17 Jun. 2011 General
Ever thought of how difficult or easy it is to turn a sick enterprise into a profitable one? Obviously, companies around the globe spend millions of dollars to ensure that firms don’t land up in the sick enterprise category. Turnaround Management is the key skill or managerial thought process that calls for incorporation of drastic measures to turn an unprofitable unit into a profitable enterprise. Enormous data, exhaustive research, tons of experience, strings of plans, and above all massive investment. But, turnaround management has not always succeeded in corporate across the globe.
Most turnaround management strategies are set with target market in mind. They analyze viability of offering in a sector or geography. People tend to focus more on macroeconomic factors and build a solution around them to counter the challenges. Analyzing the intricacies of business assumes precedence over normal business functioning. The immediate word associated with turnaround is ‘Change’. No matter how frictionless you want it to be, inertia will always have the upper hand and ‘that’ is what should be addressed.
The first preference of top management in a turn around strategy is replacement of current leadership with new stream of people. More often than not, this is one decision that the Top Management regret but, only after they have invested big time in ‘New’ Stream and parted ways with existing people. Keeping this crucial aspect in mind, it is imperative for organizations to do a root cause analysis for failure before jumping the gun and taking a hard unilateral stand.
The best way in such a case can be to ‘Replicate the unit’. Firstly, set a target date by when you want to freeze your ultimate strategy. Setup a PDCA (Plan Do Check Act) calendar. Identify and recreate each and every element with specific timeline vis-à-vis the actual course of action that has taken place in real life scenario. Remember, restrain from eating too much information in one go. As the information you are analyzing may just have a harmful virus of a wrong decision at some point of time in history. It may be that ‘one’ small step which went wrong and resulted in cascading effect on the unit rendering it into the current state, where you are trying to comprehend what’s in and what’s out.
Do a complete brainstorm of each element and rationale each decision taken and its aftereffects. This exercise will help you to identify the ‘Nodal Points’ where your analysis NOW and THEN shows difference of opinion. The nodal points that acted as blockages in actual case should be cleared in the replica and analyze the fish bone structure of the new model. Now, recreate your new prototype organization with these elements (obviously on paper) and pay due diligence to the Nodal Points. Draw a course of action considering PEST (Political, Economic, Social and Technological) analysis. When in doubt instead of taking a decision, create a ‘No Know’ zone around that section.
Next step is to classify all decisions taken till date in three major buckets. A. Operational (Internal) B. Functional (delivery) C. Outbound (stakeholders, including customers). Assign quantifiable variables to a set of key decisions for the organization. Prepare a matrix of these numbers vis-à-vis productivity ratings of each of them. This matrix will help you to identify sections in RED. There is a firm possibility that the Nodal Zone and buckets in RED have direct correlation with each other. In such a case, a ground level assessment with focus group of personnel from operations cadre highlights the main reason for divergence on key issues.
The results may not be immediate, unlike a dashing turnaround appointment, but they are more sensible. Employees know the organization better than anyone. A logical approach to things can work wonders, like in the case of Tatas. The resurrection of Tata Steel after Rusi Modi will always stand out as a classic case of managing a ship by inhouse captains. If Tatas can do it, so can you! The only difference is Tatas KNEW their organization and you Will Have to KNOW you organization… HONESTLY!
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