Why a business turnaround succeeded on its 4th attempt

Why a business turnaround succeeded on its 4th attempt

The client (fictitiously named Pipes & Pumps) had tried at least 3 times to turnaround a core non-profitable division of their business.

The message here is that a pure P&L – Balance Sheet approach to turning around a business, will not work. What is required in addition is a more human approach, as I have outlined below.

We have found over countless turnaround projects that it is the soft stuff that is the hard stuff. Being human is as important as the technical aspects – for instance if there are redundancies involved then people will go through a grieving process like any other personal loss.

Here is a dot point summary why this the Pipes & Pumps turnaround succeeded, which you might consider if in a similar position (note there is little mention of the technical aspects of the turnaround)

  • Foremost was we bought all the key players along for the journey. Some of these workshops numbered 50-60 people: senior leadership, through to the guys in the workshop. We accepted that everyone had a voice and they were listened to.
  • We admitted to everyone in the initial sessions that we didn’t have all the answers and we needed their involvement. Their contribution was invaluable.
  • We minimised any surprises especially with the bad news. For instance there were redundancies (never pleasant) involved but we didn’t shrink from fronting everyone as soon as we knew.
  • We recognised that people go through a process of loss and grief when embarking on a significant change like a turnaround. Some quicker than others.
  • We ensured leadership was accessible. Their active role was seen by everyone else as a signal to get on board.
  • We ensured that the General Manager was the hero of the turnaround, not us the external consultants. It so happened that the GM ticked all the boxes for what we required in a turnaround leader. We got lucky in this respect.
  • In summary while we exercised a healthy dose of tough-love where we had to, we were human and treated others with respect.

Prior efforts by leadership failed due to their missing these key points. If you have someone internally, with the technical and soft skills who has been-there done-that, perfect, else find someone externally who has.

There is always involved blood, sweat and tears in a turnaround. None of them are easy, however if you adopt these suggestions you stand a better chance of coming out the other side.

As of today the business has returned its 6th consecutive month of profit. We are now working with the team on Strategy and profitable growth.

Article written by Jeremy de Constantin
deConstantin Business Advisory is a specialist exit planning consultancy based in Sydney, Australia. We are partners with the Business Enterprise Institute, a Colorado based think tank on mid-market private exits and transitions, headed by John Brown. On our team we have specialists in commercial, employment & contract law, investment banking, financial planning, forensic accounting, process improvement, HR, strategy and performance measurement.

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