The Art of Business Turn Round
Many senior managers and C-suite execs will have experienced or viewed from a distance the turmoil of a company that is grappling with the intricacies of successfully turning around a business. There are certain professionals that, like firefighters, are willing to run towards the burning building rather then escape the flames. These individuals are highly tuned to the warning signs and pitfalls that can beset the best laid intentions of a management team in the recovery of their business.
The complexity of a turn round exercise is bourn from the different elements that make up the factors of why the business needs a turn round plan in the first place and it is the devil in the detail of these elements that are the key to the overall outcome of the effort.
Assessing the composition of the business, while the turmoil of the circumstances surrounding why the turn round is necessary will enviably cloud the judgment of the existing C-suite and management team, and the more close to the heritage of the company, (like founders and owners and stakeholders with a hand in the current operation) the harder it is to make decisions dispassionately. This reason alone is why external turn round assistance is so important.
The Emotional Assessment
Whoever leads the project to affect the turn round of a business is generally not going to be well liked during and after the exercise, as tough decisions like redundancy, closures, demotions, and cutbacks have to be made which generally doesn’t increase one’s Christmas card tally. It is also a stark fact that on analysis, you could even call it hindsight, it will be relatively straightforward to spot where the train came off the tracks and who was in the cab at the time.
It’s important to understand that this is not a high level version of some blame game, it’s the expert analysis of the patients MRI scan, vital to determine what parts are not working right, how they have been connected and what treatment would best serve the speedy recovery of the patient. This is never pleasant and has the risk of a closing of ranks so that the real truth will never be outed.
The turn round professional will also have to be able to spot the red herrings, some of which are laid to protect the individuals that made the decisions from incrimination, and some are genuine attempts to quantify why a particular event or events happen which led to the start of the issue, but will be coloured by the decisions made and unwittingly skewed to come to a conclusion. A good example of this is highlighted in the Film “Sulley”, which portrays the crash landing of an aircraft on the river Hudson after both engines failed on take-off. The NTSB (National Transport Safety Bureau) of the US had experienced pilots rerun the options for a safe return to an airport, sighting that Captain Sulley made the wrong call. The gotcha moment in the film for me was when Captain Sulley asked the NTSB representatives how many attempts the seasoned pilots had taken before they landed back at an airport safely. The response was 19 times.
The point here is that even with all the background data available from an aircraft crash investigation, no one thought about this scenario, even though it was the most critical of the decisions made that resulted in every passenger surviving.
The Spyglass of Success
In getting into the detail of how the business is operating, the processes used throughout the front and back office will be examined in detail and those that are well formed and working in the right direction are validated. One of the best ways of doing this is observing the process at work, usually still being used to keep the product or service moving through the stages of raw material to sale. The processes that are seen as being efficient and cost effective can be put to one side while those that are observed to be difficult, highly dependent on variables or intervention are the ones selected for closer scrutiny. This blog isn’t going to deep dive into all the tools and tricks that then are exercised on these processes, as each product and service will need different parameters to be considered, however, the simplest acid test is to look at similar processes used in the same industry or competitors and ask the question, “why do we have to do this differently”. It may be your USP (Unique Selling Point) in which case hold that thought, as it might be the spark required to restart the turn -around, or it might be one of the important factors why the business is in decline.
One of the last things to be considered by the current management in a business turn round is the technology employed as part of the process. There are many factors why this is, from the excuse of “its keeping the business running don’t touch it” to “it will cost too much, or we don’t have enough time to change.”
Complacency in what technology can contribute in a turn-around exercise is sadly too common in most CxO’s and senior business managers thought process. Some of this reluctance is the management team squaring the circle of how do you improve the use of technology if we don’t have a budget or time allocated to do this. A sense of having to go through a major selection exercise to verify the tool or strategy will benefit the business slows down technology’s place in the turn round. It should be relatively easy to get the verification that is important in a selection, but must be tempered with the need for urgency in putting the new technology to use if it can change the dynamic in the way the business operates.
The C-suite Mindset
I have left the most important aspect of a turnaround activity until last, as without this element the exercise is doomed from the start. This aspect is Attitude.
C-level and management teams need to quickly evaluate the attitudinal position of each member of the team and form what’s sometime referred to as “tiger team”, a high energy, expert team with IP (Intellectual Property) in what the company does, how the product or service is delivered and how clients are supported. Any turn round professional will want to assemble this team as quickly as possible and will become dependant on the information and expertise given throughout the project by these people. The attitude of the team, which is usually giving instructions, needs to be able to understand that they will now be taking instructions, and timescales and deliverables will be expected by the turn around professional from this team.
The attitude of the owners or founders and major stakeholders must also change rapidly, as some of the decisions that will be offered by the turn round team may be completely opposite the direction that these individuals have been moving in for some time. It also may remove or make redundant some of the decisions and benefits that these stakeholders have agreed and made or received. It is human to expect that with some much emotional, physical and financial investment they will be reluctant to accept even the most rationally proposed ideas and decisions in order to save the business.
The greatest risk to the failure of a turnaround is this group of people only acquiescing to idea of radical change at a point that the business is too close to the cliff edge for the plan to make a difference. But to get it right, normally sees a rebirth of the original enthusiasm that drove the business to its successful highpoints, but this time with a healthy awareness of where the pitfalls may be.