ContractCo Case Study
Real Case Study: How a $3M manufacturing company underwent complete organizational transformation and evolved from an owner-dependent business to a sale-ready company in 6 months
View Complete TransformationReal Case Study: ContractCo
Complete organizational transformation of an electronics manufacturing company - from an owner-dependent business to a successful sale-ready company
About the Company
Company Profile
ContractCo - Electronics contract manufacturing firm in Colorado specializing in high-end custom jobs
🏢 25 employees
💰 Over $3M annual revenue
📅 25 years in business
Equipment & Facilities
Investment of $2M in advanced manufacturing equipment
Leading-edge equipment but underutilized
Rents office space (does not own real estate)
Customers & Market
Works with local tech companies, government contractors, and medical device companies
⚠️ 70% dependence on two major customers
Specializes in small-to-medium high-quality jobs
Management Team
William Montoya - Founder and CEO (25 years)
Katrina Fields - General Manager (from day one)
Therese Callahan - Business Development (one year)
Wilfred Kline - Operations Manager (12 years)
SWOT Analysis - Current State
🟢 Strengths
- Long-term, loyal customer base
- 25 years of market stability
- Low fixed expenses
- Flexible with customers - easy to work with
🔴 Weaknesses
- Outdated website with no leads
- Not leveraging satisfied customers for referrals
- Rare and informal internal communication
- Employees don't know vision and goals
- Too tactical management, not strategic
- Over-dependence on CEO and GM
🟡 Opportunities
- Improve organizational culture
- Increase work quality consistency
- Diversify customer base
- Add staff to key positions
- Create redundancy coverage for critical roles
- Complete ISO certification
🟠 Threats
- Improving quality of offshore manufacturers
- Too many employees retiring in next five years
- Competitors with higher process maturity
Risk Assessment & Mitigation
Comprehensive identification and management of business risks
🚨 High Priority Risks
Reputational Risk
Employee leaving on bad terms and ranting on social media
Strategy: ReduceLegal Risk
Product defect in medical industry causing significant issues
Strategy: Transfer (Insurance)Economic Risk
High employment and continued wage increases
Strategy: Accept & Monitor🔸 Medium Priority Risks
Cyber Attack Risk
Potential cybersecurity threats to operations
Strategy: ReduceCompliance Risk
Failure to achieve ISO certification
Strategy: AvoidKey Personnel Risk
Fred's illness requiring backup training
Strategy: ReduceRisk Management Framework
🚫 Avoid
Eliminate likelihood or impact through process changes
📉 Reduce
Minimize likelihood and severity through mitigation
✅ Accept
No action taken, organization accepts outcomes
🔄 Transfer
Shift responsibility through contracts or insurance
Communication Charter
Team agreements for productive collaboration and conflict resolution
🚫 "Below the Line" Behaviors to Avoid
- Side conversations during meetings
- Overly aggressive behavior
- Attempting to control others
- Appearance of favoritism
- Withholding important facts
- Overly emotional responses
- Not listening to others
- Grandstanding or overselling
- Making excuses instead of solutions
- Devaluing opinions based on experience
✅ "Above the Line" Behaviors to Foster
- One conversation at a time
- Respectful interaction, even when disagreeing
- Listening generously to all viewpoints
- Debating ideas, not attacking people
- Having fun and maintaining levity
- Checking phones only during breaks
- Supporting company objectives over individual goals
- Being fully present and engaged
- Preparing ahead of time for meetings
- Using "Ada" as codeword for course correction
Team Commitment
"When someone acts below the line, other team members will say 'Ada' to remind them to act above the line. We commit to fostering these positive behaviors to empower us to bring our best selves and perform at our highest collective level."
