It doesn’t matter if you have the key if you are in front of a wall…
Solving a turnaround is all about ... BEING.
Taking in hand a distressed company required skills that are definitely not based on the classical “how and what to do” but are all about “how to be and how to move”.
Mastering the classical 4P’s (Product, Promotion, Pricing, Place) means nothing as the only thing that counts in the beginning is “Presence” and “Persuasion” (so 2 other P’s). It is all about BEING... ACTING doesn't count a bit.
It is true that in distressed companies, the people don’t mind what happens at the top and the called-in interim executive will just be considered as a temporary, a replacement for the old-so-beloved boss until the real boss arrives. How many times haven’t I heard in the first days of my turnaround missions :
- " I didn’t create the problem so why should I do something for you. It is your job to solve it. You are paid for it "
- " My team is doing a perfect job so we don’t need your intervention. You should do something fast on the team next door as they are real weak-performers
- " That's not how we do things around here "
- " We don’t need annual reviews as my team is still motivated "
- " We do not want to change what we are doing. It works since years so you should better focus on the real problems than bothering us with improvement initiatives. (resistance to change)
- With the incompetent board we have, no wonder we are weak performing. And sorry, but as interim CEO, you are now part of that board.
- When the shareholders tell you to fire 50% of the staff; you do it instantly… (the killer-CFO of the group).
- We do not do business like the others so our accounting/finance system is quite different (an excuse to tell me all numbers are wrong).
I can write down at least 50 other sayings expressing the atmosphere of complexity, resistance and anxiety of the workforce.
There are also the situations where everyone is afraid to take a decision. I once arrived in a complete no-decision company … and my first act was to purchase toilet-paper… (as there was none in the building since days – I’ll let you imagine the situation) and many asked me if I had the permission to purchase this. I just replied it the job had to be done and never an executive got in jail for purchasing toilet paper for his team.
One of the starting rules is “listen first, talk later”. People today are already stretched to the limit, in understaffed teams and simply performing business routines as usual. Relentless cost reduction and downsizing have taken a major toll not just on organizational performance, but also on morale, pride, motivation, and many determinants of personal performance. In this context, implementing change will be an extremely fuzzy mission as the required changes have to stay unclear until the recovery is well under way.
Also, when people are paralyzed and overwhelmed by a problem, the last thing they need is a solution that is almost as big and as complex as the problem and the so-called management 1.0 skills will never deliver any result. Leaders from the 1.0 decade are doomed to fail. The team neither needs a leader of the management 2.0 arena as the distributed management model will too vague for them. They need a clear identifiable and responsible underground leader – an example from the field to get them out of the mess. People have to trust you for your human capacities… not for your skill set.
I remember my first day as director of operations… changing in the evening my tie and my shirt for a T-shirt to assist the team in moving desktops. They needed some extra hands and I had 2 available. I gained respect by doing something normal “ helping the team ”. The next morning, I did other "normal" things that needed to be done... but not by an executive. The leading outside the lines created the conditions to start my turnaround plan...
You can read in the solution box some of the keys issues to implement turnarounds by managing outside the classical leadership lines.
TO BE OR NOT TO BE
Some of the greatest challenges for a leader in a distressed organization are speed, adaptability and popularity which are all elements of an informal organization embedded in an emotional, highly interactive and cross-organizational atmosphere.
The informal always takes place between, around, beneath, and beyond the organization’s formal constructs. And as these don’t longer work, a turnaround leader has to influence working norms, values, peer relationships, consensus, whisper ideas, influence underlying social networks and invigorate communities of common interest. Acting is not allowed as any action creates reaction, a thing that needs to be avoided at any price in a troubled compay. He/she simply has to BE.
But things have to change quickly so the only solution is to manage “outside the lines”, abandoning the classical management style as only hidden initiatives can deliver hard results. Let’s show this with an example :
- I once created a buzz (by leaving a note on top of my desk in the evening – in my locked office) by counting on the spies in the company. The note mentioned important layoffs scenarios. The next morning, I called the whole team in our amphitheater to present them the revival roadmap. A whole framework of where the company should go to… including a 40% layoff. As they were all expecting 65% and no vision for the future… the message passed without any resistance.
Few people describe the mission of a turnaround executive as a human motivator. Indeed, each person should discover again his/her job-core values so each one will commit again and share a feeling of performance improvements.
This cannot be done with a top-down communication so things need to be tuned to each category of people and create multiple down-up movements.
