IMD Annual Report 2019

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IMD ANNUAL REPORT 2019

IMPACT STORY: NCC

important hurdles. These included tendering projects with restricted margin potential, deviated resources and focus from growth segments, and siloed project teams with limited leverage of expertise. In addition, business units were not systematically tapping into the group’s scale and scope to win complex mandates.

Laying the “Foundation for the Future”

How could NCC realign its business for profitability and growth?

NCC, a Nordic leader in construction and civil engineering, saw its revenues climb steadily over the past two decades, but industry margins had been under considerable pressure. With the rise of smart cities and urbanization, prospects to partner with customers and ecosystem actors to develop solutions for complex projects emerge. Working with IMD, NCC embarked on a journey to renew its business model for increased profitability and growth. The Challenge Construction is the largest undisrupted market in the world, representing over 10 percent of global GDP (USD 10 trillion). Among the challenges the industry faces are sustained cost pressures, shortage of skilled workers, and trends toward fixed-bid projects that threaten profits. Players also struggle with productivity; costs doubled in 20 years and the industry trails digital adoption with 1.5 percent of revenue invested in technology against a 3.3 percent average across other markets. With 15,500 employees operating across the constructionvaluechainfrompropertydevelopment to complex building and infrastructure projects, coupled with an industrial arm producing asphalt and stone materials, NCC focuses on sustainable and technology solutions, recording SEK 58.2 billion (EUR 5.2 billion) revenue in 2019. Despite a successful track record, the group had to surmount

Listening to the Organization IMD’sjourneybeganwithacomprehensivediagnostic to listen to the organization across business units and markets, to jointly uncover areas of more and less strength, enablers and roadblocks as well as opportunities and challenges going forward. This process led to the joint creation of a strategy framework that focused on first, strengthening the foundation; second, on tackling the fundamental enablers for higher performance; and third, on laying the building blocks critical to create value in the future and profit frommarket trends. This phase was paramount to the journey. It engaged the organization in a strategic reflection, enabled a common view on market trends and NCC’s areas of strength, and triggered a wake-up call on the need for change. Mobilizing teams to create options Building on these emerging insights, the senior leadership team launched six workstreams, with the mandate to explore and develop options to address: • A focused portfolio with the goal to develop a portfolio strategy that leverages areas of specialization and capability strength, while positioning the group to capitalize on market opportunities and areas of future growth.