Turnarounds and Change - A Reality Check
by Rick Sidorowicz

Turnaround situations are usually characterized by a heightened, life-threatening urgency where the survival of the business is at stake. In principle, the decisive actions needed in a turnaround are the same as in any organization change, re-engineering, or development effort. The difference is in the time frame - the consequences of the impending disaster are clear and visible. Think - emergency maneuvers! Complacency is a formidable enemy. Whatever must be done, must be done fast.

The heightened sense of urgency helps focus attention on the key interventions necessary and cuts through the clutter. Here are a few considerations from readings, conversations, and personal experience.

Know what you’re getting into.

Clarify with owners, bankers, (and yourself) that your role in this effort is to effect dramatic and radical change. They (and you) must be prepared for what usually is a bloodletting. The business is in serious trouble because of the way it is doing business. And most often the fundamental problems with the business are the people that are running the business.

Is this realistically achievable?

Is there a market large enough to sustain this business? Talk to customers - use the 80/20 rule and get to the most important segments fast. What’s working? What’s not working? Are there customer segments we’ve overlooked or abandoned? Do a quick market and competitive assessment and determine - to the best of your limited information to this point - whether there is value than can be recreated. If not - in light of the impending consequences - tell the truth, call a spade a spade - and put the business to bed. (At least you’ll find out what the stakeholders will live with.)

Identify quickly who has to go.

You should be prepared to jettison most if not all of the senior executives in short order. They have been the stewards of the business to this point and need to be sidelined quickly. There are exceptions; however, treat these as exceptions and not the rule. Contract selectively for the expertise needed for a smooth transition and be honest, forthright, and fair in the divorce. (But they’ve got to get out of the way.)

Identify all of the blockages.

Use the loyalty and competence test for middle management and other key positions. Remove those who are more loyal than competent as they will ultimately be disruptive. When truth dies bad things happen. Bad things have happened. So keep those that tell the truth and immediately line up to get on with the recovery. Follow the path of the cronies back to the source for added info. (Also look for inflated salaries vis a vis market and the special individualized perks.) The ‘blockages’ will also most often reveal themselves to you very quickly due to their fundamental nature. Use the “look good/do good” test often. Is the main objective of this person, department, function etc. to look good (in the know, in control) or to do good (work ethics, character and service to customers.) Things don’t look so good - so just keep the ones that have the courage to do what’s right.

Tell the truth and communicate often.

The best source of information, other than the leased cars and private parking spots, are the front line, shop floor, and ‘little people.’ (Little only in terms of the past structure.) Individuals, groups, teams and departments know who’s not carrying their weight and they experience the blockages. Tell them the whole truth, for these are the individuals who will have to bear down and do the turnaround work. Invite them to become deeply involved going forward. Enlist their competence and commitment to their firm and ... walk the talk - share the news and communicate often, especially about where the business is heading and what is needed to be done.

Make the people changes quickly.

Get on with selective recruiting of the new team. Nothing of substance can happen until the new team is on board and a new business strategy formulated and shared.

Develop a brand new game plan.

More of the same won’t work. Working harder and faster at the same stuff is just going to shorten the time to crash and burn. You need a simple, clear, new strategy that is realistic and achievable in short order. And absolutely everyone must know and understand it. If the new game plan makes ‘sense’ and is articulated clearly, all of the real ‘value-adders’ (workers) will come on side very quickly.

Deal with resistance.

If you’ve acted decisively up to this point and treated people with dignity and respect, told the truth, and have a reasonably sound new game plan, the remaining resistance will be more of a ‘cultural’ complacency re-surfacing. The solution - attack the physical and structural elements head on to change the ‘look’ and ‘feel’ of how we will operate going forward.

Be courageous.

To lead a turnaround you must instill courage and self confidence in the troops, and the only way to do this effectively is to be courageous. And if integrity, realistic expectations, and treating all individuals with respect and dignity are fundamental elements of your turnaround strategy, the troops will rise to the occasion.

Rick Sidorowicz is the Publisher and Editor of The CEO Refresher and
the Minister of Culture of High Performance Retail.

Many more articles in Leading Change in The CEO Refresher Archives


Copyright 1998 by Rick Sidorowicz. All rights reserved.

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