The business imports ore, which it processes into an intermediate product, packages, and distributes to local manufacturers.
The Problem
Senior Leadership requested a six-fold increase in net earnings over 2 years. The local management team had some ideas for improvement, but didn’t think they could achieve the required earnings.
The Approach
- Driver Tree Analysis was used, as part of a 2-day facilitated workshop, to help team identify and prioritise improvements.
- Due to the short timeframe, a basic Driver Tree was developed ahead of time using their latest Profit & Loss Statement.
Details
The workshop agenda was as follows:
Day 1:
- Introduced Management Team to the Driver Tree approach.
- Mapped the production process and brainstormed opportunities.
- Collected additional data around those parts of the tree most likely to be important, and added these to the driver tree.
Overnight:
- Used the tree to perform some basic sensitivity analysis on the brainstormed ideas; calculating what a 10% improvement in a range of parameters would mean to the final earnings.
Day 2:
- Presented team with the Driver Tree to allow them to visualise their data.
- Displayed the results of the sensitivity analysis, with ideas ranked from highest impact to lowest.
- The team went through the ranked ideas list considering the difficulty of achieving a 10% improvement in the each parameter. Each idea was evaluated to decide whether the impact on earnings was significant enough to be worth the effort. Using this technique the ideas list categorised as: Go, or No Go.
- For the ideas in the Go list, we scoped the projects, and prepared a communications brief.
The Results
Management team were delighted and surprised with the outcome. Before the workshop, they had thought the improvement target was could not be achieved without mergers or acquisitions. As a result of the workshop, they were able to present Senior Leadership with a realistic plan to achieve the targeted earnings improvement with their current asset base.
The driver tree approach helped them to:
- See their data in a new way, leading to additional ideas for improvement.
- Quickly see the impact of their improvement ideas, which led to some ideas being discarded.
- Set concrete targets for improvement, linked to specific pieces of work.
The rigorous approach left them with a plan they felt confident in achieving.