Accelerating out of the COVID-19 crisis with a solution from IMD experts
Agathon, a leading high-tech machine tool and precision component manufacturer, recently worked with IMD’s Global Management Foundations to reverse pandemic-related decline.
Agathon was a company at a crossroads. COVID-19 and its associated confinement periods, lockdowns and slowed economic activity had a severe impact on the company’s growth trajectory.
To address these issues, the company participated in IMD’s Global Management Foundations (GMF) program. Professors, senior executives in IMD’s EMBA program and the company’s management team were able to identify possible solutions that touched on key areas of the business and mapped a clear way forward, with options for both immediate and long-term action.
Specific challenges in a “niche of a niche” market
Agathon is a leading manufacturer of high-tech grinding machines for indexable inserts used in products from washing machines to airplane engines. It rolled out a growth strategy in 2019 but the COVID-19 pandemic significantly affected operations. With customers experiencing budget cuts and spending reductions, the company, which is active predominantly in Western Europe, the U.S., Japan and China, experienced a painful decline in revenues.
IMD and Agathon partnered to develop recommendations for addressing the changing demand. The effort engaged Agathon’s CEO, Michael Merkle (IMD MBA 1996), as well as Daniel Felber, Chief Sales Officer, Machines, and Stefan Baumann, General Manager, Division Guiding Elements. On IMD’s side, 29 participants in the GMF program (made up of Executive MBA candidates) worked under the guidance of professors Albrecht Enders and Arnaud Chevallier, both experts in strategy.
Testing assumptions and opening new paths
Over nine days, the GMF approach allowed the teams to understand the complex issues facing Agathon and propose tangible creative and evidence-based solutions. From improving services through customer packages or virtual reality events to increasing sales through adopting new sales models, to leveraging digital marketing to reach new customers, there was an idea for each aspect of Agathon’s operations.
Equally important was identifying a set of criteria by which the value of these solutions was evaluated, as executives are often too close to their own operations to gain the perspective they need to identify a set of well-rounded criteria. The project teams gathered opinions from Agathon, pressure-tested these internally and with the executives, and offered revised sets of weighted criteria that aligned with Agathon’s priorities. This included speed and ease of implementation, revenue generation, cost and level of risk-reduction.
One of the most promising solutions was for Agathon to focus not just on providing machines, services and parts but in particular on strengthening its customer journey. Striving to be more customer-centric could include intense mapping of every stage of the customer journey and noting what improvements could be made, as well as identifying large revenue opportunities and building competitive advantage.
A further example of this was the suggestion to upgrade Agathon’s website, creating an advanced digital platform to provide for all customer needs and inquiries. Recruitment of new personnel in key locations could also boost customer interaction as well as sales.
The need for fresh thinking
The unique GMF process helped in two major ways: first, executives trained in structured thinking generated a collection of innovative ways forward in a very short time – the likes of which would have been difficult to produce in-house.
“We know our industry; we know our solutions,” said Merkle. “But we were looking for new solutions which we didn’t have on the radar yet.”
Equally important, the recommendations were a helpful sounding board to test and prioritize Agathon’s own ideas. Some of the solutions confirmed the company’s thoughts on how to move forward based on structures it already has in place, while others provided exciting new opportunities to pursue.
As COVID-19 keeps the global economy on tenterhooks, the pragmatic solutions developed during the GMF program are providing Agathon with new pathways to achieve its Strategy 2025 – and the double-digit growth it desires.