The risk of incrementalism and the importance of clear strategy during periods of uncertainty

Chairpersons and CEOs are at risk of becoming incremental in their thinking as a natural defense to today’s uncertain environment. We observe companies that are at risk of getting stuck given the extreme set of existential risk CEOs and Board members face in managing through today’s environment. They may take comfort from managing operational improvements within their control and shy away from bold choices that might deliver competitive advantage by fundamentally altering their strategy.

By Neal Kissel, Heidi Hellmann

The Business of Climate

In the aftermath of COP27, where world leaders met at Sharm El-Sheikh to address delivery of net-zero goals and planning, we recap the progress made since Paris and COP26, simplify the conference agenda, and share what all this might mean for business.

By Heidi Hellmann, Ofir Eyal

Ukraine War and Five Lasting Changes for the Energy Sector

The war in Ukraine is creating geopolitical, social, and economic disruption in the energy sector and beyond, just as the world is beginning to recover from the worst of the Covid-19 pandemic. In the energy sector, it is compounding the trilemma of security, affordability, and sustainability. Increasing sanctions on Russia’s energy exports and moves to reduce dependence, notably by the EU, are limiting access to a previously reliable and low-cost global energy source, and the ripple effects could be felt in the form of higher costs of living and of doing business. There will also be implications for the energy transition. In this Marakon Commentary, Rod Davies and Quan Li outline five potentially lasting changes the energy sector could encounter and that companies and investors should account for.

By Rod Davies,

Your net-zero plan may be "good" but is it "right"?

As businesses release a wave of net-zero plans to great fanfare, discerning investors and executives alike will look beyond the headlines to assess whether the plans hold water, determining whether what seems to be a ‘good’ plan on paper is actually the ‘right’ one for the particular enterprise. This evaluation will ultimately guide their decisions around which companies to invest in, and whom to partner with.

By Jake Brewer, Neal Kissel, Arushi Chopra

Global Macroeconomic Outlook

As we enter 2022, the global economic engine is overheating with inflation higher and more broad-based than anticipated, worrying investors and Central Banks alike. Additional risks to monitor include new potential COVID-19 variants, a mounting global debt pile, and ongoing geopolitical instability. The UK despite a successful vaccine rollout faces challenges of its own with a cost-of-living crisis threatening short-term recovery and Brexit likely to exert a long-term drag. Forward-looking executives are closely monitoring these macro-economic indicators to anticipate challenges and find hidden opportunities, e.g., building capabilities in an inflationary market, managing the energy transition amidst an energy crisis.

By Jake Brewer, Neal Kissel, Arushi Chopra

The Business of Climate

As global leaders gather in Glasgow at COP26 to try and secure global net zero by 2050, we recap the progress made since Paris, simplify what’s on the agenda at COP, and at a high-level, share what all this might mean for business.

By Arushi Chopra

Chasing growth: The rise, proliferation, and stagnation of alcoholic RTDs

Following notable growth between 2018 – 2020, alcoholic Ready-to-Drink (RTD) beverage sales seemed to lose momentum (and investor interest) over the summer of 2021, right as a wave of new entrants prepare product launches in the space, and current participants expand their offerings in multiple directions.

By

Energy Transition: Making Money with Renewables

The promise of growth from renewables is unquestionable, but the attractiveness of the sector’s returns is widely debated. In this short article, we look at the emerging evidence of relative corporate returns in renewable energy production, by energy source, and discuss approaches for securing value creation in this fast expanding sector.

By Johann Franke,

Hydrogen Market Primer

Hydrogen has the potential to play a critical role in the energy transition, but the space remains nascent and is highly complex, with a dynamic value chain of supply and demand possibilities. CEOs and business leaders looking to invest into hydrogen need to work through significant strategic, organizational, and operational questions. Why hydrogen, when to invest, and where in the value chain? Whether and who to partner with, and with what commercial construct? What are the economics and drivers? As a starting point, some basic level setting on the market fundamentals will support decision makers contemplating these types of questions. To that end, Marakon and CRA are pleased to provide this hydrogen primer as a point of reference.

