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Leading Effective Business Turnarounds
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Leading Effective Business Turnarounds

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Why companies fail and a framework for deliverying hyper-revenue growth and sustainable value creation.

Why companies fail and a framework for deliverying hyper-revenue growth and sustainable value creation.

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  • 1. Turnarounds:Envisioning the Possible By Steven L‟Heureux
  • 2. “Turnarounds require a methodical triageof the business situation and decisiveaction; but most importantly, a vision ofwhat is possible.” Copyright 2010, Steven LHeureux
  • 3. Houston,...We Have a Problem!Turnaround FrameworkBuilding the Leadership TeamMaking Organizational ChangesDelivering Double-Digit Growth and ProfitabilityWrap-up and Questions Copyright 2010, Steven LHeureux
  • 4. In Most Cases, Business Problems are Internally Generated.The Principal Reasons for Corporate Decline PercentageSheer Bad Luck 1%External Factors Beyond Management‟s Control 8%Internal Problems Triggered by External Factors 15%Balance of External and Internal Factors 24%Internally Generated Problems Within Management‟s 52%Control Source: Donald B. Bibeault, Corporate Turnaround Copyright 2010, Steven LHeureux
  • 5. 1. Management Trying to do the Same Things Harder or Faster2. Lack of Focus on Key Financial Metrics3. No Clarity Within the Company of Objectives or Business Goals4. Internal Rivalries and Intergroup Conflicts5. Culture of Contentment or Blame and Sense of Entitlement6. Sloppy Business Processes, Quality and Cost Control Programs7. Absence of Market and Competitive Landscape Knowledge8. Management is Self-Indulgent Rather than Self-Critical9. Poor Communications10. Low Aspirations, Negativity and No Accountability Copyright 2010, Steven LHeureux
  • 6. “Durable turnarounds are rarelyaccomplished as quickly as expected. Themore deep-seated the company‟sunderlying problems, the longer it takes fora cure. Even in the best managedturnarounds, things will often get worsebefore they get better.” Copyright 2010, Steven LHeureux
  • 7.  Vet and Mentally Prepare the Leadership Team Benchmark the Company‟s Performance and Quantify the Gap Against Industry Leaders Identify the Underlying Causes of the Shortfall Establish the Turnaround Plan Objectives Gain Buy-in on New Key Performance Metrics and Timetable for Achievement Communicate the Plan - Infuse the Entire Company with a Sense of Urgency, Accountability and Passion for Winning Copyright 2010, Steven LHeureux
  • 8. • Conduct ‘deep dive’ assessment ofObjective One - Active listening Company, industry and competitionand learning mode; fact • Face to face meetings with all key stakeholders, including top customergathering and getting to know and new prospectsthe team. • Uncover knowledge networks and key influencers; get a feel for the culture • Identify ideas for operational improvements and future growthObjective Two - Take steps to • Execute a multi-faceted communications plan to overcomeensure that the current business confusion and distrustis operating at its full potential. • Begin corrective actions related to current operational issues and opportunities for improvement • Compile growth ideas and prioritize • Determine resource allocationObjective Three - Design a plan requirements, translate to budget andfor accelerated growth and operating targets • Present growth strategy to Board forprofitability. approval, refine based on Board input • Communicate to organization; execute! Copyright 2010, Steven LHeureux
  • 9. Radical, Not Incremental Changes are Required Crisis Stabilization  Take control  Cash management  Initial cost reductions Craft Strategic Vision  Assess company‟s strengths and opportunities  Conduct product and market segment analysis Build „Go Forward‟ Leadership Team Launch Stakeholder Communications Install Organizational Changes  Structure change: right-size the company  Culture change: build corp. resilience and commitment to winning Implement Critical Process Improvement  Financial systems and controls  Sales and marketing  Quality and customer support  Information technology systems Copyright 2010, Steven LHeureux
  • 10.  Bias Toward Action – Extraordinarily intense individuals that operate with a high sense of urgency. Outstanding Communicators – Inspirational leaders that build confidence within the firm‟s key stakeholder groups. Highly Focused – Able to quickly identify the important issues and properly prioritize the necessary actions to be taken. Copyright 2010, Steven LHeureux
  • 11.  Key Leadership Team Members  Head of HR – Strong team development skills  CFO – Strategic, system process savvy  Sales & Marketing Chief – Highly competitive/winner Key Department Head Contributors  Product Marketing Manager  Customer Support Manager  Marketing Communications/Brand Manager Copyright 2010, Steven LHeureux
  • 12.  Quickly Assess Key Managers  Benchmark against industry best  Use outside sources such as customers, search firms  Create a management questionnaire  Leverage testing tools  Kouzes Posner Leadership Practices Inventory (LPI)  Meyers Briggs  DISC  BarOn Emotional Quotient Inventory (Emotional Intelligence) Conduct an Employee Survey  360 review of management  Follow-up with the results Hire a Team Leadership Coach Copyright 2010, Steven LHeureux
