What does a turnaround expert DO?February 21, 2011
I have recently been asked by reporters, “What would you do at Harry and David?”
I responded with a description of the turnaround steps described below. Those steps are always the same, but the specifics vary from project to project. (When I spoke with reporters, I also discussed some of the situation-specific actions I would initiate.)
My S.O.P. (Standard operating procedure)
- Get total control of cash
- Prepare short-term cash forecast
- Select Turnaround Team from key, existing management team members
- Convene the team; go through financial statements line by line–first, looking for ways to improve short-term cash situation, second, identifying ways to increase revenues (and/or margins) and decrease costs — (note: understanding the financial statements inside and out is critical!)
- The result is a written plan that includes a list of who is responsible for achieving what results by which dates and financial projections, which are the numeric representation of the plan.
- Then, it’s time for the team to implement!
- Design and begin implementation of a sound management control system if one does not exist
- In the meantime, there are generally crises to contend with and negotiations with a wide range of stakeholders.
In addition to the above, I also send a web-based confidential survey to all employees. The employees know what’s wrong, what needs to be fixed, and often see things that people at “corporate” miss. Surveys to vendors and customers can be equally enlightening.
The above steps make it sound like the turnaround process is an orderly one, but it’s not. Leading a turnaround is like being a general on the battlefield. It’s messy and fraught with peril. You have a plan, but unexpected crises are constantly arising. I always tell prospective clients that it will feel like the opening scene from Saving Private Ryan. One of my favorite owner/clients used to stop by my office occasionally and say, “I’m having a ‘Saving Private Ryan’ day.”