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Between January 2014 and January 2019, companies included in the ASX 200 index achieved an average total shareholder return (TSR) of 32 per cent. However, a group of eight leading companies managed to significantly outperform their peers, delivering almost seven times the returns – meeting Australia’s transformation champions.
For insight into what large Australian companies are doing differently and better to compete with their peers, consulting firms Innosight and Inventium team up to conduct ‘Australia’s Transformation Champions’ study. The research sought to identify those companies that have achieved exceptional and sustained growth beyond their peers and then uncover the ingredients behind their success recipe.
An analysis of Australia’s 200 largest listed companies shows that in an era of digital disruption, it is possible for any player – a digital entrant or even a legacy company in a seemingly stagnant market – to outperform the market. A solid strategy is the key: all the outperformers have been able to turn disruption from a threat into an opportunity for growth.
“In doing so, these firms did not make one big monolithic change, but instead created excess returns by simultaneously reinventing their core business while simultaneously creating successful new growth engines to serve new markets. This is not the incremental change often attributed to transformation, but a real change in the substance or form of the transformation. A caterpillar has become a butterfly,” said Scott Anthony, senior partner at Innosight and one of the lead authors.
The survey looked at three main dimensions. First, companies were analyzed from a financial perspective, using revenue growth and stock performance as key performance indicators. A more qualitative analysis was then conducted to clarify the extent to which the companies were successful in repositioning their core business and the extent to which they were successful in developing meaningful new business.
Based on a benchmark of Australian public companies, eight players were found to significantly outperform their ASX 200 peers. These are:
Aristocrat
Established: 1953
Industry: Gambling and Casinos
Headquarters: North Ryde, New South Wales
The slot machine provider and casino manager branched out into the growing social and digital gaming market.
Caltex
Founded: 1900
Industry: Oil and energy
Headquarters: Sydney, New South Wales
The company, which has traditionally focused on fuel refining, is now pursuing a retail strategy including a cafe with outlets that are not necessarily connected to gas stations.
Downer EDI
Founded: 1933
Industry: Construction
Headquarters: North Ryde, New South Wales
Mining and Engineering Services has acquired facilities management company Spotless to diversify its offering and secure its place in the integrated facilities management market.
Aurora
Established: 2013
Industry: Packaging
Headquarters: Hawthorn, Victoria
This packaging company has entered the new market of visual communication solutions and provides end-to-end services from creative solutions to the point of distribution.
Qantas
Founded: 1920
Industry: Aviation
Headquarters: Mascot, New South Wales
The national carrier has deftly mitigated its risks by turning Qantas Loyalty, its loyalty and business rewards program, into a cash-generating machine.
REA Group
Established: 1995
Industry: Online media
Headquarters: Richmond, Victoria
The leading residential real estate portal has expanded its scope beyond advertising by launching a portal through which it can offer aligned products such as financial services, home loans and lifestyle content.
Search
Established: 1997
Industry: Online media
Headquarters: Melbourne, Victoria
This global online job market has expanded its scope to not only offer a job search function but also provide educational services.
Webjet
Established: 1998
Industry: Travel and tourism
Headquarters: Melbourne, Victoria
The online travel agency (OTA) has transformed from a consumer-focused business to a B2B offering by providing hotel room aggregation and brokerage services to other OTAs.
It is noteworthy that the group of transformation leaders is quite diverse. The largest company, Caltex, has revenues of over $21 billion, more than 25 times the size of the smallest player, REA Group. And while Webjet is only 21 years old, Orora is 159 years old. In addition, there is a mix of product-oriented and service-oriented offerings in both B2B and B2C markets.
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