Detailed Workshop Outcomes
Workshop 1: Team Alignment
Key Outcomes:
- DISC Assessment: Identified team as primarily Dominators and Coordinators
- Communication Rules: Established "above/below the line" behaviors
- Project Name: Chose "Ada" after Ada Lovelace
- Decision Making: Agreed on consensus-building approach
Workshop 2: Vision & Culture
Key Outcomes:
- 5-Year Vision: "Go-to Colorado company for high-quality electronic manufacturing"
- Core Values: 5 values including "Satisfy and Delight Our Customers"
- Culture Statement: "Work and succeed as a team"
- Brand Promise: High quality, on-time, frictionless experience
Workshop 3: Strategic Advantage
Key Outcomes:
- Customer Segment: Small-to-medium volume custom electronics within 120 miles
- Value Proposition: Fast, flexible, quality, local manufacturing
- Differentiation: Speed, flexibility, quality vs offshore competitors
- Positioning: "Premier local partner for fast, high-quality solutions"
Workshop 4: Organization Diagnostic
Key Outcomes:
- PAVE Assessment: Evaluated all employees on Performance, Attitude, Values, Energy
- Business Gaps: Marketing, internal communication, planning
- Critical Success Factors: 5 CSFs with customer diversification as driving factor
- SWOT Analysis: Comprehensive strengths, weaknesses, opportunities, threats
Accountability Chart Development
Clear definition of roles and responsibilities across the organization
CEO - William Montoya
Key Accountabilities:
- New Equipment/Capital Purchases
- Risk Mitigation
- Strategy
- Profitability
- Management
- Facilities
Business Development - Therese Callahan
Key Accountabilities:
- Product Delivery
- Scheduling
- Order Entry
- Customer Service
- New Sales
- Quoting Turnkey Jobs
- Quoting Custom Jobs
Operations - Wilfred Kline
Key Accountabilities:
- Production Control
- Scheduling Production
- Programming Equipment
- Training
- Maintenance/Equipment Repair
- Production Supervision
General Management - Katrina Fields
Key Accountabilities:
- Material Management (Shipping, Receiving, Inventory, Purchasing)
- Quality Assurance (RMA, ISO, Quality)
- Accounting (Cost Accounting, AR/AP, Taxes, Payroll)
- Human Resources (Culture, Employee Development, Hiring)
Why StratPro?
The background and rationale for choosing the StratPro transformation process
🎯 Initial Situation
- William is an active TAB (The Alternative Board) member
- His facilitator identified ContractCo as great StratPro candidate
- William wants to sell business in next few years
- Katrina (second in command) talking about retiring
- Company highly dependent on William and Katrina
💡 The Opportunity
- Help William prepare ContractCo to be less owner-dependent
- Make company attractive to potential acquirers
- Transform from tactical to strategic management
- Build sustainable business systems and processes
- Create unified leadership team vision
⚡ The Challenge
- William initially resistant: "Why work on long-term vision if selling?"
- Price increase from $695 to $2,400/month caused hesitation
- Team skeptical about value of strategic planning
- Need to balance immediate operations with transformation
- Cultural issues requiring careful handling
PAVE Employee Assessment
Systematic evaluation of all employees using Performance, Attitude, Values, and Energy criteria
Assessment Criteria
🎯 Performance
How well does the employee execute their role responsibilities and deliver results?
🧠 Attitude
Does the employee maintain a positive, constructive approach to work and challenges?
❤️ Values
Does the employee embody and live the organization's core values daily?
⚡ Energy
Does the employee bring enthusiasm and drive that energizes others?
Assessment Challenges
⚠️ Initial Resistance
Team struggled to objectively assess employees - some tried to "protect friends" rather than evaluate professionally
📋 Incomplete Evaluations
Some assessments done without sufficient thought or professional approach
🔄 Course Correction
William emphasized: "You can't transform business without seriously evaluating staff"
✅ Resolution
Team agreed to recommend action plans for anyone scoring below 7 in any PAVE area
Brand Promise Development
Creating customer-facing promise that reflects organizational values
Brand Promise
"Our promise to our customers is that they will receive a high quality, on-time shipment of their custom orders, every time, at a fair price. ContractCo is a frictionless organization to do business with. Our customers are the reason we exist, and they will feel genuinely valued and appreciated in all interaction with a ContractCo employee. In the rare case where something goes wrong with an order, we will make it right and the customer will continue to believe they are working with the very best organization for their contract manufacturing orders."
