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Prize winner
Published by:
Institute for Management Development (IMD) (2011)
Version:
20.02.2013
Revision date:
08-Mar-2013
Length:
15 pages
Data source:
Field research

Abstract

NCC Construction Danmark A/S (NCC DK), a leading construction company in Denmark with revenues of DKK 2.3 billion in 2010, had a 2.5 % share of the highly fragmented Danish construction market. Torben Biilmann became the CEO of NCC DK IN October 2006, a time of financial turmoil for the company. The residential housing market that the company had relied on for the past five years to propel its revenue growth and profitability came crashing down. Revenues dropped from DKK 5.8 billion in 2005 to DKK 5.4 billion. Worse still, the company's profitability fell precipitously: EBIT went from 2.9% in 2005 to -0.5% in 2006. The company showed a loss for the first time in its history. Over the next five years Biilmann and his top management team led the company through a three-phase transformation: Stabilization (2006-2007); and two ongoing phases: Efficiency & Sustainability (2008-); and Business Development (2010-). By 2010, NCC DK had successfully reined in costs and improved its EBIT to an industry-leading 4.2% (three times that of its nearest rival). The company's portfolio had shifted from an emphasis on B2C (residential home owners) to B2P (public sector clients) and B2B (business customers). The culture of the company had been dramatically transformed along many dimensions: from a volume to a profit orientation, from a craftsman to a business mindset and from being production-centric to customer-centric. The company's emphasis on sustainability was aligned with that of its parent NCC A/B, which declared in 2010 that 'NCC (and its subsidiary companies) is a responsible and innovative society builder focusing on sustainable development. 'Biilmann set a new target EBIT of 7% by 2015 for NCC DK. But this would not be possible without simultaneously growing the top line. Biilmann and his colleagues believed that the best path toward profitable growth was to change the rules of the game in the Danish construction industry. There were three main reasons that the team felt confident of success in this gutsy move: (i) continuously improving the risk management approach and the business mindset, (ii) the growing importance of sustainability in the construction industry, and (iii) the company's unique capability in digital construction, its commitment to sustainability and its expertise in many parts of the value chain. Biilmann's vision for the company was to become the consulting contractor that customers would go to first. Was Biilmann's vision a ground-breaking move that would enable NCC DK to become an industry leader, or a risky gamble that would be hard to pull off? Learning objectives: In analyzing how NCC DK stabilized its business to improve its profitability, and then built on this success to both grow and transform its business model, participants are asked to debate what next for this company? The case provides a good platform to discuss the continuous renewal framework and to apply that framework to their own business situations.

Topics

Corporate transformation; Must win battles; Lean business routines; Project management; Growth platforms; Key customer program; Construction industry
Location:
Industry:
Size:
DKK2.4 billion in 2010, 1,125 employees
Other setting(s):
2006-2010

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Awards, prizes & competitions

2012 - AESE case writing competition - first prize winner

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