Diageo - translating strategy into action

 

Diageo, the world's leading premium drinks business trading in over 180 markets around the world, has a long history of mergers and acquisitions and plans to carry on expanding.

 

Opportunity

As part of its strategic review Diageo acknowledged the need to overhaul, reorganise and standardise its processes. It was recognised that a key element was to differentiate between global processes (marketing a particular brand) and local processes (purchasing newspaper advertising).

Despite the practical and action orientated culture of the organisation, the debate between ‘global’ and ‘local’ was fast becoming esoteric. Senior management, frustrated by the circular nature of the debate, decided the discussion either ceased or was brought to a satisfactory conclusion. Their preference was the latter as it was apparent there were significant cost savings to be made by differentiating between the two.

Approach

CITI was invited in to solve the issue. Following discussions with Diageo’s Chief Operating Officer, the solution was found using CITI’s strategic implementation planning (SIP) approach facilitated by one of our senior programme managers, Simon Peach.

In its simplest form, CITI’s SIP approach identifies and ‘proves’ the relationship between the blueprint of the new organisation (its target operating model), the customer value proposition and benefits case for the transformation. The process involved can be a challenging time for the executives and senior managers as ideas are exposed to a constructive, but necessarily ruthless, analysis process.

The outcome is an executable plan for implementation that links and tracks benefits → impacts → products (deliverables). The core element is the 'As-is' and ‘To-be’ modelling process. The ‘As-is’ identifies Diageo’s current operation, while the 'To-be' focuses on the future - the blueprint. Unlike approaches adopted by others, CITI’s approach identifies the implications of decisions made regarding process ownership and location and does not concentrate on process mapping alone. This makes it real and permitted Diageo to develop a coherent and comprehensive target operating model.

Together with Diageo’s senior management and analysis teams, CITI produced an operating blueprint which facilitated resolution of the global verses local process debate. It also proved that an operating model is not ‘shelfware’! In fact Diageo established an internal Design Authority group to become the guardian of the new operating model. Of additional, critical importance and value to Diageo, the SIP process identified a number of standalone programmes that did not contribute towards the new operating environment.

Outcome

Following this, CITI undertook a full analysis of the benefits claimed by all programmes currently underway at the time. It became evident that a number did not have a robust business case and were driven more by inertia than value to Diageo. As a result of CITI’s involvement, Diageo decided to close those programmes with no clear benefits case and align others into a more coherent programme of change. This included the exhaustive revamping of a North American portfolio of projects. The board has since demanded that the CITI approach is adopted throughout Diageo for all of its corporate projects.