Category Archives: Middle Market

Urgency in Turnarounds

When a team has tried everything in their power to solve a dilemma and is unsuccessful, the turnaround manager must step in. The buck stops with him; if a third party cannot reach resolution with company staff, someone with more clout must reestablish credibility. Use of a consistent complain resolution process can prove quite effective. It frees the team up to not have to stress relationships with those with whom they have either had long term relationships or with whom they must transact business once the turnaround is complete. Even managers should appeal to the business owner or turnaround executive if a third party will not accept their efforts to resolve issues.

Doing the Job Effectively

Encouraging employees to perform their jobs thoroughly, to the point they exceed performance standards, is most easily done by providing responsibility and reward. Treat employees as peers, recognizing that they too have responsibilities and commitments. Offering them the opportunity to wield more authority is rarely rejected. Promote a diligent working atmosphere wherein employees want to go the extra mile.

Ask all employees to document any problems with suppliers, customers, or service providers. Often, taking it a step further and documenting issues with sales teams, distributors and governmental agencies (where appropriate) can provide a paper trail to  help the executive team and turnaround artist in their work to remove roadblocks. When relevant facts are understood, appropriate actions can be taken.

Dealing With a Lack of Resources

When a company is in the middle of a turnaround, certain items that would make work easier are not going to be available due to a lack of funds. Using skills and abilities creatively to overcome this lack of resources or other unpredicted occurrence as an example for employees to follow. In tough situations, executives should look for a way to overcome the situation rather than dwelling on the inconvenience caused.

Successful turnarounds are a tribute to employees who strive to overcome limitations and exceed performance standards rather than merely meet them. To bring work projects in early and under budget, everyone must strive to do much better than is required, constantly searching out ways to improve efficiency. No time can be wasted–every minute and every dollar that exceeds schedule or budget extends the distance between a struggling company and its ultimate goal of renewed profitability.

Following the Turnaround Plan

All employees need to be reminded that a plan has been developed to promote optimal recovery and that all actions taken are done so in accordance with the dictates of the plan. United by common objectives, the work force can and will help to implement the turnaround plan. Three essential principles apply:

  • Some short-term gains will be sacrificed for ling-term profitability.
  • Some long-term successes will have to be postponed for short-term cash flow.
  • The means of implementation is always open to suggestion and never open to argument.

Creating a Sense of Urgency

Certain goals, particularly dates and milestones, need to be met without fail. To accomplish these goals, a sense of urgency must prevail. Departures from the schedule can cause the company to lose out on windows of opportunity. The interest carrying cost of financing operations longer than anticipated is an example; if work projects are completed on time, lines of credit can be paid down sooner. Even one foot-dragging employee can impede the progress of the group, and the resulting missed deadlines can mean substantial financial losses.

Meet With Employees

Sit down with your staff and clearly and frankly describe the situation. Inform them that the company is experiencing some short-term problems in meeting its objectives and that actions are being undertaken to minimize long-term  impact. Explain and reiterate throughout the turnaround that company health can be restored through combined best efforts. Explain the turnaround plan, with an emphasis on the valuable role of each and every employee in reaching plan goals.

Meet With Management

Regular meetings with managers will be needed to discuss progress in detail. Begin with twice weekly meetings and progress to biweekly as the situation improves. Update reports should be given on activities since the prior meeting, with input required from managers from each department. Discuss problems and develop plans to resolve them within the meeting. Take advantage of a quorum of opinions to move the company forward in rapid-fire fashion.

 

Implementing Your Turnaround Plan

A turnaround plan presupposes that someone will be around to implement it. A lack of execution or inappropriate one (timing or lack of adaptation) will quickly undermine all earlier efforts that went into drafting the plan. Control over operations is therefore a must–no single part of the business should monopolize the company’s attention and efforts.

Controlling Operations

Motivation

The motivational skills of a “take charge” leader can enhance job performance in many ways. Many employees complain they are not being used effectively because they don’t have enough to do or their efforts are being applied inappropriately. Management that makes the most of employee work efforts has a knack for spotting actions that, if performed immediately, will have a tremendous, positive impact on company success.

