The wages of neglect is death for your business
Turnarounds are not popularity contests, but they don’t have to be demolition derbies either
Turnarounds will always be around. Perhaps it’s just the mindset I’m in but there do seem to be an increasing number of turnarounds and business rescues being required. Times are tough.
Turnarounds cover the full spectrum – from local stores, to industries, to major corporations, to political parties, and even to sovereign countries.
Failure, to the point where a turnaround is the only option, is often the consequence of incremental decay, of tiredness, of neglect. These may be easier to address than other causes, such as product obsolescence or irrelevance or simply a mistake. The worst failures, though, are the result of bad decisions, made practically deliberately by stubborn leaders.
In an increasingly competitive global landscape, success is measured almost in real time. If you’re feeling comfortable, you’re confused. However well-established your products or services may be, management comfort zones lead to brand arrogance, which has disastrous consequences. Watch out. Open the door just a little and the wannabes and disrupters will eat your lunch.No matter how exciting your growth trajectory, if you can’t fund it, you won’t make it. Many an inappropriate funding structure has destroyed a noble cause (and left the idea for the next person to pick up and prosper).
Let’s start with the big guys.
Volkswagen has appointed a new CEO after Matthias Muller steered them through the aftermath of the emissions cheating scandal – it’ll take a tough individual to clear the stench.
Brexit must by now surely been recognised to have been a mistake. A mess, with very little hope of the UK being able to craft the right deal from a position of such weakness. Whether it was a mistake of the masses or just a bad political leadership bet, this must be a classical case for Control, Alternate, Delete. Put it to the vote again and I’ll bet you’ll get a different result. Better a bad day than a bad deal, someone once said.
Trump’s supreme brand arrogance
Talking of leadership blunders, we need look no further than the Trump “you’re fired” TV programme that went on to become a presidency – that’ll eventually require a restart, never mind a turnaround. Starting a trade war with China is supreme brand arrogance.
There are too many examples of failing economies around us (Venezuela, Cuba, Russia, just to name some in the news), where entrenched leadership doesn’t embrace change. Turnarounds will only happen once the new, young breed of politicians take over. Fortunately they are gathering in increasing numbers, around the world.If you want to fix anything, you first have to accept that it is broken, then find out the real truth about why. It will not always be obvious until you find it, but when it becomes abundantly clear, accept it. The proper cure can only follow the proper diagnosis. Not only does the disease need to be identified, but also its depth of infection – different stages require different medicine.
The problem always has to do with the incumbent management and stakeholders who presided over its manifestation. Change them first. Find the new CEO, back the new CEO. No new boss, no change.
You have to invest. Of course getting lean is part of getting fit, but to fight, particularly from a position of lost ground, you’ll have to be strong. A failing business is not simply cured by making it smaller. In fact, that may precipitate its final demise.
One person can make a difference
As the new CEO, it takes time to find out who’s who, and first impressions don’t often endure – both ways. You meet the school bully first on the playground. But you must set a deadline for the new people deal to be done, and then deal it. Tolerance lowers standards. Turnarounds are not popularity contests, but they don’t have to be demolition derbies either.
In the end, it will be the change in culture and core values, and broad-based buy-in for the new direction that will sort out the successes from the failures, not just the individual at the top. Organisational culture attracts its own kind and dispenses with those that don’t fit in. Get that right and the future self-corrects, requiring less and less intervention.
Sometimes it’s just too late, the damage is too deep, the operating environment is already structurally flawed, but, mostly, one person can make a difference, with stakeholder backing.
We have any number of work-in-progress turnarounds in play in our own backyard. We also have deep pools of talent and expertise among us. I think we’ll be okay.
Mark Barnes is CEO of the Post Office.