How We're Different
🚀 Speed
Fast turn-around times that allow customers to meet changing demands from their customers
🤝 Flexibility
Adaptable when customers make mistakes or need specification changes
✅ Reliability
Confidence that products will work as designed, with consistent quality
🏠 Trust
Local presence - customers know the people making their products
Introductory Workshop Results
Initial assessment that revealed the need for transformation
StratPro Wheel Assessment
Team response: "Are we a 4 organization? Are we a 4 team? We need to perform at a much higher level."
Key Challenges Identified
Wilfred:
Culture is poor - too much gossip and pettiness between staff
Therese:
Inconsistent quality - fine for simple jobs, issues with complex work
Rick:
Business way too dependent on two large customers
Katrina:
Staffing too lean - not enough people to delegate to
William:
Worried about key roles when Katrina retires
Key Milestones in the Process
Initial Assessment
Score 4.16 out of 10 on StratPro Wheel
Team identified as struggling with strategic areas but good at execution
Team Composition Change
Removed Rick (accountant) from team due to lack of engagement
Smaller team became more active and productive
Key Goal Definition
SMART Goal: By end of 2021 - maximum 20% from one customer
At least 5 customers contributing 5%+ each
KPI Development
Distinction between lead and lag indicators
25% increase in quotes to 3 target customers
Execution Launch
7 sprints for first 90 days
Transition from planning to execution with monthly follow-up meetings
Team Testimonials Throughout the Process
— William Montoya, Founder and CEO"Exceeded my expectations. Feel optimistic about what the team can achieve."
— Katrina Fields, General Manager"Found the workshop 'exhilarating' to start working on these important issues."
— Rick Moneypenny, Accountant"Always rolled my eyes at these things but now see the importance."
— Therese Callahan, Business Development"Starting to feel like a different organization."
— Wilfred Kline, Operations Manager"This was a good use of our time."
— Management team on new strategies"Now this feels like transformation!"
Challenges Facing the Company
🎯 Over-dependence on Key Customers
70% of revenue comes from just two customers - high business risk
👥 Dependence on Key Managers
Business too dependent on founder and GM, problem for company sale
🏭 Poor Organizational Culture
Gossip and communication issues among employees
📈 Inconsistent Quality
Good quality on simple jobs, issues with complex work
📊 Lack of Strategic Goals
Business managed tactically without long-term vision and planning
🔧 Underutilized Equipment
$2M investment in advanced equipment not fully utilized
StratPro Process - 8 Transformative Workshops
1. Team Alignment Workshop
DISC Profiles: Identifying team communication styles
Results: Created communication rules, agreed on "above the line" and "below the line" behaviors
Project Name: "Ada" (after Ada Lovelace)
2. Vision & Culture Workshop
Clear organizational vision: Defining 5-year forward goals
Core values: 5 guiding values for the entire organization
Culture and brand promise: Defining how we communicate with customers and employees
3. Strategic Advantage Workshop
Unique value proposition: "ContractCo is your premier local partner for fast, high-quality, custom electronics contract manufacturing solutions"
Advantages over offshore competitors: speed, flexibility, quality, local manufacturing
4. Organization Diagnostic Workshop
Comprehensive SWOT analysis: Identifying strengths, weaknesses, opportunities and threats
PAVE employee assessment: Performance, Attitude, Values, Energy
Business diagnostic: Identifying gaps in marketing, internal communication and planning
5. Risk Assessment Workshop
Identified 15 key risks: Including reputation, legal, economic and cyber risks
Risk matrix: Ranked by likelihood and severity
Response strategies: Avoid, reduce, accept or transfer
6. Plan Development Workshop
SMART goals: Specific, measurable, achievable, relevant and time-bound
Detailed strategies: "Work buckets" to achieve each goal
Action plans: Concrete tasks with ownership and deadlines
7. KPI Workshop
Lead and lag indicators: Understanding the difference between results and activities
Physical scoreboard: Real-time weekly tracking
