Tuesday, April 28, 2009

Of Course I can fix it; I am a Mechanic

The resurrection of a failing or even dying organization is often fraught with a sense of panic. To some the panic is so mild that the leaders believe, in their own self-righteous wisdom that they can ‘weather’ the storm. For others, complete chaos ensues and the downward spiral begins to accelerate. How organizations choose to move beyond their current circumstance rests almost entirely on management and corporate identity. In the past I have written a great deal on corporate identity and ‘knowing thyself;’ in a turnaround situation these concepts are jugular.

Organizational change finds its basis with a vision; centrally a vision of something greater than itself. I do have knowledge of organizations whose vision is to wind down and shut down. However, for organizations which have a drive to achieve their true potential; a vision and a visionary are paramount. As I try to distance myself from my recent South East engagement of a turnaround organization, I would like to share some of the ‘DOs and DON’Ts’. Organizational turnaround requires very specialized talent. It requires a leadership team that understands the dynamics of the organization, the market place and how to institute cultural change.

Through my engagement with the firm, one of the senior executives based her entire turnaround process on one of her management books, Good TO Great, by Jim Collins (2001). In the book, Collins examines companies over a 20+ year period to identify those characteristics of companies that catapult them beyond their peer group. Barbara (not her real name) was so connected with Collins’ work that it became her bible, so much so she had everyone on the management team study it. As the executives undertook meetings and strategic visions, they often changed the phrases dispersed throughout the book. In the short time I was engaged by the firm, I was so overwhelmed with the Collin’s mantra I had to get the book myself.

In reading the book and looking back on the organization I am able to see some glaring flaws in Barbara’s vision. Collins professes “get the right people on the bus.” Essentially, have the right people in the right positions and they will do the right thing. My question was, “Who are the right people?” I have come to realize, the right people are those who have the self-discipline and the knowledge to do what needs to be done. They have the unencumbered role to make hard decisions while implementing the vision. These ‘right people’ must be selected from the hoards of candidates in the market place.

Here is failure number one; Barbara’s organization was unable to identify the ‘right’ people. The first assumption in finding the right people is whether the person undertaking the selection process is, in fact, one of the ‘right’ people. Secondly, when seeking a person for a specific role, such as a turnaround, it is essential that the candidate must have done this type of work in the past. As an example, no matter how astute the hiring manager is, hiring a VP of global tax requires knowledge of taxation. Just because the person indicates they have the skill, doesn’t mean they can convert knowledge to action. In a turnaround, time is of the essence, the wrong people on the bus equates to a timely crash!

Often the organization does not have the judgmental skills to identify the required talent necessary to meet the actual needs. To overcome this barrier, organizations should seek the advice of their outside advisors, auditors, tax advisors or their legal counsel.

Having the ‘right’ people also means having the right leader. All the brilliant people in the world, without a great leader will only produce mediocre results. Collins discusses different types of leaders. He settles that the leader must put the company above all else, bring forth humility and professional will. The leader must have ambition first and foremost for the company and concern for its success, well beyond his/her own personal ambitions!

With a strong Collins Level 5 leader and the right people, the organization still must be disciplined. They must know who they are and a vision to their destination. Organizations that chase around the next money making fad end up getting trampled by those organizations that are focused and on the road to greatness. Barbara’s organization is caught in the dilemma of not knowing who they are, what they are good at and what they can be great at. During my short engagement, they believed they were a professional services organization, a software development company, a Six Sigma services organization, and a consulting firm on specialized techniques. Sadly, the company continues to be a sailboat in a typhoon – chaos with no leadership.

One of Collins’ mantras about great companies is their ability to focus on the intersection of three man ideals: i) Being passionate about something, ii) Understanding your economic engine, and iii) Being the best at what you do. Organizations that can achieve all three in a harmonic balance are great. Those that cannot are somewhere on the continuum of mediocre to good. ,

Organizations have the power and ability to change their circumstances. Collins sites numerous references of how companies leap way ahead of their peers and achieve true greatness. In a world overrun by management faddists, brilliant visionaries, ranting futurists, fear mongers and motivational gurus, the achievement of greatness is still possible. It begins with the right leader and the right people; those who have the experience doing what needs to be done. Then doing it! Management research, analysis and literature are no replacement for self-disciplined experience and determination. If this were the case, my reading of Clymer Automotive Manual has made me a class ‘A’ mechanic.

Thursday, April 16, 2009

Turnaround or Turn-Around

Hardly a day goes by without an array of contrasting signals from world markets. However, it is the person on the street that has the true sense of where the economy is and where it is going. All people communicate their desires with their wallets. I have heard it many times over, “you can always tell what is important to someone by where they spend their time and their money”. It is the pervasiveness of positive sentiment that will drive the economy from bear to bull. Once people feel the economy is recovering their wallets will accentuate their feelings. Until then, we wait.

