Strengthening analytical rigor through capability building to support growth

Challenge

Port-terminal operations are increasingly complex and capital intensive, making it critical to accurately project revenue flow in order to maintain capacity and competitiveness. Miscalculations and underperformance can put volume and margins at risk and capital improvements on hold. Such was the challenge faced by one large national port-terminal operator—inaccurate projections threatened its ability to meet volume and revenue-growth goals. Unable to reduce labor costs or scale back on capital improvements and remain competitive, the company needed a way to mitigate any risks to revenue. The organization contacted McKinsey to help it develop the capabilities that would equip its teams with analytic, communication, and risk-management skills needed to realize its strategic ambitions.

Discovery

The McKinsey team partnered with the company's finance, strategic-planning, and continuous-improvement teams to design, pilot, and launch a comprehensive capability-building program. The primary program objectives were to help employees use analytical rigor to adapt to changes as needed, continuously improve operations and efficiency, and identify and respond appropriately to operational issues without compromising strategic goals or increasing risks to cash flow or revenue.

The client and McKinsey team members designed a wide-ranging program that spanned skills from project and performance management to analytics, critical thinking, problem solving, and relationship building and effective communication. Skill building in these areas was provided through multiple modes:

• classroom-based training (for critical thinking and analytics)
• self-paced learning through reading (for topics such as business-plan writing)
• interactive workshops(for presentation skills)
• field training and on-the-job coaching (in areas such as negotiation, assertion, coaching, and problem solving)

Shifting mind-sets and behaviors was an equally important part of realizing the company's goals. To make the desired shifts, McKinsey helped identify and train change leaders and teams to serve as role models and coaches for colleagues.

The new ways of working, communicating, and problem solving were piloted twice—first with McKinsey delivering the training to the client change leaders, and next with the client change-team members delivering the training to terminal managers and implementation teams to ensure organizational uptake. In addition, McKinsey helped the client institutionalize the approach in three ways:

• evolving the project office into a center of excellence focused on results management
• convening a community of results-management practitioners
• establishing knowledge-management systems such as handbooks, databases, and continuous-learning tools

In addition to capability building, the McKinsey team assisted in developing a cash-flow-at-risk methodology and validating 5-year demand forecasts for key commodities.

Impact

The collaboration between the client and McKinsey reduced the overall revenue at risk in the first 3 months of the financial year by 40 percent, with some regions reducing revenue at risk by more than 70 percent. Approximately $100 million in revenue was salvaged during the year following the capability-building program. If sustained, the impact of the program will support the company's ambitious 2020 capital-investment programs and growth goals.