I have to admit that I created several down-up messages just to make the team think or act. As they don’t accept the change from the top… you have to send some fake message from the bottom, just mention it to the team as you are curious to know the answer… and, if they think management should do something, they just have to say it afterwards. Amazing how these things can unify a team and make them pronounce the propositions you imagined.
Other items that can be use – but with precaution - is to use the conflict atmosphere to unify your team against other teams. I once innovated the marketing department of my subsidiary by making them launch a project against the marketing department of the group. It worked as the team started working together and were extremely motivated to deliver a strong service (and they did).
STEP ONE : TO BE or to fail
PRESENCE : People don’t mind where you come from, what you have or what you do… they need you to BE there. Don’t act and if you need to act, act differently. They need to have the feeling to have a boss that can get them out of the mess they are living in. You have to be different than the previous managers that brought them into trouble.
Influence teams by showing the example and by having very visible acts. If people can’t see what you are doing… you are doing nothing. When I see a paper on the floor, I can just grab it… but no, I take it and scramble it to make a maximum of noise to get noticed.
Be consistent and inconsistent at the same time. Be consistent in getting things moving ahead… but also inconsistent so you make people think.
Make the teams listen to you (so they will not listen to your opponents). The key is to understand that communicating is not about the message itself but how it is received. If it creates a buzz, it means things are moving. Creating a buzz is stronger than any official communication. Get your words in the mouth of others !
Also, if things turn bad, a product line breakdown, a service line that collapses… be the first one to communicate so everyone has the feeling you are controlling the situation (even when it is not true).
POPULARITY : You need to communicate a lot but the message you send is not important – it is the way it arrives that matters. How do people speak about you and your initiatives…. You can get more done through a (well-managed) buzz than by official communications or team-meetings. It is important to get this feedback by meeting the staff informally… (around the coffee machine, at lunch in the restaurant…). Of course, you need team-meetings to get things synchronized… but those meetings don’t make you win the turnaround battle.
Listening to people is important but also try to get someone near you (why not your assistant) to collect information from the field about what people say about you and your initiatives. Of course, several people will give you wrong information – they will praise your actions as they hope it will give them a promotion – so be aware of false data. Monitoring some comments on social networks can also be a nice experience of how people feel.
You can also create some positive buzz – “he is doing a max to keep a maximum of jobs” – without letting people know you are the one that started the messages.
MOMENT IN TIME : There is a right moment to tell things and to initiate projects. Silence can also be an ally but only for a short time. I once witnessed 2 engineering teams yelling to each other and I didn’t intervene. After half an hour listening to their wordbattle, I knew all the things that could be improved so my propositions were clear to the bone and made them agree to work together.
In any turnaround situation, you will have difficult moments and it is important to prepare people for this announcement. Once again, to influence the mass, you need to play outside the traditional lines of management – influence people through buzz and when the time is right, you hit. Also, all initiatives will only have a temporary impact so you should rework constantly your acts. All your acts are momentary so it is possible you will do the same thing differently further on the road.
This is the phase one of a turnaround – getting the confidence so people start listening to you.
STEP 2 : UP TO YOU TO PUSH / PULL
In a second step, it is not longer sufficient of BEING THERE but now you need to ACT. And there we have our classical 4PM model with this difference that you need to take a lot of attention to the sensibility of all teamplayers. The actions are now a mixture of the “being there” of a crisis manager but with a softened management 1.0 attitude (improve efficiency, leverage skills, create a shared vision…).
You then enter the phase 2 or the turnaround… the PULL/PUSH phase. As people trust you, you have to shake them to get the company rolling again. And things can break very easily… meaning people can loose confidence easily meaning the end of your mission.
For the PULL/PUSH, I use the 4P’s everyone knows but in a sequential mode to succeed the turnaround situation. I start with :
PRODUCT : In a crisis situation, there is definitely something wrong with the product or service you are producing. The problem is to make the team aware of this problem which is not an easy task as many have worked years to develop it. So you have to find the things that need to be improved. This can be done through internal/external surveys, some client meetings, in the press or on social networks. It is sometimes remarkable to see what you can find on the web. Of course, you cannot use this as your team will not accept these written things as evidence.
By bringing this in as a discussion item (don’t try to launch it as a project yourself – it is the team that has to find the solution you already know)… you should ask the right questions (PULL phase) and people should become aware that things need to change. You now enter the PUSH phase. The revamping of your product/service portfolio. But you have to go fast and create a quick-win.
The most difficult thing for an executive is to have the time pressure and at the same time, know the solution to implement… but to make it happen, he/she has to beg the team the find a solution – all together. This is once again leading outside the lines.
