Changing course after a serious business setback is one of the most difficult challenges an executive will ever face. While solutions may seem simple in retrospect, the shear effort required to make a change can be daunting. In addition to the technical aspects of a turnaround, it is critical to get and keep the support of your team. While there are no simple answers, the following 5 strategies can help you reach your destination.
1. The status quo is not an option. In alcoholism, admitting that you have a problem is the first step in making a change. In business, it’s the same. While executives who frequently review financial data may see the writing on the wall well, it’s often more difficult for line managers to see how dire circumstance have become. To them, news that a dramatic change is in order may come as a shock, especially if they have been routinely given raises and promoted for doing work the same way they have doing it for years. Before issuing draconian orders and slashing staff, it is vitally important to make the case to those who will be managing the day-to-day changes of your business when the process begins. If you don’t have them with you, they will fight any attempt you make to save the business.
2. The road behind us is longer than the one ahead. Very few businesses find themselves in hot water over night. It’s a long process where management continually searches for solutions to losses in market share and profitability. Once a company has gotten to the point where a dramatic turnaround is necessary, most line managers will have some form of “change fatigue.” To maintain credibility as you lead your team through yet another turnaround strategy, it’s important to revisit where you have already been. Making the case that every road pursued has helped further define the next strategy may be a hard case to make, however, it is necessary that your team understands that you are learning from the mistakes of the past, not just making new ones.
3. What would we say if we were our competitors? Placing your managers in the shoes of your competitors can help them understand the situation they’re in. Rather than become defensive, they will begin to see their shortcomings in terms of opportunities to exploit. Clearly seeing how your competitors are filling the gaps you fail to fill will help managers objectively look at problems as opportunities. Key to this strategy is an authentic give and take between sales and operations. Consider a role reversal where operations managers play salesman pitching a competitor’s product or service to their long-term clients.
4. Day one. After an organization has gone through significant change, it is valuable to take a look at the business as if it were the first day of business. What opportunities would you pursue? What opportunities would you avoid? Rather than think about how to save the current economically marginal business, this strategy will help managers focus on the most lucrative opportunities available in the market.
5. If we were all fired today, what would our replacements do? Thinking in terms of what your replacements would do can break the natural human instinct to throw good money after bad. While you may be invested in your current strategy, there is no use in trying to recoup sunk costs. Consider where you are today and move on.
Turning around a company after an extended decline requires empathy, focus, and leadership. While you may have a clear vision of what it will take to succeed, realize that your managers and employees have a lot invested in the status quo. Getting your team behind you requires a form of leadership that is both firm and compassionate. Like news of a heart attack in a family, a turnaround begins with the recognition that major things are about to change. Will you be the Doctor or the Undertaker?