Efficiency

To ensure that operations are monitored and controlled correctly, the individual who reviews system reports must make decisions based on indicators of company efficiency. For example, if variance reports show (project or product) costs exceeding budget, action must be taken immediately to prevent further overruns. Similarly, if non-payment has a vendor worried, the top financial manager must find a way to keep the vendor on board so a return to profitability can occur.

Sound management is exhibited when field operations or internal reports require responses to abnormalities. For example, a business owner in the midst of a turnaround had a new hire (< 2 months) supervisor request on Thursday to take Monday and Tuesday off to pursue some personal matters. The business owner was not in a production crunch and was short on cash, so he approved the time off–particularly since the supervisor was not using vacation (paid) time to take leave. When the supervisor strode onto the job Monday late morning, the owner was surprised. When he requested to work the balance of Monday and all of Tuesday, the owner declined the request, citing that she had to make other arrangements that inconvenienced others and that last-minute notice would not be accommodate in this or future instances.

In this instance, the owner did what was necessary to maintain control over operations. Though it may have ruffled the supervisor’s feathers for a few days, it demonstrated the importance of setting policies and commitments–and living by them. It was also to the owner’s advantage not to have to pay the supervisor for work that had been reassigned to someone else. Proper planning was used to make sure that someone would be able to supervise the work. Additional follow-up was necessary to make sure no problems were slowing down production for those two days. Had the owner failed to exercise sound management, proper planning, or follow-up, she would have lost time, money and credibility with others due to one employee’s circumstances.

Focusing on Common Objectives

Getting employees to focus on common objectives is a difficult task. Executives an managers who are able to motivate their workers to avoid distractions, do their jobs effectively, and remember to follow the turnaround plan do so with tremendous skills/abilities.

Employee Problem Solving

Employees can best avoid distractions and aid in the turnaround process by quickly resolving issues in which they have innate skills and referring all other issues to appropriate personnel. Additionally, employees should report any persisting problems or confrontations to the executive team.

Problem-solving should be a relatively painless process, requiring only that he or she utilize skills learned on the job and “do what seems best” based on prior experience. If an employee has little or no experience in the problem area , she should not hesitate to find someone who is experienced. It is far better to admit a need for help than to take a chance on behalf of the company.

Employees should be reassured that involving others is not “shirking” or “dumping” work into another’s lap. Rather, this process is a way of relieving employees of the likelihood of error in making an uninformed decision. However, employees are not absolved from making sure the problem is resolved. Make it a habit of celebrating when employees help one another out to build camaraderie.

 

Locating the Buyer Need

Is your organization in the habit of finding unresolved problems? If not, chances are high that you are currently–or will be soon–losing market share to more nimble competitors who are “tuned in” to buyer habits and frustrations. Many industries suffer from the slow and steady move to products and services that have largely become commoditized. Once your offering is viewed as a commodity, you are no longer competing on value; the playing field is reduced to price only (or at least as a primary decision criteria.)

One of the categories that suffered this fate about 15 to 20 years ago was televisions. Appliance stores (as opposed to the modern day consumer electronics big box specialty retailer or boutique provider) were where people shopped. When looking for a TV, most consumers would walk down the aisles of sets in their beautiful shades of grey or black. Sales staff may follow or approach and offer to explain or demonstrate features of a model you may have paused near. Most buyers, however, came in to the store armed with some knowledge about prices or consumer ratings and were planning to buy a certain model…until they came across a TV with a sticker that asked the simple question, “Ever lose your remote control?”

