Turnarounds – Fixing an ailing business
I greatly enjoyed a presentation at the recent Independent Publishers Guild conference by Sam Richardson, CEO of SPCK, who outlined his approach to turning around the fortunes of the troubled specialist publisher. One of the reasons that I enjoyed it so much was that it covered much of the same ground that I had recently travelled as I led the turnaround of Samuel French in the UK. Sam referenced Michael Watkins’ book The First 90 Days as a source of clear guidance on approaching various leadership challenges. Although I glibly refer to the challenge at Samuel French as a “turnaround”, the company wasn’t in fact about to go under; so according to Watkins’ definitions our situation was actually somewhere between a “turnaround” and a “realignment”. The distinction is one of the degree of danger. Many of the same principles apply in seeking to radically improve your business’s fortunes and future. Indeed the thinking and process of leading a turnaround is a sound approach for management to take at any stage of a company’s life.
One of the first steps is to identify what areas of your business are really generating profit. This may not be as obvious as it sounds. The answer is not just the activity that accounts for the most revenue. How clearly have you broken down the elements of your business to see a Profit & Loss account for individual areas of activity? Just because there are areas that share resource and cost does not mean it is not possible to determine a notional P&L. This exercise may provide some surprising results, which at the very least will lead you to focus on the true performance and contributors to your business. It may even lead you to reconsider whether to continue with all of your current activities, to review costs, and to re-balance your priorities.
Of course any analysis of your existing activity should also consider the external market in which your business is operating. What is your market share? What are the general trends in your market? What would be required to grow your share and profits?
Having mapped your strategic landscape, the next question is whether you have the right resources, talent and team to pursue your chosen priorities and opportunities. This is where difficult decisions may be required to change the structure of your organisation and/or your personnel for example. While change is inherently stressful, it can also be exciting. Offering existing people new opportunities or recruiting new talent can be the most significant way to rejuvenate your business.
Building a team is one of the most rewarding things a leader can do. Sam also referenced in his presentation a program called The Five Dysfunctions of Team, which as it happens we also used at Samuel French to help create the most effective working relationships within our leadership team.
As with any period of significant change it is essential that you communicate openly and positively about where you are heading and why. During times of change people will value even more communication than normal, including opportunities to express their views and concerns. It is part of the process of accepting change, and even embracing it. Achieving small, early wins in executing your plan and sharing and celebrating these, helps to foster collective commitment and belief.
I was excited to be reminded by Sam’s talk, and by his success at SPCK, that leadership with a clear purpose and process can deliver a dramatic turnaround in a business, with rewards for all that are part of it. I would welcome more opportunities to offer assistance to those who would benefit from my own experiences in turnarounds (or even just realignments!).