Yorktown Heights, New York – Business turnarounds are never easy, especially if it is your business and you must do something drastic to turn it around.
We have had experience at Simon Associates Management Consultants (SAMC) helping clients turn around their businesses. We have also had hands-on experience turning around one of our own entrepreneurial ventures. But whether we are supporting someone or dealing with a turnaround ourselves, broken businesses are never pretty. Wouldn’t it be beautiful, though, if you could do a business turnaround for your business?
Where Do You Begin?
At SAMC, we often get engaged to help a company that is going in the wrong direction. Often, there is a crisis. How do you know if you are facing a critical moment in your company’s development? We have found there is a recurring pattern often marked by one or more of the following crisis moments:
- For a period of time many of our turnaround clients were experiencing limited or even zero growth. Sometimes it was for as long as three to five years. They had typically hired a new sales manager, developed new products, launched a new marketing campaign, and still saw sales flatten or stall.
- Some situations come from the realization that their customers arechanging. One client saw his largest customer leave for a competitor because that competitor had a larger scope of services that were more relevant for the customer’s needs.
- In some cases, more competition is emerging or different types of competitors are disrupting the old style of business.
- Demographic trends have an impact. We have found this to be true with many higher-education clients where enrollments are being affected by changing demographics. With fewer high school students, and hence fewer traditional college freshmen, colleges have been facing major crises impacting everything from who they are to what they do and who they do it for.
It doesn’t matter if you have a heavy industrial company or a B to C business, something is changing and you are stuck in the past. Your own efforts to change have led to dissent among your staff and little growth among your customers. Sales are flat and it is time to start a turnaround.
You see yourself facing a crisis. What to do?
If you are facing any of these conditions, or ones unique to your own company or industry, you are ready for some turnaround training. You have always known how to run the business. You learned it in your MBA program or on the job. Now you have to become an expert in an entirely new leadership role – designing and driving a turnaround.
Here are some things to think about:
- First, take stock of where you are and assess your current condition. Review all of your core assumptions. Are they still good; still valid? Rethink such issues as: Who are your customers of the future and how should you serve them? Where are customers located and how do they purchase your services? How good are your marketing and sales efforts? How do you use technology? What types of collaborations do you have inside and outside your business? What is your company’s culture today and is it set up properly for the future? What types of people do you have and will you need, and are they the same? We could go on, but you have the idea. Everything is open for review and rethinking.
- Next, reverse everything. You are going to need some tools to rethink those assumptions. We like to use Innovation Games® because they help you and your team to rethink everything in a safe, creative environment. One game that works particularly well is called “Reverse Everything.” It enables you to take everything apart and put it back together in new ways. When I was in the consumer packaged-goods business my boss always told me that “good marketing people pull things apart and rebuild in different ways.” Try it sometime. You can learn more about it here.
- Don’t narrowly define yourself. Sometimes we fall in love with categories. But these categories are too narrow and even if you own everyone in the category there isn’t enough volume to make a business. Think across categories. As Franz Johansson wrote in his groundbreaking book “The Medici Effect: Breakthrough Insights at the Intersection of Ideas, Concepts and Cultures,” the more ideas you have the more likely you will have big ones. They come at the intersections.
- Blue Ocean Strategy®, nonusers, and unmet needs. As Blue Ocean Strategists, we approach turnaround situations as if they are in need of a new strategy, a blue ocean one. To continue to do more of the same, even cheaper, is a very difficult strategy to embrace when a business needs an overhaul. Instead, we would urge you to think about nonusers and unmet needs, the central core of blue ocean strategic thinking.
This is critical to your success; to that turnaround. Spend time asking people what keeps them awake at night; what problems do they have that seem to be unsolvable.
- Be brave. Turnarounds require emotional courage. Eighty percent of businesses aren’t around five years after launch date. There are startling statistics about companies that 50 years ago were in the Fortune 500, but now are no longer around. However, there is also research that suggests that if those companies had been brave they might still be here. Kodak is one of those types of frightened companies that could not see the trends that were all around them, building digital cameras to replace their film. Blockbuster denied that NetFlix was relevant. They thought Apple and Walmart were their competitors. Blackberry never saw the iPhone coming.
- Build a team. You might be the greatest, the best. But you can’t turn everything around by yourself. If you are the chief strategist, you need people who not only believe in you but can execute for you. Think about how you are going to convert your team to lead the transformation rather than undermine it. As John Kenneth Galbraith said, “Faced with the choice between changing one’s mind and proving that there is no need to change, most everybody gets busy on the proof.”
- Believe in yourself. Turnarounds are never easy. But if not you, who else? If you think you are right, you need to lead so that people follow and trust that there will be rewards that come from the changes.
Don’t find yourself struggling or stalled. Remember “Insanity: doing the same thing over and over again and expecting different results.”
If you believe that you can turnaround your company, it will be a beautiful transformation for you and your team.