  • 13.  Seriously Consider Hiring a Search Firm with Industry Expertise Leverage Testing and a Leadership Coach‟s Insight Give More Weight to „Potential‟ over „Experience‟ Conduct Multiple Interviews – Include Dinner with Significant Others Measure Along These Three Dimensions: Functional Industry Expertise Expertise Company Cultural Fit Copyright 2010, Steven LHeureux
  • 14. Key Hiring Factors – You Must Get This One Right! Top Priority is People Development Expertise Must Have Solid Business Knowledge Beyond HR Excellent Judgment – Must Be Able to Value Input Strong Self-Confidence, Enthusiasm and Tact Extremely Well Read in Behavioral Sciences A Developed Sense of Urgency, Action Oriented Capable of Being a “Trusted Confidant” Creative Leader of Motivational Programs Copyright 2010, Steven LHeureux
  • 15. There Are Five Essential Stages in Leading Successful Organizational Change:  Raising a Feeling of Urgency - Reducing organizational complacency and fear of change.  Building the Change Leadership Team - Identifying the right individuals and empowering the team.  Communicating - Establishing genuine „gut-level‟ buy- in, overcoming confusion and distrust.  Celebrating Wins - Diffusing cynicism, pessimism and skepticism by securing „little wins‟ early.  Reshaping the Corporate Culture - Overcoming the pull of „old ways‟ of doing things by embedding new behaviors in the organization. Source: John Kotter, The Heart of Change Copyright 2010, Steven LHeureux
  • 16. In Today‟s Dynamic Global Business Environment, the Ideal Organizational Culture is Based on Resilience – Where It Anticipates and Proactively Adapts Quickly to Market Shifts, Yet Remains Focused on and Aligned with the Agreed Upon Corporate Business Strategy. There Are Four Key Steps in Transforming to an Ideal Culture of Resilience:  Communicate: Ensure information flows (bi-directionally), communicate and gain buy-in on metrics used to measure performance; regularly communicate expectations and results.  Empower: Ensure decision making authority is clearly understood and individuals feel empowered to use their authority.  Motivate: Motivators such as incentives, rewards and opportunities should be personalized (as much as possible), aligned with the goals of the company and not such that they place individuals/departments within the organization in conflict (e.g., sales focused on maximizing revenue at any price while product managers are focused on preserving margins).  Structure: Organizational structure supports rapid decision making and maximizes productivity of the firm. The org chart is understood by everyone in the company and all reporting relationships are well documented. Copyright 2010, Steven LHeureux
  • 17.  Successful Turnarounds Typically Require a New Organizational Structure to:  Reflect a leaner operation  Support rapid decision making  Allow for flexible and cost effective resource allocation The New Structure Must Allow the Company to be Capable of Adapting Quickly and Successfully. It is Essential that the Company is Capable of More than Responding to Industry Trends, It Must Shape and Lead Them. The Organizational Design Imperatives are to Maximize Productivity and Competitive Market Advantage. Evaluation of the New Structure Should be Along the Following Dimensions:  Efficiency of resource utilization  Facilitation of sound & rapid decision making  Responsiveness to the market  Adaptability to change  Ability to hold people accountable Copyright 2010, Steven LHeureux
  • 18.  Improve Customer Base Retention  Provide high value services and product enhancements  Measure and continually improve customer satisfaction Focus on Market Share Gain  Improve product/service value proposition  Target complacent competitor(s) Identify High Growth Market Segments  Rigorous data driven market segment analysis  Prioritize based on measurable evaluation criteria Penetrate High Potential Adjacent Markets  Measurable data driven selection criteria  Conduct Buy vs. Build Assessment Invade New Lines of Business Copyright 2010, Steven LHeureux
  • 19. Within 17 Months, Revenue Jumped 145% and EBITDA Increased 240%...Company was Sold to Harris for $340 Million.  Revenue From Existing Customers Increased 84%  Increased Market Share From 10% to 25% at Expense of Largest Competitor (Harris)  New Customer Revenue Increased 10X by Targeting Emerging Global High Growth Market Segment  Increased TAM (Total Addressable Market) by 4X via Expansion into Two New Adjacent Markets Copyright 2010, Steven LHeureux
  • 20.  Strategy and Operational Decisions are Important, but the People Judgments are the Most Critical Invest or Divest Build an Empowered, Customer Centric Company Culture – Always Ask “Why Should the Customer Buy from Us?” Listen to Ideas and Be Open-Minded Be Flexible, but Remain Focused on the Strategic and Financial Goals Make Decisions and Act Swiftly Communicate Continuously and Honestly Copyright 2010, Steven LHeureux
  • 21. “Always bear in mind that your ownresolution to success is more importantthan any other one thing.” Copyright 2010, Steven LHeureux
  • 22. Thank You….Questions?Please email thoughts/comments to slheureux@rocketmail.com Copyright 2010, Steven LHeureux