
Looxent led a turnaround and corporate value enhancement project for a technology-intensive company that became the world’s third to develop industrial diamonds using domestic technology. For five years starting in 2000, the company achieved exceptional operating profit margins uncommon in traditional manufacturing industries. However, the emergence of low-cost industrial diamonds from Chinese competitors caused a rapid decline in profitability, leading to losses within just 1–2 years. The company’s operating margin, which once exceeded 25%, plummeted to -10%, creating an urgent need for new solutions. The primary objective was to overcome the deficit and prepare for further market deterioration by achieving financial improvements.
A Turnaround Team Comprising a New CEO, Expert Consultants, and Internal Talent
A new CEO took the helm, and Looxent consultants joined as external experts to drive the turnaround. Key internal talent was selected to form a company-wide operational innovation team under the CEO’s leadership.
In the diamond materials industry, success depends on various advanced technologies: the formulation of mixtures like graphite and catalysts, equipment for high-temperature and high-pressure synthesis, auxiliary material processing, diamond recovery and grading, and expertise in balancing quality and cost. The synthesis process generates diamonds of varying grades, and low-grade inventory accumulation erodes profitability. While this was manageable in a high-margin environment, it became a critical issue in the low-margin context, requiring significant improvement.
Comprehensive Improvements Across All Cost Drivers
The project identified and implemented improvements in all areas, including:
- Reducing costs for raw materials, equipment, and consumables.
- Enhancing diamond synthesis yields to increase value-added output per unit time.
- Improving productivity to boost contribution margins.
- Optimizing work processes to reduce workforce and material losses.
- Refining recovery processes to increase diamond recovery rates.
- Selling obsolete materials to reclaim value.
For example, improving diamond synthesis yield involved optimizing high-temperature and high-pressure profiles to accelerate diamond formation. This enabled significant production increases without additional time, labor, or energy.
Achieving a 20% Margin Improvement and Positive Turnaround
Through company-wide operational innovations involving all employees, the company executed these improvements, transforming its operating margin from -10% to 10% within a year. Executives and employees worked tirelessly, dedicating themselves to a structured, high-level approach. The leadership of the project champion and their commitment to leading by example played a pivotal role in the project’s success.
Key Outcomes
- Turning a deficit into profitability in a short timeframe: Collective effort enabled the company to recover from losses and achieve sustainable profits.
- Fostering a culture of ownership and accountability: Employees were empowered to propose and execute ideas, fostering a sense of responsibility.
- Enhancing operational capabilities and resilience: Systematic participation in innovation activities improved overall operational efficiency and instilled confidence in navigating future challenges.
Even after the project, the company successfully navigated subsequent crises, such as financial downturns, maintaining high profitability and leveraging the skills and confidence gained from the turnaround initiative.
Looxent led a turnaround and corporate value enhancement project for a technology-intensive company that became the world’s third to develop industrial diamonds using domestic technology. For five years starting in 2000, the company achieved exceptional operating profit margins uncommon in traditional manufacturing industries. However, the emergence of low-cost industrial diamonds from Chinese competitors caused a rapid decline in profitability, leading to losses within just 1–2 years. The company’s operating margin, which once exceeded 25%, plummeted to -10%, creating an urgent need for new solutions. The primary objective was to overcome the deficit and prepare for further market deterioration by achieving financial improvements.
A Turnaround Team Comprising a New CEO, Expert Consultants, and Internal Talent
A new CEO took the helm, and Looxent consultants joined as external experts to drive the turnaround. Key internal talent was selected to form a company-wide operational innovation team under the CEO’s leadership.
In the diamond materials industry, success depends on various advanced technologies: the formulation of mixtures like graphite and catalysts, equipment for high-temperature and high-pressure synthesis, auxiliary material processing, diamond recovery and grading, and expertise in balancing quality and cost. The synthesis process generates diamonds of varying grades, and low-grade inventory accumulation erodes profitability. While this was manageable in a high-margin environment, it became a critical issue in the low-margin context, requiring significant improvement.
Comprehensive Improvements Across All Cost Drivers
The project identified and implemented improvements in all areas, including:
For example, improving diamond synthesis yield involved optimizing high-temperature and high-pressure profiles to accelerate diamond formation. This enabled significant production increases without additional time, labor, or energy.
Achieving a 20% Margin Improvement and Positive Turnaround
Through company-wide operational innovations involving all employees, the company executed these improvements, transforming its operating margin from -10% to 10% within a year. Executives and employees worked tirelessly, dedicating themselves to a structured, high-level approach. The leadership of the project champion and their commitment to leading by example played a pivotal role in the project’s success.
Key Outcomes
Even after the project, the company successfully navigated subsequent crises, such as financial downturns, maintaining high profitability and leveraging the skills and confidence gained from the turnaround initiative.