DPO&Co - DPO Consulting and Investing, Market Growth Strategy

Situation

Impact and Results

Situation

Due to changes in technology and consumer preference, economists forecasted client was poised to lose ~$250M in revenue and ~$100M in profit
Given client's core engineering capabilities, they were considering ten growth opportunities they felt could fill the void from the loss in this business
Expansion appeared to be a logical expansion of a very profitable business, but we were skeptical of the client's sources of differentiation

Approach

Impact and Results

Situation

Developed fact base by segmenting the market into OEMs that had strong sources of differentiation and generic manufacturers
- Conducted public desk research to determine OEMs generate ~4x profit than generic manufacturer
- Established hypothesis that brand, distribution, engineering expertise and IP access drive profit
Created robust framework to analyze client capabilities on these four metrics
Leveraged public desk research to calculate overall profit pool and potential market share by comparing client on these metrics
Ranked opportunities by value at stake and highlighed one strong opportunity, several moderate opportunities and several negative economic profit pools
Identified several other operational efficiencies within the business that could fill profit gap using information captured organically during client interview phase

Impact and Results

Impact and Results

Impact and Results

Client received actionable plan for pursuing the highest value at stake opportunity, worth $200M in new revenue and $30-60M profit
Management had significant evidence contrary to initial internal hypotheses, which drove the decision to not pursue growth that would destroy stakeholder value
Key stakeholders were aligned and trained to use framework to evaluate future adjacent market growth opportunities