Setting baselines and targets: Accurate measurement of progress
8. Plan Execution Workshop
90-day sprints: Breaking plan into short-term goals
Communication plan: Updating entire organization on progress
Transition to execution: From planning meetings to follow-up and accountability meetings
Initial Results
Initial Score
Organization's initial performance score (out of 10)
Team Commitment
All team members committed to executing the plan
Core Values
Defined 5 clear core values for the organization
Plan Horizon
Years - time horizon for strategic plan
Customer Diversification
Goal: no more than 20% revenue from one customer
Sprints
Strategic tasks for execution in first 90 days
DISC Analysis of Management Team
Communication profiles of team members and their impact on work dynamics
Team DISC Wheel
89
79
74
84
42
89
86
70
91
71
61
Team Profiles
William Montoya - CEO
Style: Dominator - strong leader, fast decision maker, results-focused
Strengths: entrepreneurial, decisive, sees big picture
Katrina Fields - General Manager
Style: Developer - builds systems, wants to control quality
Challenge: can be condescending, struggles with delegation
Therese Callahan - Business Development
Style: Inspirational - inspiring, pleasant to work with, energetic
Strengths: industry knowledge, successful at winning new customers
Wilfred Kline - Operations Manager
Style: Coordinator - wants stability, struggles with confrontation
Strengths: excellent technician, respected by team, rich experience
Communication Insights
🔥 Main Challenge
Team primarily composed of Dominators and Coordinators - conflicting styles
💪 Improvement Areas
Balance passionate debate with fact-based discussion, keep emotions tempered
🎯 Team Commitments
Focus on decision outcomes, show up as people, have some fun at work
Organizational Vision Balance Wheel
Team scores on different aspects of vision (average from 4 team members)
Balance
Insights from the Wheel
🟢 High Scores
- Market Position (8.0) - strong position in local market
- Product Quality (7.5) - good product quality
- Brand Recognition (7.25) - brand recognition
🟡 Improvement Areas
- Financial Performance (6.25) - needs profitability improvement
- Growth (6.5) - slow growth rate
- Customer Service (6.75) - customer service
Vision and Values Created
Organizational Vision (5 Years)
"ContractCo is the go-to Colorado company for high-quality electronic contract manufacturing solutions. By fostering a positive culture where employees feel valued and work as a team, we delight our customers by producing the best quality products and provide the best service. We utilize leading-edge (not bleeding edge) equipment to deliver cost-effective, customized solutions on time, every time."
"ContractCo's ISO 9001 certification gives their customers high confidence in their work. ContractCo is superior to other local competitors due to consistency of product, on-time deliveries and commitment of staff."
5 Core Values
🎯 Satisfy and Delight Our Customers
⭐ Whatever We Do, Do It Best
💪 Embrace Challenges with Optimism
🛡️ Safety and Cleanliness Always
🎉 Work Hard. Have Fun.
Culture Statement
"At ContractCo we work and succeed as a team. We are passionate about the success of our customers, our employees and ContractCo. We support each other and have a shared sense of urgency. Our relentless attention to quality produces high-quality products that we are proud to produce. We respect each other and our communication is always positive and constructive."
"In our business, our most important assets go home every night. Great ideas can come from anywhere. ContractCo is a business where people would want to work and be their best selves."
Strategic Plan
Critical Success Factors (CSFs)
🚀 Driving Success Factor (DCSF)
Create and implement sales program to significantly diversify customer base
📈 "Quantum leap" in quality
🏢 Organizational changes to prepare for business exit
❤️ Build culture where employees love coming to work
⚙️ Develop systems and processes to increase efficiency and profitability
Main Strategic Goal
🎯 Customer Base Diversification
By December 31, 2021, ContractCo will earn no more than 20% of topline revenue from a single customer. ContractCo will have at least 5 customers that contribute at least 5% of topline revenue each.
