Turning Around a Company Not in Trouble

Someone once asked John Whitney of Columbia Business School the question, “how do you turn around a company that isn’t in trouble?” John’s reply was classic–

“it is in trouble—it just isn’t in crisis yet. The idea is to avoid a crisis by changing the policies and procedures in the company so it can really compete globally, compete for the long term.”

John went on to say that waiting until a company is in trouble to fix it is management by exception. Over 20 years ago (before globalization and a worldwide economy became the hot topic it is today) Mr. Whitney observed that competition abroad to continuously improve would force companies domestically to keep focused on “management by review.

Companies that have enjoyed success, however, can be reluctant to undertake change through what is termed an operational turnaround. It can be harder, though, without the threat of imminent insolvency, to change company culture and rituals. This type of management change relies far less on historical financial performance than on looking forward to what might be.

How to Know When You Need It

Sometimes, losing a big customer is the trigger point. But, losing one can be explained away. Losing multiple large customers and key employees should definitely raise your antennae. If you begin to take longer to take products to market and the competition keeps introducing new products faster, these patterns should make you consider getting outside help. Look to your customers and suppliers to provide industry feedback and “intel” on trends and patterns. 

While Others Cut Costs, Innovate

Suppliers know what’s happening and can advise how to improve your product. Eliminate layers in your company. Get back to communication in person. Lost time, will and energy to problem solve creatively is the biggest expense in most businesses. Regain respect for the people doing the work—respect their integrity, intelligence and commitment. Eschew over-control. Break down communication issues between departments. Cross-functional management focuses on running a system, each part dependent on  the other.    

John Whitney said that, when he watched Leonard Bernstein conducting Beethoven’s Ninth Symphony, he realized that Bernstein “did many of the same things a good manager does. There were parts of the score where he was deeply involved, working to make sure he got exactly the sound, the nuance he wanted. And he knew what he wanted. But he also knew when the orchestra had it going right, and he wasn’t afraid to lean back and just let it happen, let the musicians do their jobs and listen to the music all come together.”

How about you–are you willing to take a hard look at your organization and determine to become better, even though you are already good? Ever heard the expression, “good is the enemy of great?” Consider ways that you can improve information flow, creativity, problem solving and other soft skills. In addressing these seemingly minor issues while business is good, you prepare the way for an operational turnaround–innovation as some may call it in today’s vernacular!



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