The connotation of ‘waiting’ shouldn’t be taken as an idle stance until some magic day. Instead organizations have become diligent about ‘change’ and orchestrating such change to keep them afloat; to weather the storm. For many organizations on the edge, the process is a known as a turnaround. The phrase can be used to identify a situation as a turnaround from poor performance or from the brink of bankruptcy. Regardless of the type of turnaround in question, the process is pretty much the same; analyze, assimilate, decide, focus and orchestrate.

Recently I was contacted by a colleague, with whom I have done considerable work, regarding a professional services organization turnaround. The Florida based firm had been in business for thirty plus years and have since been struck with rising fixed and variable costs. Also, with the economic downturn the firm was dealing with a drastic reduction in revenue. In meeting with the executive management team it became very clear they needed a fix but didn’t know how to get from where they are to where they need to be.

During several of our meetings, the management team bantered their views on the local market, their vision(s) and their strategies for bringing the firm to greener pastures. With all of this ‘talk’ I wondered why I was there. They have the ideas, so why isn’t it happening. It struck me like a ton of bricks – no one had a clue what they were doing or going to do to get out of this mess. The strategies where there…but they weren’t relevant. There was talk of cost cutting, new technology, job-sharing, etc. there was no talk about fixing their problem.

Over the last while there are a few words in the English language that have given me spine chills and strategy is one of them. Strategy has become the buzz word for the solution of every instance of derailment. All too often, the pie-in-the-sky strategy results in nothing more than spending more money and drilling the organization deeper in the hole. For me, strategy and strategic thought is more about getting back from where you want to be to getting to where you want to be. Strategic thought should look at the process of getting from where I want to be, back to where I am now. The vision of the future should be clear, tangible and totally unencumbered. Once you are fixed on the vision, then strategic processes will get you to your goal. The process of bridging the gap between the ‘here-and-now’ to the future should be a product of unencumbered thought. A great work on this process was presented by Edward deBono in his book ­­Lateral Thinking. The process, forces the incumbents to avoid linear thinking, a,b,c, etc, and get to a more complex matrix of thought.

These processes are far beyond the average organization, as it requires talent and time. Both of which are not available to the smaller organization. Therefore their resort to their ‘strategic rumination’, a process of moving things around hoping they will hit on the magic button of change. My firm in Florida did just that, they culled the employment ranks only to rehire within 6 months. Because all of the experienced talent had left the area, they had to hire and train. They bought thousands of dollars in computer equipment, only to find they had the cost but no more efficiency. Their failure was a direct result of both lack of leadership, a wealth of chaos and ‘strategic rumination’.

Successful strategic fortitude is a result of a diligence for unencumbered thought. However, strategic planning does possess some potholes; realized by the true strategist. Edward Barrows, in his paper Four Fatal Flaws of Strategic Planning (Harvard Business Review, 2009, UO904A, clearly outlines the flaws of the novice strategist. Organizations’ skipping of a rigorous analysis tops the list of ‘strategic flaws, business managers simply fail to realize that experience is no match for a critical analysis of the situation. Secondly, Barrows clearly demonstrates how the novice believes that the organizational saving strategy can be developed in a day. My firm honestly believed that a boardroom filled with ‘c’ level management could hammer out a plan for success in 6 hours. Even after 6 such sessions in the span of 4 weeks yielded nothing more than great flow charts and rising debt.

Once organizations can make it beyond the first two flaws, often their strategic plan becomes part of the ‘file of bad ideas’. This, according to Barrows is the failure to link strategic plans to strategic execution. Executing strategy requires the work of the entire organization, whereas strategic planning requires only the top team. In his article “Obstacles to Effective Strategy Implementation” (Organizational Dynamics, vol. 35, No 1, 2006) Lawrence Hrebiniak of the Wharton School of Business notes that ‘Strategic success demands a ‘simultaneous’ view of planning and doing. Managers must be thinking about executing even as they are formulating a plan”.

The strategic plan is a living organism, once initiated it takes on a life of its own. With that, it must be nurtured. All too often, the plan is executed and then the team moves on. Barrows sums up that ‘dodging strategy review meetings’ is a killer of often great strategies. Organizations simply fail to follow up and fine tune a great plan, resulting in the flame of success fizzling out.

In turning around a business, the key players must be able to critically analyze who they are and where they want the company to be. Then, they must work from the today, bilaterally to the vision, to build a plan of success. A phenomenal orchestration of strategy is how Smucker’s moved from the jam industry to packaged snack food. For many organizations, strategy isn’t an option; change must come by way of a pure tactical approach.

As for my firm in Florida, they are not a turnaround. Instead they have opted to be a turn-around, and around. They have and will continue to spin their wheels going in circles.