How did Magnavox determine that the Remote Locator function (in which pressing the power button causes the lost remote to beep several times) was a missing ingredient in the TV viewing experience of many viewers? Did they simply ask, “What problems do you have with your current TV?” No; instead, they asked penetrating questions about how the TV fit into the lives of consumers. They looked at family dynamics and how TV viewing paralleled relationships with other daily activities. What they discovered was that 80 percent of Americans admitted to losing the remote control; over half of the viewers lost their remote more than five times per week. Inanimate objects like sofas, pantries, and refrigerators swallowed up the devices when the owner wasn’t watching!

The typical consumer may never have offered up that losing the remote was a problem associated with TV viewing. The TV manufacturers were not responsible for the loss of the remote (though family members and friends were certainly thought to be culprits!) Yet, when asked if the loss of remote was a problem, most readily agreed that it was.

Note that the technology used in the Locator was not novel or cutting edge. But, Magnavox had created a temporary competitive advantage among buyers of TVs for whom keeping track of the remote control was now seen as a problem that technology could solve. While some may argue that the company was fortuitous in “stumbling upon” this idea, in fact, it was very deliberately planned.

Magnavox published survey data to validate the problem. Some of the key findings included:

  • 55 percent of respondents admitted losing the remote control 5+ times/week.
  • Of those who lost the remotes, 63% said that their average search to regain the device was about 5 minutes.
  • The remote was most likely to show up in/under a piece of furniture (38 percent), in the kitchen or bathroom (20 percent), or in the refrigerator (6%)

What was the process of discovery and meeting a previously unstated need?

  1. Magnavox tuned in to a problem that TV buyers really had.
  2. They created a product experience to solve it.
  3. They shared the powerful idea with the market. (Through survey results)
  4. They communicated to the market in ways the target audience wanted to hear.

Instead of taking a traditional, worn-out R&D approach, consider changing how your company develops and commercializes product ideas. Send team members out to collect data that can drive design, packaging, messaging and other aspects of product positioning. You will be better off for the new approach!

Experimental Failure Leads to Success

We’ve all heard the Thomas Edison quote that he “successfully discovered 1000 ways to not make a light bulb.” He didn’t consider the 1000 attempts as failures, but rather experiments from which he collected data that guided the innovative process. Who else lays claim to so many failures? Cisco grew to be one of the largest technology companies in the world after being rejected for funding by 76 venture capital firms. Michael Jordan, in the minds of many (including yours truly) the greatest basketball player of all time, was cut from his high school basketball team. John Grisham, award winning novelist, was rejected by a couple dozen  publishers before getting his first sizable deal. Slumdog Millionaire won 8 Academy Awards after Warner Brothers gave up on it and sold the property to Fox Searchlight. In short, each of these is a story about finding a positive way to apply lessons learned.

Why is it that workers go from being starry eyed, curious and energetic to automatons after working for a company for an extended period of time? Usually, by the time these numbed brains “check out” mentally, they have already been promoted to a managerial level. We value visionary leaders, but all disdain lethargic managers. What’s the difference between the two? The loss of intellectual creativity and desire to take risks leads to bureaucracy. The market demands innovation. Those who will lead are challenged to not become shut off to progress and new ideas.

Paul Arden wrote It’s Not How Good You Are, It’s How Good You Want To Be. The former executive creative director of Saatchi & Sattchi said, people “will say nice things rather than be too critical. Also, we tend to edit out the bad so that we hear only what we want to hear…If, instead of seeking approval, you ask, ‘What’s wrong with it? How can I make it better?’ You are more likely to get a truthful, critical answer.”

Jeremy Gutsche concurs with Arden, writing that “a culture that openly discusses imperfection is more likely to accept the failure that comes from acceptable risk.”

Michael Jordan, mentioned above as the greatest basketball player in history, said the following about taking risks, 

“I’ve missed more than 9,000 shots in my career. I’ve lost almost 300 games. 26 ti,es I’ve been trusted to take the game winning shot and missed. I’ve failed over and over and over again in my life and that is why I succeed.” 

Most companies, however, spend a lot of time in performance appraisals celebrating successful outcomes and critiquing efforts that don’t appear to meet expectations. Think for a minute, however, about how to inspire your employees to be clever and progressive. Put measures in place to help them feel protected. It must be understood that trying new things, even if failure is the outcome, is a better business decision than undertaking safe projects constantly.