As the team disliked one of our major clients, and the client was asking a new product, I proposed the team to design something the client would never love… making people working again together with enthousiasm… and our client loved our product. A negative feeling created a positive product and a satisfied client.
PLACE: Once again, a PULL/PUSH action on the understanding what the company is doing on the market. Why people come to your company to buy your products and/or services. Once you pulled this together, you can use these key points as an action plan to tune your place on the market (and as you already worked on the product… you can use this to underline your spirit of innovation). Then you have to push this idea onto the market to reinforce your place. I once worked for a heavy loss-generating software editor. I found out that they knew very well the distribution market so I changed their market positioning. It was a radical change – including the change of our product line - but it was the only way to stay in business.
Once you got your “delivery right and structured”, you can start to hit the market with the phase 3 of the turnaround.
PROMOTION: There are 2 kinds of promotion channels – B2B and B2C. In a B2B environment, you have to define the way you can help your partners to sell your products. In many cases, they are very interested in getting assisted to increase their revenues. This “how can I grow your business” is a nice push/pull exercice but not an easy one. How creating a social network that benefits your network ?
In a B2C environment, the solution is closer to a “management 1.0 concept” so you can start to underline your brand reputation inside your marketing campaigns. As you have direct contacts, try using web2.0 channels like social networks, buzz, videos, e-newsletters… – not forgetting the traditional promotion channels (newsletters, advertisements…). But a lot of companies stay in a pull position (getting Facebook contacts) but they forget to use all the push aspects (you need a strong community manager, you need to deliver things your clients/customers expect…).
Also… you can not address your clients if you do not have a datamining tool (or CRM tool) available.
PRICING: A difficult issue as in a turnaround situation, you need cash (and quickly – so creating higher prices) but you also need to create higher volumes. By looking to different industries, it could give you an idea to think out of the box and create new service/product delivery or new ways to invoice. A brainstorming on … and what if someone brings the same product on the market for half of the price… what do we do to resist (or how to innovate to survive).
STEP 3 : PROMOTE YOUR WINS...
Once finished, you have to create a repetitive mode with continuous improvement modes for the whole company. It is a difficult step for a turnaround executive as he/she will be leaving the crisis mode for a continuous operations mode. Used to work in a "BE MODE", he nos has to work in a "MANAGEMENT 1.0" mode... but as a real turnaround executive, it is time to find a successor as the job is finished.
It is hard to give the credits for leading outside the lines – “doing unconventional things” as each line has a left and a right side to act. The one delivers results... the other side a failure.
Personally, I learned a lot by reading Sun Tzu “Art of War” to consider my “outside the lines management” activities.
- Starting the “6PM” battle : meaning, whatever happens, we have to survive until the evening. People are not interested in strategy, the only thing they want is tactics to survive.
- Get your army united. From a fuzzy environment, create little by little a new framework in which people want to advance together. Study your teams and find the internal influencers, the people who don’t care but just want to work hard and isolate all opponents, I once gave a major project to a person who was against me… so she was fully occupied with no time left for opposition.
- Use ‘internal” spies to know what happens in your team.
- Join your teams as much as possible (go as much as possible to the coffee machine, eat at the cafeteria and take a seat with people you don’t know).
- Find an appropriate battlefield. The internal battle field : you need to become the boss so you need to be the one that communicates, the one that creates the buzz (and destroys the negative buzz). Also, create quick wins so people see you are gaining field.
- The external battlefield : find an easy enemy – this could be a close competitor (so you align) but it can also be some numbers (we need to get this % of satisfied customers at our helpdesk…). But attention to “information leaks”. I once had my salesperson announcing to a prospect that we would kill our competitor… not very positive.
- Master energy. Be careful not to burn out. It will be a long battle so you’ll better be a marathon runner than Carl Lewis. Also supervise the energy of your key team players… and try to increase the workload of your opponents (if they are tired… they will not bother you). Send your opponents to hard battles you can’t win (so losing a battle can be a nice thing) – send your supporters to quick wins and like all famous generals, only fight the battles that make a difference (in most war cases, famous generals only arrived at the end of the battle to finish the job…. So why should you be there from the beginning).
- Communicate heavily on the victories and reward your teams,
- Don’t hesitate to make a 90° turn if necessary… but manage it through careful communication (blame your opponents, launch a new initiative so nobody sees you turned…)
- Victory : Once you have won your major battles, it is time to leave so find your successor, train him and give him all the information he/she needs to continue daily operations.
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