Confidence

Confidence on the part of lenders and existing and new customers is vital. Those who have financial exposure to you will be willing to postpone receiving their debts if they have confidence in your ability to repay, particularly if they can see opportunities to do more business with you in the future, once you are up and running again.

Look forwards and backwards at the same time

Any turnaround involves sorting out a past mess. It also involves running the business differently in the future, starting today and improving every day from now on. The past mess cannot be ignored, because it presents cash generation opportunities as well as very valuable information on how to improve the running of the business. Nor can the proper running of the business be postponed until the past mess has been sorted out, because every day of postponement is an opportunity missed.

Usually, two separate teams are required to do this effectively, one looking backwards and one forwards. At some point the work of the two teams converges and eventually the team looking backwards becomes redundant.

Unity of purpose and unqualified support

A turnaround necessarily involves short term pain in order to achieve long term gain. Seldom can everyone affected by the changes see and appreciate the big picture, therefore when they start to experience pain they apply pressure for the turnaround to be abandoned or modified. Giving into such pressure spells long term disaster for intended beneficiaries of the turnaround.

As the owners, managers, workers, customers, suppliers and lenders of a business are likely to be the ones to bear such pain, it is vital that they all understand the long term objectives of the exercise and agree at the outset to support them as well as any action required to achieve them.

Empowerment of those leading the turnaround

Detailed planning in a turnaround is often impossible, therefore decision making needs to be quick and on the hoof. Delayed decision making is the enemy of turnaround success, as management who um and ah for the sake of short term expediency can derail the whole process. This means that only broad objectives can be agreed with stakeholders at the outset, with regular updates thereafter, and that turnaround leaders need to be empowered to make detailed decisions.

Staffing: horses for courses

The last rule might appear obvious, but it amazing how many people attempt a turnaround using staff that are employed to run the business under normal circumstances. These staff are usually ill-suited to the requirements of successful change management. By their very nature, they are unused to analysing what is missing and then effecting radical changes. Instead, they are more comfortable with managing what is already there and most have very little appreciation of the big picture.

Staff needed for a turnaround have a different aptitude. They are experienced in the art of gathering and analysing systems and information quickly, designing changes, no matter how radical, implementing them and training full time staff in how to run the new systems. Furthermore, they have no interest in the corporate politics of any situation and no career in the organisation to consider. They change situations and they move on.

Having said that, some of the most valuable people in a turnaround are those rare individuals employed to run the business under normal circumstances who have the aptitude to manage change and can discern the big picture. These square pegs in round holes are often extremely frustrated and have a clear idea of what needs to be done to implement change for the better. Such people need to be co-opted into a turnaround team.