Zenith Strategy Associates

Bapcor and the perils of outsourcing your strategic transformation

Bapcor’s “Better Than Before” strategic transformation was unwieldy and according to one co-founder left the business “Worse Than Before”

Bapcor og

"Worse than before"

In 2022, Bapcor’s newly appointed CEO launched “Better Than Before”, an ambitious strategic transformation of the business that was meant to deliver $100m in profits for the automotive giant.

As reported in the Financial Review, the strategy involved a large team of McKinsey consultants working across 300 separate projects to deliver benefits.

Instead, the program left the business “Worse Than Before” (according to one of its co-founders), with three profit downgrades and a 27% share price decline in 12 months.

The business also faced internal disarray, with the unexpected withdrawal of the intended replacement CEO, and the impending retirement of the Board chair.

No wonder financial sponsors are circling the business.
Better than before

So what went wrong?

Bapcor is undoubtedly facing tougher market conditions than it did when its shares peaked during Covid.

At that time, the combination of large stimulus cheques and restrictions on personal freedoms would have benefited the automotive after-market sector (along with the DIY and home fitness sectors, among others).

But since then, rising interest rates have squeezed households and SMEs with predictable results for those same sectors of the economy that benefited the most during Covid.

But Bapcor’s problems seem to go beyond market-driven forces. The business has lost ground to key competitors SuperCheap Auto and Repco.

The combination of an unsettled leadership team and an unwieldy strategic transformation program appears to have contributed to an excessively inwardly-focused business that took its eye off the market.

Secrets of Effective Strategic Transformation

Bapcor may also have gone too far in outsourcing its strategic transformation to strategy consultants. A transformation program of 300 projects just sounds too complex and unwieldy for most businesses to take on (without of course the support of an army of consultants to provide the analytical horsepower).

It is too easy to get lost in the complexity of the transformation and lose touch with the market. All while drawing comfort from the fact that so much work is getting done on a weekly basis.

But I would argue that a better approach is to be far more targeted, and to start with a much smaller set of strategic initiatives that really move the dial.

This requires a deep level of strategic insight to frame the strategy around the key drivers of the business, and how best to respond to changing market conditions.

And this process should be led by the management team rather than outsourced to consultants. This helps to build the buy-in and alignment among the management team that is critical for successful execution.

Our own approach to strategic transformation reflects this philosophy, with small teams of senior strategy consultants working in partnership with management teams to jointly develop strategic plans. A holistic approach which is underpinned by rigorous modelling of the key financial drivers of the business, and reflects the capital and resourcing constraints on the strategy.

The result is a focused plan with a more manageable number of initiatives that allows for rapid execution and delivery of benefits.

You can learn more about our approach to strategy execution below:

Turning Strategy into Action

A guide to strategy implementation

Implementing Strategy Report

Implementing Strategy

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