By Neal Kissel, , Drake Hernandez

Strategy Teams: Delivering Value in the Downturn

During recessions, management teams tend to prioritise operational efficiency and delivery; typically, big-picture thinking takes a back seat. This presents a challenge for strategy teams in ensuring that their contributions are still appropriate given the business context, and are ultimately valued by management. In this article we share a framework and some examples to guide strategy teams on prioritising their activities in a weaker economic environment, and help them effectively fulfil their mandate as the custodians of the future success of the business.

By Yassir Ahmed

The Future of Oil and Gas: The Writing Is on the wall

Renewables will take an increasing share of global energy supply over the next decades. It is no longer a question of whether renewables will begin to replace traditional sources of power and chemicals but when. O&G players need to decide what markets to focus on and how to win in the future by leveraging current assets and capabilities.

By Johann Franke

Food, Inc: Making the Coming Agricultural Revolution Work For You

The information and technology age is coming to agriculture – and the outcome will be a food system that is more reliable, more efficient, and more sustainable. This transformation is not happening on industry fringes – it is changing the fundamental wiring of the food industry, and will bring significant risks and opportunities for established businesses. Now is the time for established businesses to plan a comprehensive response.

By Christine Delivanis

Responding to a Rapidly Changing ESG Policy Landscape

The Biden administration has signaled a strong desire to make environmental, social, and governance (ESG) considerations more central themes in government policy, corporate disclosure, and investor and corporate behavior. Policies directed at addressing climate change get the most attention, but we expect significant policy shifts across all areas of ESG. These shifts will not only change disclosure requirements, but may fundamentally affect the economics of certain value chains, capital-labor relationships, and the legal risks of corporates. As a result, US corporates need to step up their ESG orientation. One place to start is a simple set of questions management teams can ask themselves to better understand how prepared they are for the expected policy shift.

By , G. Elaine Wood, Christine Delivanis

Sustainability Case Study: North American Utility

More and more CEOs are looking to dial up their companies’ sustainability capabilities in response to the sharper societal and investor focus on the externalities associated with their operations. They recognize the need to embrace a more sustainable and inclusive decision-making process to deliver more positive long-term impacts for shareholders and employees, customers, and the communities they operate in. Yet integrating sustainability in a way that is lasting and additive to the core business is much easier said than done, and it needs to be underpinned by a systematic and deliberate approach to defining the sustainability agenda and roadmap for execution. In this case study, we share a framework and some tools we used to helped a North American Utility successfully elevate and more tightly integrate sustainability with its enterprise strategy.

By Neal Kissel,

Hydrogen: 10 Questions CEOs and Their Boards Must Ask Before Investing

There is a great deal of renewed enthusiasm for hydrogen as a major element of a clean energy future. Hydrogen can support longer term decarbonization alongside electrification, but there is still a great deal of uncertainty. Many CEOs feel pressure to invest in clean hydrogen to avoid being seen as “back-footed”, but there is real risk of moving too fast and too far in front of economic viability and demand. Before committing material time, money and human capital, there are 10 key questions CEOs and their Boards should be asking themselves and their teams.

By Neal Kissel, Anthony Meggs,

Looking under the Hood: UK Economic Outlook and Implications

The UK’s macro-economic outlook is rapidly evolving. Read our latest macro-economic briefing to understand what it may mean for you and your company – a lost quarter, or a hidden opportunity? 2021 was expected to be a year of recovery and growth – both globally and in the UK. However, as we are now in a race between a more infectious virus strain and vaccine rollout, recovery has been stalled at least by a quarter. In the midst of this all, Brexit is a side show. Forward-looking executives are closely monitoring these macro-economic indicators to find hidden opportunities, e.g., how does this outlook impact my cost of equity and WACC, or how am I adjusting my short term consumer offering to take advantage of the expected unlocking of pent-up demand?

