Before the wheels come off: Proactively planning and implementing your turnaround strategy - The Finance Team

Our Blog

Before the wheels come off: Proactively planning and implementing your turnaround strategy

Traditionally, a company will implement a turnaround strategy when the red lights are flashing. Sales may have plummeted, the board or management team may have seen a mass exodus, or economic factors may have led the numbers to look grim, and the future may be looking even grimmer. But when a turnaround strategy is implemented at this late stage in the business cycle, there is a price to pay. A lengthy recovery phase is required, during which there is no significant revenue stream while the company patches things up as best they can. In addition, the obligation of recovering the losses from the past comes into play. Inevitably, at some point in the process, members of the management team will sound the same refrain: we should have done this sooner!

Companies that have adopted a turnaround strategy as a last resort will vouch for the danger in the traditional “if it ain’t broke don’t fix it” approach. In retrospect, such companies will attest to the fact that responsible management asks questions about the direction of the business even when things are going well. Kurt Huber, MD of consulting company VM Services, says that good managers may ask the Paradigm Shift Question. “What today is impossible to do in our business, but if it could be done, would fundamentally change what we do?”

These managers forecast the need for a change in the business long before the wheels come off the proverbial bus.

Everything has a life cycle

The first step to adopting this proactive approach to your turnaround strategy, says Huber, is acknowledging that the traditional management skills of planning, organising, leading and controlling are no longer sufficient to manage the modern working environment. Forward-thinking managers will realise that everything has a life cycle of being productive, and even currently effective management techniques will become obsolete when new technologies are introduced or markets evolve.

A manager with foresight will recognise the need to implement a turnaround strategy that anticipates upcoming changes in the company’s environment, even while current management practices are still in good order.

Change management   

Those who foresee the need for a turnaround strategy and those who are responsible for implementing it are usually two separate sets of managers. It’s not unusual for there to be some skepticism from those who will ultimately need to get the new strategy underway as to why such a change would be needed. In order to move from an existing paradigm to a re-framed way of doing things, Huber advocates a change management process to allow all stakeholders to understand the reason for the turnaround.

The challenge here is to allow for the alignment of strategies between visionary leadership and the rest of an organisation on an ongoing basis. This would make space for the continuous questioning of the business’s paradigm and for the appropriate “turnaround strategy” to be adopted before an urgency for it has sprung up.

Turning back to basics

A turnaround strategy is about just that – turning around. It should create an opportunity for the business to return back to the basics – and make sure it’s doing them right. Take stock of your basic processes, tweak them and streamline then to fit in with your evolving vision.

Creating a culture for questioning

In order to meet this challenge, managers need to create a corporate culture that fosters a kind of visionary questioning of the future. Any employee, at any level, should be encouraged to ask why the company is doing things a certain way, how the future could affect things, and how the company could change things to meet future challenges. The company should put incentives in place to encourage such feedback from all levels of staff. The more receptive a senior management team is to such feedback, and the more they effect change from the input, the more visionary their leadership can be hailed as, and the more proactive their turnaround strategy will become.

If your company is looking for insight into the turnaround strategy process, or how to create a culture for change, The Finance Team can provide assistance. We can provide ongoing strategic support to your business to ensure that your company’s strategy remains constantly relevant and effective.

Image credit: timeshighereducation.co.uk

 

CTA2

What will the African economy look like in 2020?
How often should you review your corporate strategy?