Owner: Therese Callahan
Execution Strategies
🔄 Convert 3 existing customers to premiere customers
🆕 Acquire at least 2 new customers who will become premiere customers
❌ Eliminate low profit jobs from current premiere customers
📊 Only perform jobs with at least 54% gross profit from non-premiere customers
Key Performance Indicators (KPIs)
Lag Indicators (Results)
💰 Gross Revenue
Goal: 10% annual growth
📈 Gross Margin
Goal: 10% improvement first year, 5% subsequent years
🔄 Customer Return Rate
Work quality indicator
⏰ On-time Delivery
Customer service indicator
🎯 Customer Diversification
Maximum 20% from one customer, minimum 5 customers at 5%+
Lead Indicators (Activities)
📋 Number of Quotes
25% annual increase to 3 target customers
📞 Meetings with Potential Customers
🔍 Internal Quality Assessments
📚 Employee Training Hours
🏆 Scoreboard
Large physical scoreboard in manufacturing area, updated every Friday with current data. Includes visual graphs and charts to track progress toward goals.
First 90 Days Plan
7 strategic sprints for immediate plan implementation:
📊 Establish Premiere Customer Criteria
Owner: Therese | Due: End of March
🔍 Evaluate and Identify 10-15 Candidate Customers
Owner: Therese | Due: April 30
🎯 Develop Strategy for Top 5 Premiere Customers
Owner: Therese | Due: May 31
🌐 Website Update
Owner: William | Due: 60 days
📈 Establish Basic KPI Tracking System
Owner: Katrina | Due: 45 days
👥 All-Staff Meeting to Announce Vision and Plan
Owner: William | Due: 30 days
🏆 Setup Physical Scoreboard
Owner: Therese | Due: 75 days
Challenges During the Process
Not everything was smooth - real challenges and how they were resolved
Initial Resistance
Challenge: William was skeptical initially - "If I'm selling the business, why work on long-term vision?"
Solution: Explanation that owner-dependent businesses aren't attractive to buyers. Need to build a business that can function without the owner.
Price Shock
Challenge: Jump from $695 to $2,400 per month caused William to question the value of the process.
Solution: Explanation of urgency and importance + month-to-month approach without long-term commitment.
Team Member Removal
Challenge: Rick (accountant) wasn't engaged, showed cynical attitude and didn't contribute to strategic discussions.
Solution: William decided to remove him from the process. Result: smaller but much more active and committed team.
PAVE Assessment Difficulty
Challenge: Team struggled to objectively assess employees. Started defending "friends".
Solution: William emphasized that you can't change business without truly assessing the team. This was a tough but necessary discussion.
Excessive Pre-work Load
Challenge: Organizational diagnostic workshop had too much pre-work, team complained.
Solution: Facilitator reduced pre-work in subsequent workshops and focused on collaborative work in sessions.
Impatience for Action
Challenge: Wilfred asked "when will we start taking action?" - wanted less planning, more execution.
Solution: Explanation that rushing to action can be counterproductive. Also identified immediate actions they could take (website, staff meeting).
