Case Study
5 min read
Why would an organization embark on a strategic cultural transformation when it had just achieved its best earnings in 90 years? Because the CEO knew market conditions would change and wanted to withstand it better than they had in the past. Founded in 1933, Finning International is the world’s largest Caterpillar dealer that sells, rents, and provides parts and service to customers in mining, construction, petroleum, forestry, and power systems applications. Their multinational business employs 15,000 people across the UK and Ireland, Western Canada, and South America (Argentina, Bolivia, Chile).
Despite recent success with share prices at unprecedented highs, Finning’s biggest challenge was a lack of agility, making them subject to market conditions due to not having a foundation of resiliency upon which to build. Because of their reactive stance and inability to get ahead of the curve, when markets turned, their stock dropped. Their lack of flexibility in managing the operational complexities of their diverse global markets during these downturns— like being caught with surplus inventory— caused them to be viewed as a cyclical company and valued as such. In light of the market’s caution in valuing Finning, they also struggled to realize gains when markets were in their favor, with more modest value growth across market cycles than some key competitors.
In late 2022, new CEO Kevin Parkes recognized the opportunity for change. Since he had come up through Finning’s ranks and understood its legacy mindset and culture, he saw the impacts of the fluctuating market. But he also understood that a major contributor to being unable to weather those ups and downs was the complexity that had clogged company operations.
“Our valuation as a company dislocated in [the last 10 years], so we needed to address that, ”says Parkes of the fact that the market wouldn’t sufficiently respond to their value add. “I wanted somebody that could come and help us rethink the company and reposition us to be a more resilient, comparative value creation company, which is more sustainable for our employees and for our shareholders.” Ultimately, he wanted to cultivate a leadership mindset of accountability.
But true transformation would require uniting leadership around a vision that simplified complexity and built resilience. “We’re a people business. We’re 15,000 people. We’re not a manufacturer, we’re not a technology company,” he explains. “Everything we do is through our people.”
Parkes hired JMW to help Finning shift its leadership culture and capability to a business built for stable growth and earnings in an unpredictable and highly cyclical market. The journey began when JMW brought together the company’s 40 top leaders to create a Strategic Leadership Group that would have ownership over their new strategy’s execution and delivery.
The goal was to transform the culture to align around accountability and performance through the lens of simplification. They needed a strategy for resilience that realized earnings growth through all parts of the cycle—essentially asking, “How do we make ourselves resilient from the topline and bottom line?” This meant shifting their mindset from being reactive—focusing on catching up and putting out fires only—to being proactive, efficient, and building for the future. Part of this commitment to resilience also included looking at business decisions from a cost takeout perspective, including how they managed capital and better management of how they ordered and held inventory. Equally important was growing the more resilient revenue streams, including expanding product support (maintenance, parts, warranty work) and building their power systems, used equipment, and rental businesses.
At Finning’s Investor Day in August of 2023, Parkes announced a series of commitments based on the exercises the new leadership team had gone through with JMW, declaring that Finning would now be a resilient business and asking the market to change their view of them. Then the market slowed. Demand and investments were reduced or delayed.
Suddenly Finning faced the first test that required them to put into practice the strategies they had been planning for—but which they hadn't yet implemented. They knew that if they didn't confront this challenge differently, the market would pull them down like it had in the past. It was finally time for leadership to accept their personal responsibility for the conditions and hold themselves accountable for actually changing course. They declared a 90-day intervention, during which they realigned themselves to their new strategy and took immediate action on being more conscious of spending money, utilizing aftermarket maintenance and service, and other simplified operational approaches. For example, they learned how to proactively stay closer to the line on inventory instead of reactively stocking up to have supply on hand “just in case.” They also learned how to take a more holistic approach to selling and maintaining both new and used equipment, which was another part of their improved inventory management.
By May of 2024 and the end of Q3, their performance turned around independent of the market, which hadn’t recovered at that point. While it took time and effort to get organized, leadership was empowered in knowing they could be the driving force behind change as they saw how their actions directly impacted outcomes.
After their turnaround, their newfound resiliency began to show up in their results. Finning transformed across all three geographies over18 months of working with JMW, demonstrating its capacity to be more agile when facing an economic downturn, delivering sustained positive performance through a highly uncertain market condition.
Parkes explains that most people “believe resilience to be recovery: getting up off the canvas after you’ve been knocked down,” something that Finning is still great at, he says. “But my view of resilience is you don’t get knocked down to begin with—because then you don’t get hurt.” Parkes says it’s about setting leadership up to be strong and stable rather than to win at all costs.
Ultimately, the company launched a new era of financial performance with big wins, including:
Additionally, some of the cultural impacts Finning experienced after working with JMW included:
Finning shifted its systems and mindset from complexity to simplicity, standing up one unified strategy across three markets and three leadership teams.
“If you came into our business today, it wouldn’t take you long before somebody would start to talk to you about resilience,” Parkes says. “That just wasn’t in our language. We were just ‘win at all costs, dominate, be strong.’ Now people talk about, ‘What’s the consequence of that? Is it going to stretch us too far? Can it withstand the downside of it all?’ We’re thinking about things differently.”