By Patrick Foley, Neal Kissel, Arushi Chopra

Beyond ESG: Building more confidence and assurance in corporate sustainability practices

Sustainability and ESG are the buzzwords of the day, and indeed much progress has been made to bring transparency and focus onto these issues in the business world. As capability and sophistication in this space evolve, many companies and investors are understanding the need to move beyond using relatively simple, sometimes self-reported ESG scores to build more confidence and assurance in corporate sustainability strategies and policies. Charles River Associates, via Marakon and its Investigations practice provides an effective supporting capability that enables corporates and investors to do just that.

By Nicholas Panes, Christine Delivanis

A total capital approach for developing a sustainability agenda

The gap between what markets value and what society values is closing. Financial markets and investors are increasingly focused on the fact that risks and opportunities linked to sustainability are tangible and can have a significant impact on business performance. By better understanding the relationship between stakeholder and shareholder value in the context of what a company does, leaders can shape more robust sustainability agendas. Once these agendas are progressed via an appropriate approach for institutional change, the company is then well on the path of simultaneous growth of both shareholder and stakeholder value.

By , Christine Delivanis, Daniel Dias

The long tail of consumer packaged goods: Are you a stubborn persister or disciplined adapter?

The COVID crisis makes the challenges of CPG companies even harder with price-sensitive consumers trading down, customer demands for higher trade, and consumer shifts to lower margin e-commerce. These are but a few from a long list of structural challenges to growth and profitability. The crisis presents an opportunity for CPG companies to restructure portfolios where they have been reticent to do so.

By Mason Kissell

Utilities Are Not Immune This Time

In this white paper, Marakon and CRA colleagues Quan Li, Neal Kissel, and Jim McMahon analyze the intense pressure on affordability, uncertainty in utility rate base growth, the heightened scrutiny on investments, and pressure on regulated ROEs in the current environment. Most of these issues were at play to some degree before the current economic downturn. The COVID-19 crisis has brought them to the fore at an accelerated pace. Consequently, there are deep strategic implications that all utility CEOs need to consider to better weather the storm in the current crisis, be better prepared for the next crisis, and increase the odds of creating long-term business resilience.

By , Jim McMahon, Neal Kissel

New World, New Rules: The Case for Redefining Good Growth

Can businesses drive revenue growth and meet sustainability objectives at the same time? We believe so, yes. “The Case for Redefining Good Growth” proposes a practical brainstorming tool and investment hurdle framework.

By Christine Delivanis, Arushi Chopra

Re-Base the Plan; Regain Control - Food and Beverage

Covid-19 has created significant uncertainty for the Food and Beverage sector. How can business leaders re-gain a measure of agency over their short-term business performance? Marakon recommends formulating a 12-24 month plan to re-base your strategic plan to re-gain visibility and control over the alternative futures possible. This can arm you with the knowledge needed to make the right cost, investment, and financing choices now and over the next few months – choices that will help you not only survive, but also outperform when the recovery comes.

By Christine Delivanis, Roland Foxcroft, Arushi Chopra

4 Distinct COVID Response Choices for Consumer Goods and Foodservice Companies

While the Consumer Goods and Foodservice sector has shown some resilience in light of Covid-19, there is significant variation between sub-sectors and individual company performance. Each company’s strategic response should therefore depend on their unique reality – their ability to withstand the short term turbulence, and their readiness to take on what lies ahead in the new normal. Marakon’s Covid Response Framework maps 60 S&P 1200 companies to their unique reality, and accordingly suggests a tailored strategic response.

By Christine Delivanis, Roland Foxcroft, Arushi Chopra

People, Planet, Profit

Here are our top five ideas for helping CEOs drive more joined up thinking between people, planet and profits to positively impact more of all three, more of the time.

By Neal Kissel, Katarina Bureau

5 Lasting Changes CEOs Need to Be Planning For

We share our perspective on the five lasting changes that every CEO should be planning for as they react to Covid-19 changes and plan for long-term success.

By Neal Kissel

Strategic Resource Management - The Hidden Secret to Outperformance

Solid operational performance matters; if your team can’t reliably execute you’re finished. However, our comprehensive study of 1,200 companies revealed that the path to superior performance is determined by management’s decisions about where to focus the firm’s strategic resources (time, people and capital). At least 60–75% of the difference in performance can be attributed to high-level portfolio choices. The implications for senior management are stark and the report outlines the common challenges they face and six actions they can take to help ensure outperformance is within their grasp.

