First step of any turnaround endeavor, the management team must determine if the company is able to strive and grow after the turnaround is successfully completed. Is there a growing market that the core products and services can regain and sustain profitability? Does the company have the key skill sets and core competencies to innovate in the new or existing growing marketplace?
There are many different details on why a distressed company finds them self in trouble. One common issue is that the company is spending more than they are generating. Financial stability is often impacted by loss of focus on execution and developing the right products or services. Company leadership within a turnaround must look at there spend and determine what programs need to be terminated. This cost cutting exercise is a must, but be careful on how you do it.
My number 1 objective during a turnaround is to control cost and never impact innovation, which is the key lever to growth. Here are 5 actions to growing the business during a turnaround:
- Financial Modeling and Measurement: It is absolutely critical to visit the cost structure of the organization and define a cost model that allows the organization to be measured for performance. Simplify the cost model and be consistent in your measurements. It is critical to have a consistent score card throughout your turnaround in order to see success.
- Process Simplification: Study your processes and recognize the complex areas that need to be changed. Champion teams and empower them to rethink the way the operation is executing today. Define a framework of how management wants the organization to operate, and allow your change agents to define the "how". Develop Functional Process Groups (FPG) to lead this effort and to maintain continuous process improvement efforts.
- Lean the Execution Structute: Flatten down the organization, and remove the hierarchical silos within your organization. Teach the organization to be lean and to leverage teamwork to execute more efficiently. Hold the organization accountable to commitments and empower the organization with a clear vision and strategy from the management. Inefficiencies are created within the layers, so reduce them and remove your teams roadblocks to success.
- Focus on Operational Excellence: Define the critical activities that are customer committed and establish a focus on execution by assigning these tasks to upcoming leaders within the organization. Focus 80% of your organization on the turnaround and focus 20% of the top talents and industry experts on innovation. Allow the innovation teams to not get dragged into the turnaround and empower them to focus on standardizing platforms and rapid prototyping of products and/or services. Stop the bleeding while setting up the future.
- Develop Human Capital: Focus on developing the core competencies and leadership within your organization. Remove the resources who are a non-fit, and mentor your junior talent. Empower your top talents and industry experts to help with the turnaround and growth. Focus on what is core to your business and leverage outside help for non-core needs. Streamline your operations for flexibility and growth.
In turnarounds that I have lead, these 5 critical actions are the basis of keeping the innovation engine in motion. It is important to not only stabilize the organization during a turnaround, in parallel overdrive the innovation machine to achieve business growth.
What actions have I missed?
Global High Tech Executive, GM, Entrepreneurial Leader – Strategic Vision, Process Improvement, P&L, PLM, Sales Growth