Oct 202008

Dr. Earl R. Smith II

In the first part of this series, I described the initial triage steps that I took after analyzing the data provided by the assessments had. At the same time that we were working with the CEO and senior team, we began to develop a plan for the first stage of the turnaround effort. Here is the list of challenges that we had identified:

  • The company had a poorly defined – almost amorphous – value proposition. Key customers disagreed with the focus
  • The focus of the senior team was almost exclusively on strategic planning – their efforts at implementation were far less effective than needed
  • The disconnect between the senior team and the rest of the organization was a major source of conflict
  • The company did not have an effective customer relationship management system – opportunities were lost because follow up was unfocused and sporadic
  • The company had engaged a wide range of consultants without a holistic vision for their engagement – nothing fit together – consultants were sometimes working at odds with each other – there were no effective metrics for any of the consulting engagements
  • The company had very ineffective financial controls – the cash flow management system was primitive
  • Focus on product development was fragmented and sporadic – the customers were not involved in directing the efforts
  • The internal friction was eroding the effectiveness of the organization – the corporate culture was corrosive
  • The organization was made up of a series of fiefdoms – the leadership style of the CEO had cultivated these divisions – the team was not playing as a whole

Prioritization was the initial step. We used the following screens:

  • Which challenges would, if met and overcome, have the greatest impact on the company and its fortunes – particularly which would significantly reduce the chances that the company would become non-viable?
  • Which challenges were manageable in the short-term – which could we address and quickly overcome – which fires could be put out quickly?
  • Which challenges related directly to the culture of the company – a culture that had become defeatist and one of the principal sources of difficulty in making a successful turnaround?
  • Which challenges could be successfully addressed by the existing pool of resources and talent – which were within reach without bringing in additional resources?

In this particular case, we selected the value proposition, implementation and internal friction as out first areas of focus. We decided to address them frontally and quickly – to expect productive responses to the issues – and to quickly set in motion processes designed to create real change. The senior team began a series of intensive meetings within the company – working to connect with employees and integrating strategic and tactical planning into a seamless whole. To her credit, the CEO lead the way enthusiastically. The rest of the team followed her lead. Changes became evident almost immediately and internal frictions began to subside.

Because the company had been insular when it came to the planning process, we involved some of the major customers in the process for the first time. This not only helped improve the process – it also helped with the evolution of the company’s value proposition. The value proposition was no longer developed in an ‘ivory tower’ atmosphere and the customers were very active in their advocacy of a modified proposition. This experience pushed the integration of strategic and tactical planning as well as increasing the focus on the implementation of plans.

Over the next six weeks, though an intensive program of engagement, the company began to turn around. Employee defection – always a problem – began to be reduced. The culture of the company began to turn more positive and the feeling around the office was more hopeful and enthusiastic. Although nothing much had really changed in those first couple of weeks, the employees began to feel that it was about to – and in a very positive way.

By the time we were two months into the process, much of the waste had been eliminated, a non-profitable division had been dissolved, significant changes had been made in the management, better financial controls were in place, the value proposition had been completely re-engineered and a whole host of other advances made. It took another year for the program to work itself through but, with focus and effort, it worked. Now I visit the company only occasionally and on an as-needed basis. None of the team wants to go back to the ‘bad-old-days’ before the sun came up.

© Dr. Earl R. Smith II


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