By Neal Kissel, Alex Formstone, Patrick Foley

In search of alpha: Unlocking value growth in CPG

Despite pressures on recent performance, market expectations for the consumer and packaged goods (CPG) industry are high. Growth has been trending up and margins are expected to continue to improve. Taken together the rate of profit growth in the next three years is forecast to be three times what was delivered in the last five. The challenge for CPG companies is how to meet and exceed the high expectations imbedded in their valuations, given the considerable headwinds.

By Mason Kissell, Alex Formstone,

Making the Transition to CEO: A Strategy for Personal Success

Many new CEOs fail to appreciate that success requires a different strategy than what worked before. Most of the CEOs who found the transition difficult, fell into the trap of believing the job was simply a bigger version of their current role. It is not.

By Neal Kissel, Patrick Foley

Making Elephants Dance: Enabling Agile in Large Corporate

Agile techniques are increasingly used to alter the DNA of large corporates. However, the agile elephant remains an elusive beast; to date many large corporates have used agile working practices to improve efficiency and effectiveness of operations, but until decision-making processes, standards and culture are rewired from the boardroom down, the full benefits of agile will not be realised.

By Andrew Macpherson

Food for Thought: Beyond the Growth vs. Cost Debate

The global food manufacturing industry has historically benefited from a period of embedded market growth driving exceptional shareholder returns. As market growth has slowed, executives are under increasing pressure to change their focus. In this article, we discuss why trading a uni-dimensional focus on revenue growth for a uni-dimensional focus on cost reduction is not likely to drive sustained growth in shareholder value. We explore why moving away from “pendulum management” is particularly challenging for large food manufacturers, and suggest ways forward.

By Christine Delivanis, Roland Foxcroft

Commercial Optimisation - How to Ensure Full Value Capture from Oil and Gas Value Chains

Commercial optimisation of downstream value chains has the potential to drive material value capture and, ultimately, significant improvement in firm performance.

By Neal Kissel

Sales Force Effectiveness - How to Balance Customer Centricity and Shareholder Value

In this paper, we identify five common organizational tendencies that can reduce sales force effectiveness and upset the balance between customer and shareholder value. We also provide observations on what makes an effective, customer-centric sales performance system as well as its benefits, challenges, and avoidable pitfalls.

By Ron Langford

2020 Emissions Regulations - A Storm Brewing for Global Shipping

The shipping industry, oil refiners, and commodity traders will all be impacted by the new IMO sulphur emission regulations that come into effect in 2020.

By Neal Kissel, Andrew Macpherson

Winning with Digital in Consumer Financial Services

Lessons from Leaders and Laggards

By John Rolander, Anish Shah, Srini Venkateswaran, Todd Taylor, Ryan Bulkoski

The Effective Chief Strategy Officer

In this article we discuss the six important aspects to help chief strategy officers, strategy directors, chiefs of staff, etc., to be impactful in their role. This article will also help chief executives better understand who they want in the job, what their remit should be, and how to get the most out of them.

By Patrick Foley, Neal Kissel

The Where or The How - New Evidence on the Link Between Portfolio Decisions and Performance

What is more important – where you compete or how you compete – portfolio or operations? Marakon finds evidence that portfolio matters more, and in some industries explains up to 65% of performance. Executives should give portfolio decisions the attention they deserve.

By Neal Kissel

Private Equity Cannot Rely on Tried and Tested Strategies in Food

In recent years the European food manufacturing sector has come under pressure from the forces of recession, rapidly changing consumer tastes, and the fragmentation of competition. We ask the question of whether the traditional PE model needs a re-think in the food space.

By Christine Delivanis,

Smart Growth: What B2B Can Learn From Consumer Companies

Consumer companies ‘know’ their customers – who they are, what they buy, when and why they switch brands, what motivates them, and how much they are worth – in an increasingly granular way. Many B2C firms are driving towards ‘segments of one’ in how they target and engage customers to win business. By contrast, B2B companies tend to view the world through a product and end market lens, with actionable customer insight on where and how to grow profitably often underdeveloped. This creates a big untapped opportunity to reignite growth in what are often slow growth markets.

