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.

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