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.