MT Højgaard

From good to best: Strategic flexibility as a competitive parameter

From good to best: Strategic flexibility as a competitive parameter. ”We had achieved our goals, and at the same time, we realised that our values, vision and goals no longer matched the world we were living in. We needed a new starting point to take the next step forward”

MT Højgaard

The management team, headed by Kristian May, therefore initiated a strategy and organisational development project with the purpose of preparing MT Højgaard for a more global and intensified competitive situation.

”We decided to start the process top-down in order to create a clearly defined framework for the organisation to work within”, says Kristian May and adds, ”It was, thus, the management team who jointly worked out the new vision: We will outperform industry standards through innovation and operational excellence – together with our customers. The vision is worded in English, which is a very deliberate choice. It may only be a detail, but first, it is entirely new in our industry, and secondly, I believe there is no point in talking about global view if the vision is formulated in Danish. On our website we have translated the intentions of the vision into Danish, but the wording remains English”.

Respect, cooperation and professionalism

In the same process, the company’s new values were defined as respect, cooperation and professionalism. This work was completed by the beginning of 2009, whereupon the top management and then the rest of the employees were involved in bringing the vision and the values alive in the organisation.

”Even though I believed and still believe that it was the right decision not to involve the employees in the preliminary part of the process, I and the rest of the management team were excited to see the organisation’s reaction to the new vision. Luckily, it turned out that everybody bought in on it, and we received a lot of good and relevant input for how to realise the vision”, says Kristian May. ”The most significant input concerned the need for formulating new performance measurement systems, incentive structures and organisation. And since this input matched the conclusions we had reached in the management team, it only contributed to supporting the process”.

In parallel to this work, MT Højgaard initiated a management development programme among the 120 highest ranking managers with the purpose of developing the management competences that were necessary for performing management in accordance with the new vision.

It was a crucial initiative. Within the organisation, we wanted to break with a number of ingrained beliefs of how to run a contracting business. Externally, we wanted to change the market’s idea of us as the traditional contractor with whom you only discussed budgets to the idea of an equal partner and consultant. It was a great upheaval for most people, and I believe that the management development programme created a common frame of reference which has been indispensable in the process.

New goals – new organisation

Status in the middle of 2009 was, thus, that MT Højgaard could certainly feel the consequences of the financial crisis, but at the same time the results of the initiated strategic initiatives were beginning to show – culturally as well as financially. "Considering the market, we were in a quite strong position. We had a reasonable contribution margin on our projects, and even though there was no prospect of growth in the top line, there were many indications of a growing profitability ratio which subsequently turned out to be right. In 2009, we were among the most profitable building and construction companies, both in Denmark and at the global level”, says Kristian May.

Nevertheless, MT Højgaard did not believe that they could rest safely on their laurels. ”The potential of the current  development curve was coming to an end. We, thus, believed that it was time to take the next step and define the goals for a new curve on top of the first one.

If we viewed the company from three perspectives, competences, culture and operating model, it was clear to us that we were in a strong position both in terms of competences and culture. We possessed the technical, commercial and managerial competences, and we had loyal employees who both individually and together headed in the same direction. Our operating model had been examined since we started the journey in 2008, and it was obvious that it had many strengths, but it was just as clear that it also gave rise to a number of challenges”, says Kristian May.

Consequently, MT Højgaard chose to design the future organisation in accordance with three fundamental logics in the company’s business model, i.e. being present where the assignments are, having the required specialist competences at their disposal and having available the necessary resources for handling the assignment at all times. Today, MT Højgaard is, thus, built up around three business areas: Construction, Civil Engineering and Major Projects. Construction is organised around the need for local presence and Civil Engineering around specific competences, whereas Major Projects is organised as required with resources from Construction, Engineering and, if relevant, a third party with regard to very large projects, e.g. the Copenhagen Metro.

Performance management as the focal point for continuous development

The performance perspective had been central to MT Højgaard all the time, and as the new organisation began to take shape, it became increasingly important, according to Kristian May, to be able to measure whether the company progressed as expected. ”Historically, like all other contracting businesses, we had primarily measured on the financial aspect in the individual project. Practically all of the dialogue was, thus, centred around the status of the project and then, of course, a lot of explanations to why things were as they were”.

Kristian May found it essential to turn around the dialogue. ”Even though we can learn a lot from our mistakes, the discussion is not very constructive. In reality, we practically only talked about what we should have done differently, whereas it would have been much more relevant to talk about what we could do in future in order not to end up in a situation where explications were needed”, says Kristian May and continues, ”Having said that, we had to admit that we had difficulties in cracking the challenge of creating a new logic for performance management of a company as complex as ours”.

MT Højgaard had the ambition of developing a simple structure easy to communicate which could link the company together, from the lowest project level over departmental and regional level to business area level. ”During the work of creating this structure, we and our external consultant were very aware of not creating confusion with too many incoherent measurements. We found it essential to define the economic engine that drives our business in the new context without compromising with the strong project economic focus which has taken us to where we are today”.

According to Kristian May, MT Højgaard has now reached a point where the new KPIs are close to being integrated in the organisation’s infrastructure. ”We want them to live in the organisation, which is why we are now working on designing performance boards and incorporating the reporting in relation to the current meeting and decision-making structure in order for it to become a natural part of both our operational and our strategic management. We have not finished yet, and in reality we probably never will. But the project has shown us that there are many new dimensions which it would be favourable for us to measure on, because they support a proactive, constructive management dialogue and focus on improving our performance continuously”.

The work continues in 2010 when e.g. selected KPIs on customers and employees are also to be integrated in the performance management system. It has been a long haul, and I have really invested myself in it. But it has been worth the effort – not least when the results begin to show

Kristian May.

Jan Lythcke-Jørgensen
Jan Lythcke-Jørgensen
+45 2338 0017

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