By Randy DeGeer,

The Power of Portfolio Focus: The Chemical Sector

Arnie Lowenstein discusses the importance of portfolio strategy in executive suites and boardrooms. A fast changing world, shifting growth dynamics in key sectors of the economy and across regions, plus often conflicting views of value between management and investors place portfolio choices at the top of many management agendas.

By Arnie Lowenstein

Designing the Winning Portfolio: The New Economics of O&G Requires a New Approach

This article is an updated version of an article that was originally published in the December 2014 issue of Petroleum Economist. Many of our clients have expressed increased interest in an appropriate portfolio response to a lower price environment. The methodology and approach has been slightly adjusted due to the change in context.

By Neal Kissel

Strategic Transformation in European Food - Why and How

Times are tough in the European food sector, plagued by industry overcapacity, consumer price sensitivity, grocery price wars, and retailer pressure on manufacturers’ economics. But taking six practical steps will help food and drink manufacturers find a path back to value creation.

By Christine Delivanis

Leading Through The Oil Glut

One simple idea has driven Oil and Gas strategies for the last decade. Now, with the industry facing a supply glut, and expectations this will last for several years, it is time for a new approach. David Roxby discusses the options available, beyond cost cutting, and why some strategies work better than others.

By David Roxby

The Digital Wealth Management Imperative

Following the financial crisis, there is a wave of new startups that are trying to redefine or refresh traditional models of wealth management. Their services are priced to sell, and traditional firms have not been able to deliver the quality of customer experience of these startups. While some startups have been able to grow to a modest level relatively quickly, the question is whether they will be able to sustain this rapid pace of growth, and what more can traditional players do.

By Srini Venkateswaran

Redefining Winning in E&P

How do you run an E&P company to satisfy investor demands for stable returns, in an inherently risky and cyclical industry? New sources of supply make portfolio decisions and shape increasingly important. Neal Kissel discusses a new approach to winning in E&P through better portfolio strategy.

By Neal Kissel

Making Better Technology Investments in Oil Sands

Ramping up your investment in innovation and technology is a logical response to increasingly complex and marginal – but potentially huge - oil and gas projects. And the numbers confirm it: despite the recession, overall R&D spending by oil and companies has jumped by several billion dollars in the last 5 years as national oil companies and independents have piled in. Yet chief executives cite “making technology work” as one of the hardest challenges of the industry. In this article, we highlight what oil sands operators – as owners of the largest volumes of marginal barrels and growing investors in technology – are doing to improve their odds of success.

By David Roxby, Joanne McCollum

Smart Promotion Strategies will Grow Sales and Profits

De-escalating promotions in a time of continued economic uncertainty can feel counter-intuitive for many consumer product manufacturers. In the September 2014 edition of the Grocer, Christine Delivanis discusses the surprising benefits of this strategy in the condiments category.

By Christine Delivanis

Strategies For Branded Manufacturers As A Potential Price War In UK Grocery Unfolds

The UK grocery market has been undergoing a fundamental structural shift. Despite significant investments into online and convenience, the top supermarkets are struggling financially.

By Christine Delivanis

What Really Just Happened to the Future of Traditional UK Life Insurance Companies?

Four ways to help insurance companies thrive in the new paradigm.

By Neal Kissel

Entry Into Adjacent Products/Categories - Lessons from the Consumer Products Sector

In the ongoing search for growth, companies with a strong capability around entering adjacent businesses have a significant competitive advantage. However, the journey is often littered with countless pitfalls and risks. Based on numerous examples from a range of Consumer Products categories, Marakon identifies key challenges faced, lessons learned and implications.

By Christine Delivanis

Economic Profit Growth

Almost 35 years ago, Marakon pioneered the Economic Profit metric and linked it to a new strategic framework for managing the value of an enterprise.

