Sharing insight: Seizing opportunity in today's economy
What kind of company can leverage its business model to seize opportunities during a recession and produce results for its clients who working with fewer resources and smaller budgets? Introducing nonbox client, Group O. A company with a diversified portfolio of businesses competing in the supply chain, packaging and marketing services industries. Founded in 1974, the company has experienced 100% sales growth since 2005 with sales last year of $500 million. Instrumental in the company's growth is President and COO, Murad Velani. He gives us some insight into the dynamics that have contributed to Group O's success:
nonbox: What has been the key to Group O's success in the past 12 months?
Murad: Quite frankly there is no “silver bullet” (at least I’m not yet aware of one) on how one succeeds in this difficult economic and business climate. It’s the orchestrating and synchronizing of a lot of disparate and moving pieces. It’s paying attention to detail on all elements that create value in your organization, especially for your client. Group O’s DNA is configured around rewarding entrepreneurship, “can do execution” and “listening to the customer”. It’s this pervasive cultural DNA combined with the following three things that we have focused on doing well that has enabled us to continue growing our business successfully:
1. Client Focus: We keep our focus external – on our clients. We continually ask ourselves - “What can we do to deliver exponential value cheaper, faster, smarter than our competition?” Sometimes that means doing things that are counter intuitive to improving our bottom line. It means making the right short-term vs. long-term tradeoffs. It means really listening to our clients problems and coming up with creative ways of solving their problems. For example, providing our clients options on how we could revise our pricing terms so that there is a “gain share” model. We took more risk via margin compression and upfront investments; however, if we exceed our service level agreements and/or delivery execution (e.g. cost savings) we would participate on the upside. We are also working in an age of transparency – clients expect and demand that you provide complete visibility into all the cost and performance metrics of your service delivery. We make sure that all our operating businesses bake this into their execution models.
2. Investment: We consciously made a decision to make significant investments in human capital, infrastructure enhancements and technology (counter intuitive to a tough economic climate) – especially in those investments that drove immediate value to our clients. While the easy answer in these economic times is to tighten the belt and drive more profit to our bottom line; we decided this would be the best time to make client facing and service differentiating investments. The labor market provided us unprecedented opportunity to hire extraordinary talent; we made significant upgrades to our facilities and technology infrastructures that could provide us scale and efficiencies; We made substantive investments in training and employee development.
3. Innovation: It’s been a great time to innovate and find ways to rethink how business value is delivered in the markets we serve. We developed and launched our O2 Direct Response & Rewards Optimization suite which dramatically changes the cost, value, quality and cycle time of executing marketing campaigns. Many of our clients are seeking ways to reduce their costs, acquire customers at a lower cost and gain wallet share. We have delivered a game changing technology solution that enables our clients to achieve orders of magnitude improvements in executing Direct Mail acquisition, retention and cross sell campaigns.
nonbox: How has your business model insulated you from the tremendous down pressures of the economy?
Murad: I don’t believe there is any business out there that has been insulated from this economy – unless you are a monopoly – even then I suspect you felt some pressure! I heard someone say “A major recession – what a terrible opportunity to waste!” That’s a interesting perspective and one which resonates if you think about it. We’ve been fortunate in having a diversified portfolio of services that we deliver to a diversified client segment. In many cases, our message has resonated with our clients. The “new normal” is organic growth by outsmarting your competition. Our clients have to do more with fewer resources and smaller budgets. I suspect everyone of us has heard this message repeated by our clients. Our execution model is simple – extract and make transparent hidden costs and optimize all possible inefficiencies in those operations we execute on behalf of our clients. This dials in perfectly with being able to deliver more with less.
nonbox: You have launched new business initiatives in the past 12 months. Tell us about them and why they will succeed?
Murad: We either re-tuned or launched entirely new business services in all our operating divisions that focuses on “optimization”. The bottom line is that these solutions improve our clients bottom line; increases the velocity of how they can execute faster, smarter and with greater visibility and transparency in their operations. Clients are under pressure to deliver results now and are seeing solutions that are modular, portable, configurable, can be on-boarded quickly with low execution risk and that can have an immediate impact on their business. They don’t want “custom” that translates to high cost, complex/high risk implementations and long delivery times. Let me give you two examples:
1. Smart Audit ™ in our Packaging Solutions business enables us to execute a deep forensic on our clients plant and distribution center packaging operations. We provide a comprehensive assessment of how they are consuming packaging material in the context of their operating protocols and equipment configurations. We provide a “biometric” of how they can optimize their packaging operations and reduce their use and costs of packaging consumables by delivering prescriptive changes to their operating protocols; calibrating the equipment and even changing the consumable. This level of synchronization allows us to deliver significant cost savings that are immediate. Our Smart Audit also delivers metrics that demonstrate the impact of reducing our clients carbon footprint in their operations.
2. O2 Direct Response and Rewards Optimization Suite™ in our Marketing Solutions business delivers orders of magnitude cost savings in executing marketing and direct response campaigns. There are tremendous inefficiencies in how Direct Response campaigns are executed in many companies. When executing any given marketing campaign - there are multiple agencies; multiple technologies (in some cases no technology); multiple handoffs; multiple in-house and out-sourced stakeholders (strategy, creative, data, legal, production, distribution) involved in some part of the marketing campaign supply chain execution. In many cases, our clients are burdened with significant hidden/redundant costs and have limited visibility and no transparency in how this entire service deliver is choreographed day-in-out. Our O2 solution provides an elegant execution Software as a Service (SaaS) platform that enables us to “plug in” the clients creative agency and other value creating stakeholders in the marketing supply chain. We standardize and optimize the workflow thru smart technology our clients and their agency can immediately plug into and start executing their Direct Response campaigns – in some cases 30%+ lower cost; 50% higher velocity; and significantly higher quality. We enable our clients to aggregate their spend – postage, paper, print production, project and program management across disparate operating/marketing groups and drive the lowest CPP (cost per piece) in the industry. Bottom line – they can do more with their already reduced budgets; respond faster to changing market/competitive conditions; lower their customer acquisition costs.
nonbox: You anticipate rapid growth in your marketing services business. What is driving this dynamic?
Murad: Clients are under significant pressure to do more; with less and deliver improved results immediately. This dynamic isn’t new. However, the tough economic climate and prolonged recession provides a tremendous opportunity and amplifies this sentiment. Clients are demanding innovation – not just lower cost! We find this an opportune time to bring new thinking and ideas to the table that deliver results. Our clients are listening more now then ever – especially if you can execute as advertised.
nonbox: What challenges and opportunities lie ahead?
Murad: The opportunities far outnumber the challenges. Whenever there’s a confluence of constrained resources, the velocity of execution increases and the demand for immediate and exponential performance – innovation abounds. At Group O we see this as incredible environment in which to innovate fast; partner smart and stay close to the pulse of strategic drivers of our clients business and industry. If you can focus your energy on those things that either make your customer money or save them money, I’m convinced that you will find incredible opportunities for growth.
