Making Turnarounds Work !

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    Making Turnarounds Work ! - Presentation Transcript

    1. Making Turnarounds WORK by Erik Van Rompay FIRST DRAFT – © 2008
    2. Note
      • This presentation was made for an audience of young net-entrepreneurs. The style reflects the spirit of the audience.
      • All illustrations were used to tell an animated story …. (up to you to imagine…)
      • A very strict “business” presentation made for a French Bank (without images) also exists and is available on request (see last page)
      • Why do so many turnarounds fail ?
      • Companies squander their energies on attractive-looking projects or major restructuring projects that fail to produce bottom-line results
      WHY ?
      • After months of turnaround activity and redesigning the company, we find dramatic improvements in major fields…. but with an overall performance decline.
      How is this Possible ? DEFINITION (Platt – 1993): The Turnaround Manager is responsible for getting control of cash, eliminating excesses (people, products and facilities), focusing upon the company’s core competencies and preserving assets .
      • NUMBERS…. not available for Turnarounds
      • For Major Change Management programs
        • European survey LOGICA/EIU (2008)
          • 36% are stopped before deployment
          • 30% do not give financial results
          • => 66% fail (and we are not yet at TURNAROUND LEVEL)
      Turnarounds Change Mgmt Programs Projects VALUE High impact – high value Low impact – no value
    3. Personal experiences - 1
      • one of my consulting missions : a furniture distribution company in distress
      • 2 turnaround plans in 18 months
        • GREAT  : operational costs reduced by 15 %, the creating of a real brand name, larger audience and sales increase of 14% during those 18 months (+ successful web launch).
        • BAD  : Financial results : unchanged (ebita worsened by 0.2%)
      Note: I was only a consultant on this mission so I could not handle some sensible issues like closing down the 10 most lost-generating outlets.
    4. Personal experience - 2
      • turnaround of a retail company in the event industry
        • GREAT  : operational costs reduced by 45 %, beating the historical leader, sales volume multiplied by 150 times in 18 months.
        • BAD  : the company was close to bankruptcy and had severe cash problems. Our exponential growth only created a success story hiding our continuous cash problem.
      A great business success but without any financial result (so negative shareholder value) ?
    5. Personal experience - 3
      • Solving cultural conflicts after a failed merging (2 Internet platforms)
        • GREAT  : Strong audit detecting the possibility of a perfect merging
        • BAD  : The merging did not work
          • No new products
          • No new sales neither new clients
          • No innovation during 2 years in a very competitive environment
      I came in to solve the cultural conflicts and to make the company running again. Result : growth of 70%, 2 successful new productlines…
    6. Now, it is time to present…
      • The six elements
      • that make
      • a turnaround work !
    7. Or do you think you can fight better than Cesar ?
    8. Critical element 1: you need a champion Who do you pick as a champion to execute ? The intellectuel The communicator The force of nature The beauty
    9. Critical element 1: A high engaged executive
      • You need the first 3 in one person : the intelligence, the communicator and the force
      • Turnarounds can only succeed when senior executives invest time and energy
        • In 80% of the cases, a new executive is brought in to execute a radical change
        • In 80% of my missions, I was preceded by at least 3 failing change management experts.
      • Only a boss can act to:
        • Dedicate the best people
        • Be generous on resources (people, IT…) to make things happen
        • Implement the right communication
        • Define the adequate pace to change
    10. Critical element 2: The right and ambitious scope
    11. Critical element 2: The right and ambitious scope
      • Most turnarounds fail as they are oriented towards one « field » or one « activity » or one « process » and not to the whole company (or even market transformation).
      • Don’t go too wide
        • You can not change everything overnight. You need a roadmap.
        • People need to follow the leader… take care they are behind you
      • The target must span the entire business to ensure sufficient breadth…
      • If you can impact the whole market ! Just go for it!
    12. Critical element 3: Know your value ? What do they want you to do ? Why are you important for your clients ? What do you do for them ?
    13. Critical element 3: Know your value
      • Everyone thinks knowing the value its company creates … but have an audit to see what clients would appreciate in your company.
        • A wider catalogue or faster delivery ?
        • A faster contact center of a web interface ?
        • … .
          • Personnal experience  : a cybercafé in distress
            • the first reaction was to replace the existing computers with faster and new ones and repaint the wall (nice and new !)
            • What people wanted was better service (an area to take a good cup of coffee, information leaflets…)
    14. Critical element 4: Succeed cross-influences ?
    15. Critical element 4: Succeed cross-influences
      • The corporate landscape is complicated… back-office and front-office are strongly linked with visible and HIDDEN links.
      • Take care of the hidden relationships between people, teams and organizations,
      • Assign full-time team members from a wide range of functions/services
    16. Critical element 5: Monitor your turnaround
      • manage your existing customers as they are the one that deliver you cash.
          • Try to increase the purchase ticket
          • Also focus on prospects that are unhappy being with your nearest competitor
      • Create a 2 way communication channel to know what happens
          • One from your employees to yourself
          • One from your clients to yourself
      • Know what you collect !
      • Define the critical element of your turnaround.
          • Is it scope, time or budget ? (remember, you can only pick one… the other two are less critical)
      • How do I monitor my turnaround
          • It is common to change the way to monitor during the turnaround process.
      • Is it working ? Are the results on target ?
          • If no, how to correct
          • If yes, are we sure we are on the right track ?
      Critical element 5: Monitor your turnaround
    17. Critical element 6: Thinking out of the box You could be the same Obelix doing different things ! - Doing the same thing… but serving 3 different markets
    18. Critical element 6: Thinking out of the box
      • What organizational drivers will determine the success of a redesign?
      • Does the front-office understand back-office and vice versa
      • Does everybody understands business ?
      • Do salespeople know what they are selling and what it takes to deliver ?
      • Does everyone has the attitude to improve daily operations ?
    19. Critical element 6: Thinking out of the box
      • Create several WHAT IF scenarios
      • What if a new competitor delivers my products at half price ?
      • What if I start selling my products in another country?
      • What if I change operations so I can reduce staff by 50%
      Personnel experience: 2005 A new market entrant delivering my products at TOP250 companies for FREE (while my average ticket was 40.000 euros). Solution: as we blocked the market early 2005 with a unique service offering, 90% of our existing client-base stayed with us.
    20. 5 most frequent pitfalls
      • the wrong team (or underpowered team members)
      • preview only the impact of the plan itself and not the impact to the whole company (or even customer relations)
      • settle for a status quo (we turn around not to loose our world… versus we turnaround to win the world)
      • overlook communication and buzz
      • burnout of the executive (out of magic potion)
    21. Don’t hesitate to contact me… Erik Van Rompay [email_address] Tel. 33+(0)6.79.91.06.87
    22. Turnarounds need to combine the 4E+4C+4P Product Price Place Promotion Consumer Cost Convenience Communication Experience Exchange Everyplace Evangilism 4P 4C 4E + +

    + Erik Van RompayErik Van Rompay, 2 years ago

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    The 6 critical keys that make Turnarounds work !

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