Business turnarounds always require a lot of work and skill. They are paradigm shifts that often affect every person and process in the company in some way. Managing change at this level requires significant leadership, planning, and know-how. This is a very simplified list of things that an organization must do to succeed as they embark on this set of changes.
1. Get help. I cannot emphasize this enough. Business leaders often get a “business myopia” that keeps them from seeing the things that need to change. This is especially true in organizations with leadership with long tenures with the company or in family-run companies. The type of vision and drive required to enact real change is rarely found within the organization. Hire a turnaround expert and listen to them.
2. Conduct a thorough business analysis: Analyze your business thoroughly to understand the current state and identify the areas that need improvement. I suggest using Lean Methodology as your basis for this in any organization. It is a very simple, yet extremely effective, approach to understanding value in your organization.
3. Identifying the root causes of failure: Determine the underlying issues causing the business to underperform. Root cause analysis is one of the most critical skills needed to lead and change any organization. If something occurs in your organization, good or bad, and you do not know why it happened you can neither capitalize nor correct.
4. Developing a comprehensive turnaround plan: Create a detailed plan that outlines the steps you will take to address the identified issues. This seems obvious, but many times this step is overlooked. It is critical that this plan is also flexible and regularly reviewed to ensure that new issues are addressed.
5. Implementing cost-cutting measures: Seek and find ways to reduce costs and improve efficiency. This step deserves its own article! This is the crux of saving a business. Cutting costs (internal and external), increasing efficiency, driving improvement, and increasing customer satisfaction all are critical keys!
6. Reevaluating the business model: Consider whether your current business model is still viable and make necessary adjustments. This step can be the hardest of all. Sometimes the issue is not a process, product, or location. Sometimes the thing that most needs to change is the whole business model. Look at software companies. When I began my career, a company would spend 5 figures for a software package just one time. Now everyone pays a monthly fee for software. The growth of the SAAS model in software is an excellent example of business model reevaluation.
7. Strengthening customer relationships: Focus on improving customer relationships to increase loyalty and revenue. Often I joke that I was raised in Customer Service. To fund my college expenses I worked customer service jobs in call centers. I then have spent many years in a purchasing function. Keeping your customers satisfied and coming back is fundamental to a successful business. If you don’t know what your customers want you to do differently, ask them. A key component of your turnaround will have to be customer retention and growth.
8. Leveraging technology: Use technology to improve processes, increase efficiency, and stay competitive. This could mean adopting automation software to eliminate manual tasks, using data analytics to make informed decisions, or implementing AI to improve customer service. Technology can also help in identifying inefficiencies in business processes and provide solutions to address them. Technology is always changing and offering new opportunities.
9. Engaging employees: Get your employees on board with company values and objectives. It's also important to focus on your company culture to increase employee morale and productivity. This can be hard. People are creatures of habit. But one thing that has helped me in my change management career is this: ask your employees how you can make their job easier. This has a few effects. First, your employee feels seen and heard. Giving them time to review their concerns and frustrations builds trust and motivates the employee. Second, making their job “easier” is simply making their job more efficient. More efficiency means less waste and less waste means more profit.
10. Monitoring the success of the turnaround plan: Regularly review the progress of your turnaround plan and make necessary adjustments. This step is a fundamental step for all project management and organizational change is no different. Measuring goals, KPIs, and outcomes are must-dos.
The success of a turnaround strategy largely depends on early intervention, strong leadership, and the commitment of the entire organization. It's also important to remain positive, stay committed, and be flexible.
