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Business Transformation #1 - Stakeholder Support

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The defining crucible of leadership in a business transformation is the process of rebuilding stakeholder relationships and crafting a narrative of future success that effectively sets the stage for economic viability moving forward.

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Business Transformation #1 - Stakeholder Support

  1. 1. BusinessTransformation #1 - Stakeholder Support February 2019
  2. 2. Overview • The defining crucible of leadership in a business transformation is the process of rebuilding stakeholder relationships and crafting a narrative of future success that effectively sets the stage for economic viability moving forward. • The headline grabbing value maximization results of a successful business transformation are impossible without stakeholder support. • A strategic approach to stakeholder relations can make the difference between success and failure. Abraxas Group LLC 2
  3. 3. Stakeholders Stakeholder Group Primary Concern View of Transformation Capital Providers Risk Adjusted Returns Skeptical Employees Job / Career Prospects Open Suppliers Current Exposure / Future Sales Hopeful Abraxas Group LLC 3 Each of these broad constituencies has a unique set of concerns, risk tolerances, and levers at their disposal to help or harm a nascent business transformation. It is the role of leadership in a business transformation to manage each constituency for the maximum benefit of the enterprise.
  4. 4. RebuildingTrust Admit Fault Efforts to avoid or shift blame are counter-productive. Admit fault, focus on what is different now, and move forward with a discussion of solutions. Embrace Skepticism In the early stages of a business transformation, skepticism is to be expected, and is warranted, from long-suffering stakeholders. Earn Trust Leaders should welcome the opportunity to change minds and make that goal explicit in all communications with stakeholders. The success of a business transformation rests on the ability of the team to rebuild stakeholder trust Abraxas Group LLC 4 Share Bad News Stakeholders in business transformations are starved for information and candor. Downplaying the scope or nature of the problem will only further erode trust.
  5. 5. Abraxas Group LLC 5 Analysis Credibility Alignment The challenge in rebuilding trust with this group is in respecting each party’s risk/return preferences and structuring a formal proposal that will result in a palatable long-run equilibrium. Capital Providers
  6. 6. • Address challenges candidly, emphasize the end of the status quo • Explain the scope of changes to come • Set expectations regarding timing of changes and status updates Employees and Suppliers Abraxas Group LLC 6 Employees Suppliers • Apologize for lack of clarity, offer c- level point of contact to expedite issues during the process • Emphasize the duration and scope of relationship • Set expectations regarding payment, terms, and updates Humility, Candor, and Clear Expectations are the keys to rebuilding trust with employees and suppliers
  7. 7. [InsertTitle] Abraxas Group LLC 7 Capital Providers Employees Suppliers Time and Attention Upgraded financial forecast and reports, accelerated reporting cadence (quarterly to monthly, even weekly). The leadership team should be prepared to invest considerable time and attention in stakeholder communication Townhalls, company-wide email updates, small group gatherings. C-level point of contact to expedite issue resolution, update calls and visits for critical vendors.
  8. 8. David Johnson is a career change agent who has served as interim manager or financial advisor on over $5 Billion of middle market transactions. In his 20+ year career, David has served as an advisor, board member, interim manager, and operator at organizations ranging in size from pre-revenue startups to Fortune 500 organizations. David has several publications to his credit and is a regular speaker on the topics of change management, performance improvement, turnaround, restructuring and value creation. He received his MBA from the University of Chicago and completed his undergraduate studies at Fairleigh Dickinson University. Role Highlights • Turnaround resulted in a 300% YoY increase in Q1 EBITDA • 6x YoY increase in EBITDA achieved as a result of turnaround plan • Improvement initiatives yielded a 34% decrease in DSO • Interim CFO, Industrial Services Company (Sponsor-Backed) • Interim COO, Behavioral Healthcare Company (Nonprofit) • Interim CFO, Construction Company (Sponsor-Backed) Email: david@abraxasgp.com Ph: 312-505-7238 Background David Johnson Abraxas Group LLC

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