By Neal Kissel

Building the Organizational Capabilities to Achieve Sustainable Organic Growth

Achieving sustainable and profitable organic growth requires more than new ideas, innovation, and strong execution. Rather, organic growth exemplars embed a set of institutional capabilities and a growth culture that define the organization and that are key enablers to realizing advantaged performance.

By Brian Burwell,

Managing Differentiated Commodities

Most industrial businesses are neither purely commodity nor fully differentiated, but are a combination of the two—in essence, differentiated commodities.

By Arnie Lowenstein

Increasing Price Without Increasing Price

New evidence that taking steps to move away from deep discounting to consumers can deliver tangible benefits to all parties involved.

By Christine Delivanis

Stop Leaving Money on the Table - Get More Value from Your Brand Portfolio!

Successfully managing a brand portfolio can unlock significant value but the process is complex. We identify best practice principles from interviews, experience and theory.

How to Build a Global Beer Brand

The conventional wisdom is that beer is a local business. Despite many attempts, only a select few beer brands have made a successful transition from local to global. The stakes are high as those that win are viewed as the crowning success in the portfolios of the world’s best brewers.

Structure Is Strategy — Gaining Strategic Advantage Through Organizational Design

Conventional wisdom suggests that it is critically important to decide the enterprise strategy first and then re-align the organization to deliver on it. Reality is quite different.

By Neal Kissel

Conserve, Capture, Create Value

Mergers and acquisitions do not have to destroy shareholder wealth, despite evidence to the contrary.

By Neal Kissel

Are Acquisition Multiples Too High?

Companies should not think about acquisitions in terms of pre-deal multiples, but through analysis of fundamentals. This in turn will create better post-deal strategies.

By Randy DeGeer, Jim McTaggart

Economics of Breakups - Conglomerate Discounts and Premiums

Top diversified companies command premium multiples and outperform their pure-play peers through overcoming four distinct disadvantages that diversified companies have vs. pure-plays.

By Ron Langford, Jim McTaggart

Portfolio Management - Managing Energy Industry Portfolios for Value

Long lead times and large capital commitments mean that in the energy sector, portfolio management requires a deeper consideration of tradeoffs between growth, risk and return.

By Ron Langford

The hunt for ‘holy grail’ of clean energy buried beneath the ground

This article from The Independent covers the new energy revolution and the pursuit of natural hydrogen. The article contains a diverse range of viewpoints, acknowledging the challenges and providing a quality discussion on the complexity of developing the resource.

The many faces of the chief strategy officer

The Chief Strategy Officer (CSO) is not the most common executive-level role, nor is it the best defined. Nonetheless, where it exists, the role is among the most valuable and influential in the C-suite, often acting as the CEO's right hand.

By Neal Kissel

The emerging strategic M&A play in private equity

In this article, Marakon’s Yassir Ahmed explores the potential for opportunistic M&A as the private equity industry adjusts to an era of higher interest rates.

By Yassir Ahmed

Is the insurance industry a barrier or facilitator of net zero?

In this article, Marakon’s Ofir Eyal outlines how the insurance sector can harness its unique capabilities to facilitate the low-carbon transition across the real economy.

By Ofir Eyal

SAF to be used in Singapore departing flights from 2026

In this article, Marakon’s Rod Davies shares his thoughts on Singapore’s commitment to mandate the use of Sustainable Aviation Fuel (SAF) for departing flights.

By Rod Davies

The big debate: are CEOs paid too much?

Executive compensation has become a focal point for growing stakeholder scrutiny, resurgent principal-agency problems, and general excess.

By Neal Kissel

Making the world go round - circular manufacturing

The circular economy, once a peripheral consideration for many businesses, is taking center stage in strategic planning due to shifts in the regulatory, consumer, and global business landscapes. A recently published article by Marakon’s Michael Yap and Joyce Kim challenges the traditional view of circular practices as limited and costly—exploring a longer-term horizon and strategic advantages it can offer. The article unpacks the strategic shifts necessary for transitioning from the traditional ‘take-make-waste’ model to one that is resilient and forward-thinking.