I have taken part in several business turnarounds in my
career, and time and again I noticed the same problems. Here are the nine steps
that need to happen during any major business adjustment and some of the
pitfalls to avoid along the way.
1. Assess the situation.
Before a successful business
turnaround can be implemented, it is crucial to understand what got the company
into its current perilous position. Does the problem arise from falling sales?
Price problems? Spiralling costs? Falling productivity? Failure to understand
the company metrics? Rising debt?
2. Hire consultants.
Those who created the problem in the
first place will not know how to fix it. Business owners develop the “sweaty
palm” syndrome whereby they are just too close to the problem, take personal
responsibility for it and shrink from the tough decisions. An independent
review and action plan will improve the chances of a successful turnaround.
Consultants are paid to make the touch decisions.
3. Develop a strategic plan.
Once a turnaround-management
team has defined the core values, culture, and vision of the future, effective
strategic planning can begin. The process should include the top management
members who will be charged with implementing the plan. The planning sessions
should not be held in secrecy. Planning groups are only the sum of 5 or 6
brains. Harnessing the power of the entire company paves the way to better
success rates. Powerful companies have solid strategic plans, and they effectively
recruit employee buy-in.
4. Know your core values.
At the heart of a turnaround
culture are the core values a company embraces. Core values are like the Ten
Commandments. They are simple action statements that define the principles the
company believes. They should be published and posted throughout the company.
Employees should understand the corporate commitment to them, and their role in
making the values happen.
