Halton, a supplier of air conditioning systems, wanted to double its turnover by 2025. The company turned to Talent Vectia for help in finding new growth paths. Halton’s growth pace is already picking up.
- Permanent capabilities and unified, systematic approach for growth opportunity valuation and portfolio management
- Based on more than 50 new growth opportunities that were identified in the company’s existing business areas, Halton decided to develop about five new ideas and to continue supporting the development of about ten existing growth ideas
- As things stand in February 2019, a new factory is being built in the United States, a company negotiation is underway, and new staff are being hired
Doubling its growth rate is a tough call for any business. However, by the time of the Finnish recession of the early 1990s, Halton had thoroughly learned the lesson that growth and renewal are vital to any company. That’s why the company’s owners wanted to set up a project to expand existing business operations and find new growth areas.
They set a target of doubling the company’s growth rate, which would mean that turnover has to more than double, to EUR 500 million, by 2025.
If a company is satisfied with modest growth, it can be content to stick with what it already knows. But if you set your sights high, you have to start thinking about new possibilities." — Kai Konola, CEO, Halton
Halton chose Talent Vectia as its partner for building its growth portfolio. There were various reasons why partnership was needed: for example, despite being a company that generated over two hundred million euros in turnover a year, Halton did not have the internal systems with the capacity to implement annual strategic processes on the necessary scale. And when a company is creating new business operations alongside its existing workload, there is a need for skilled support.
A business model for the brightest ideas
Halton has three business areas: Foodservice, Marine, and Buildings and Health. Halton’s management was well aware that every business area offers many unexplored growth opportunities. Hence, they wanted to look for growth ideas in their existing operations first.
Over 50 such promising opportunities were quickly found. Talent Vectia introduced a systematic way of analysing and comparing these ideas to determine the paths the company should take first. Important issues that were emphasised in the comparisons were growth potential and the need for investment. The same analysis was carried out for existing businesses.
The need for investing in new growth could mean various things, for example acquisitions or development of know-how. Work on these tasks is already in full swing at Halton.
“We need to develop our expertise in digital competence, for example, when we start selling remote-monitoring solutions. It is absolutely essential to be able to guarantee the right level of service”, says Halton’s director of strategy Mika Nieminen.
New business operations on the way
Halton has made rapid progress on its chosen growth path. In early 2018, development work started on the construction of a new factory, as did merger negotiations and the recruitment of new employees.
Halton estimates that it will hire about 70 people during 2019. A new factory is being built in the United States, where the company will develop and manufacture new solutions for professional kitchens.
Similarly, in the Foodservice business area negotiations on a business acquisition are underway, with the aim of expanding expertise in turnkey deliveries. This will enable Halton to deliver a completely new kind of kitchen building services engineering to selected major customers. In this way, Foodservice is taking a step from being a traditional equipment supplier to providing a total service.
The journey in this direction requires expertise that the company has not had so far.
“It is an easy way to increase turnover but at the same time lose money, whereas we want to both grow and earn,” says Konola.
About five promising new ideas for business operations have proceeded to the deployment phase, or are on the way there. In addition, many other new ideas may be realized at a later stage. The company is avoiding the risk of advancing on too many new fronts at the same time.
It is especially important for the future growth of the company to ensure that employees remain content and committed.
One major outcome of the growth project was that a new spirit of growth has emerged in the company.”
There are many reasons why this is so important to Halton; for one thing, the company’s business operations are based on local power and responsibilities. Because of this, the successful realization of the new growth ideas will be determined by the ability of the local country organisations to create and innovate.
“That’s why we have put a lot of effort into ensuring that everyone feels empowered to have an impact on the implementation of the strategy”, continues Nieminen.
Those involved in the growth project have praised the consultants for creating a positive spirit. This is indispensable for the open discussion that is especially needed in the creation of new business activities.
“The consultant must bring intellectual honesty to the conversation”, Konola says. “That is something that Talent Vectia’s consultants have done very successfully”.