I broadly summarise my business development work in three categories: startups, growing healthy businesses and turnarounds. The latter is by far the most complex and challenging of the three.
With startups and growth programmes everyone is properly and positively focused on achieving success. In a broken organisation this is not the case. The universal truth is that every single person in such organisations played a part in its decline, sometimes actively and misguidedly, sometimes entirely innocently. Everyone will need to participate in change which, for all sorts of reasons, is easier said than done.
The broken business is easily identified by poor financial results. Some consultants address this with cost-cutting programmes and job losses, with a loose belief that survivors will sharpen up. It typically makes the few good people leave. I’ve picked up companies after this has happened and while it might have achieved a short term improvement in figures, it made the real unaddressed problems worse and harder to solve.
One needs to understand why the numbers got bad. People and process failures caused it so one must look at those for the solution. Another manifestation of the problem is often a dilapidated working environment, which amplifies the discontent of the people inside and outside the company. The most important outsiders are, of course, customers. When things look like nobody cares, it suggests the organisation doesn’t care, which informs the customer about service levels. This is toxic.
Somehow, out of this mess, I need to find ways to pull the company back into a healthy position that resembles the structures and processes outlined in my startup and growth scenarios. The starting point is to quantify and qualify the current position and set out a vision for where we need to go: smart, positive, profitable. The transition will need funding so I will calculate the requirement and find the ways to access capital – sometimes through restructuring the balance sheet, sometimes through loans or new capital. This needs to make commercial sense – the risk/reward needs to stack up. If it doesn’t, the doors will need to close. I set out the options for the Board to decide.
I am not instinctively a hatchet kind of guy. I enjoy the potential of people. No one person causes a company to fail. Although the buck stops with the Board and shareholders, I know they don’t wake in the morning to lose their own money. However “something” went wrong in leadership as well as throughout the organisation. Supporting the Board is the fundamental purpose of a chairman. Together we set out a plan, and I make sure this is easy to convey to the staff. I take part in this: it is the first evidence of change, a new face amongst the Board. We must now encourage everyone’s engagement.
Here is a simple mantra: if you can’t change the people, change the people. Whilst that contains a veiled threat the first part is a commitment to developing the incumbents. Fair opportunity and support will be given to evolve. Developing existing personnel is a more cost-effective, not to mention happier, outcome than the distraction and drain of widespread recruitment activity. I have some lovely stories about people who woke up, smelled the coffee and went on to achieve great things once their mojo was in order.
However, I have been doing this for long enough to quickly identify people who are blockers rather than enablers and with a Board that’s intent on fixing the business those people’s employment will be at risk if their behaviour jeopardises the plan and everyone else’s livelihoods. In the early 90s I earned the nickname ‘Bushfire’ from the survivors of an organisation that had an unhealthy number of blockers – it was a spectacular turnaround.
Turnarounds throw up all kinds of curve balls, they are never straightforward. I have dealt with legacy computer systems that aren’t fit for purpose, the after-effects of marketing and investment droughts, irregularities in records, even frauds. Some characters seek to sabotage the mission or move to protect their ‘piece of empire’ in devious ways which can slow the process but it’s important to maintain focus on the goal and deal with the hurdles as they arise. Provided there’s sufficient capital and Board motivation, the company will come good.
If you would like to discuss your business in confidence, please contact me.