Transition to Execution & Accountability
How the transition from planning to execution looked in practice
📅 E&A (Execution & Accountability) Meetings
🎯 Focus
High performance and accountability culture
⏰ Frequency
First meeting in one week, then monthly
📋 Agenda
- Track commitments from previous meeting
- Review sprint progress
- Identify obstacles and solutions
- New commitments for next meeting
🚀 Organizational Communication Plan
🎉 Launch Meeting
All-staff meeting + social event to announce vision and plan
📈 Monthly Updates
Monthly all-staff meeting with progress report
💰 Link to Profits
Integrate KPI achievement into quarterly profit-sharing system
💡 Encourage Suggestions
Openness to team ideas - not just tactical suggestions but also strategic improvements
📊 Tracking and Control System
📅 90-Day Sprints
Starting with 7 sprints balanced among team members
🎯 Tracked Tasks
Each task with owner, target date and success metric
🚫 Anti-Distraction Discipline
Commitment not to take urgent tasks instead of important ones
👥 Katrina as Execution Manager
Responsible for maintaining focus and organization of sprints
Key Insights from the Process
Real Transformation Takes Time
The Message: William wanted quick solutions. The facilitator explained that problems that developed over 25 years won't be solved in a few workshops.
Reality: The plan will take several years. Workshops provide plan and strategies - but success depends on consistent execution.
Lesson: "Good plans fail due to poor execution" - requires discipline and focus.
Team Composition Critical to Success
Reality: Not every manager is suitable for strategic team. Rick wasn't engaged and didn't contribute.
Decision: William removed him from the process - and this dramatically improved dynamics.
Lesson: StratPro is about "transformation" - need people who can think strategically, not just manage tactically.
Transition from Tactical to Strategic
Starting Point: Score 4.16 out of 10 - good at execution, weak on strategy.
Insight: "Are we a 4 organization? Are we a 4 team?" - this motivated them to change.
Turning Point: When they developed new strategies, someone said "now this feels like transformation!"
Importance of Preparing Business for Sale
Original Problem: Business too dependent on William and Katrina.
Goal: Create business that can function without owner - more attractive to buyers.
Value: Difference between 2-4x revenue (owner-dependent) vs 4-7x revenue (independent business).
What We Learned from ContractCo
✅ What to Do
- Invest in the Right Team - ensure all team members are suitable for strategic work
- Transparent Communication - William was transparent with team and all employees
- Focus on Execution - planning is just preparation, success depends on execution
- Set Clear Metrics - lead and lag KPIs with weekly tracking
- Give Process Time - real transformation takes time
- Show Willingness for Tough Changes - like removing unsuitable team members
❌ What to Avoid
- Don't Rush to Action - thorough planning saves problems later
- Don't Protect Team Friends - objective assessment is essential
- Don't Resist Investment - StratPro pricing reflects value
- Don't Overload Pre-work - can discourage team participation
- Don't Give Up Discipline - temptation to switch to urgent vs important tasks
- Don't Underestimate Communication - team needs to understand and support vision
Investment & ROI
💰 Investment Breakdown
Month-to-month commitment - no long-term lock-in
Can discontinue if not achieving goals
📈 Value Created
🎯 Strategic Clarity
Clear 3-year vision, defined goals, and actionable strategies replacing tactical day-to-day management
🏢 Sale Readiness
Transformed from owner-dependent to independent business, dramatically increasing sale value
👥 Team Alignment
Unified leadership team with clear communication protocols and shared accountability
📊 Performance Systems
KPI tracking, scoreboard visibility, and execution accountability framework
🚀 ROI Calculation
Potential Value Increase: $3M - $9M
ROI: 15,000% - 45,000%
Transformation Summary
Before vs After
🔴 Before Transformation
- Score 4.16/10 on strategic capabilities
- 70% revenue dependence on 2 customers
- Owner-dependent operations
- Poor internal communication
- No clear vision or strategic plan
- Tactical day-to-day management
- Team communication issues
🟢 After Transformation
- Clear 3-year strategic vision
- Defined path to customer diversification
- Sale-ready business structure
- Aligned leadership team
- Established KPI tracking system
- Regular communication cadence
- Execution accountability framework
Key Success Factors
🎯 Strategic Focus
Moved from tactical firefighting to strategic execution with clear priorities
👥 Team Alignment
Created unified leadership team with shared vision and communication protocols
📊 Performance Management
Implemented KPI tracking with lead/lag indicators and visible scoreboard
🚀 Execution Framework
90-day sprints with accountability meetings and progress tracking