It is said that Steven Ross would fire employees for not making mistakes when Warner was launching its MTV subsidiary. He and his leadership team were trying to debut new programming and needed as much innovation as possible. Similarly, Microsoft used to have the mentality that a leader was not ready for promotion if he had not had a highly publicized, big flop. Thomas Watson, Sr., founder of IBM, once received a phone call from an employee who wanted to resign after making a $10 million mistake. Watson refused to let him follow through with his intended action, telling the manager that IBM had just spent $10 million educating him.

How much money and time are you willing to spend in your organization to educate people and give them the chance to pioneer something great? Probably not enough. 

Don’t Make a Monkey Out of Innovation

 

 

The story is told of five monkeys who were a part of an experiment studying group theory. Inside the cage wherein they were placed, a ladder led to a bunch of tantalizing bananas. What the test subjects initially did not know was that a high-pressure water hose was attached to the ladder.

One eager monkey raced up the ladder, reaching for one of the tasty bananas, only to cause the entire cage to be deluged with water. Undeterred, another monkey made her own attempt to reach the top. When she ascended the ladder, all the monkeys were again treated to a downpour. The lesson began to sink in–if any one of us tries to reach for the banana bunch, we are all going to get soaked, and that is unpleasant.

As the original test group was substituted out for individual newcomers, one by one the new arrival would make an effort to scale the ladder for the tasty treat. However, the existing group, fearing the dousing, would beat the newcomer down before he could make it to the top. The cycle was repeated, with the same result, until all the original monkeys had been replaced.

When the water hose was removed, it didn’t affect the curiosity of the monkeys–they had learned to avoid the bananas.

In most organizations, there is a built-in resistance to trying new things–particularly if hard lessons had been learned that discourage innovation. It is as though the expectation of risk bringing failure or reprimand begins to thwart spontaneity and creativity, until “group think” has overtaken individual expression. As you think about your own organization, to what degree does this thought process embed itself in your company culture?

Organizations who want to improve their organizational culture need to go to work on the four dynamics above. Perspective, defined as the way we look at the future and the problems we are trying to solve, determines destiny. If it is one’s approach to always be logical, for instance, that is a matter of perspective–not necessarily a reality for all player’s in a niche market. Lou Gerstner, in speaking about his turnaround of IBM, said, “I came to see in my time at IBM that culture isn’t just one aspect of the game–it is the game.” Some of the changes he made seemed like semantics, but his commitment to them made a huge difference:

  • Shift the focus from product to customer
  • Shift from “value me” (silo) to “value us” (the whole)
  • Shift from analysis paralysis to making decisions with 80% knowledge and moving forward

Experimental failure means creating a safe environment in which ideas can be tested and allowed to fail without the idea person being labeled a failure. Instead of making minor adjustments to what exists today, we need to foster an attitude that looks for tomorrow’s breakthroughs. Often, complacency is the doom of a department, division, or business. It has been said that we grow most in the valleys. If you are a part of an organization that only wants to play “king of the hill” through entrenchment, you should look for your next opportunity today!

Disruptive innovation begins with a deep understanding of the needs of your target audience. Customer obsession is an intentional effort to connect and engage..especially on an emotional level. When the connection is made, your product or service resonates with the customer in such a way that she cannot imagine a world without your offering as a part of her life.

Breaking down worn-out structures and processes that hinder our vision of market dynamics allows us to adapt effectively. Intentional destruction challenges the assumption that a strong titular leader makes an organization high-performing. Instead, ideology becomes the unifying factor. Empowered employees can react more quickly and build greater team capabilities that those languishing under an unwieldy reporting structure.

As you look at these recommended area to improve your organizational culture (thanks, by the way, to Jeremy Gutsche, again, for articulating many of these ideas in his writings), determine one thing you can obtain buy-in to change this week and do it!