Wednesday, June 05, 2019

New INC Blog Post: Managing a Turnaround in Four Vital Words by Kaplan Institute Exec Director Howard Tullman


Managing a Turnaround in Four Vital Words
Rescuing a business from peril is alternately scary and invigorating. You need to make sure you go at it with a purpose and plan. Start with these basic concepts.

Executive director, Ed Kaplan Family Institute for Innovation and Tech Entrepreneurship, Illinois Institute of Technology

I've done a few major turnarounds in my career.  The stakes are always enormous, involving multiple millions of dollars, hundreds of jobs and thousands of related lives dependent on keeping those jobs and the businesses that created them whole. These ventures aren't easy and the tensions, uncertainties and emotions run very high and very hot throughout the process. This is not a burden that anyone takes on lightly and in many respects the feeling is exactly the same one that every entrepreneur has on a regular basis when he or she realizes how many other people are depending on them to make the right calls. In some cases, where just surviving is a major challenge, no one is looking for applause and kudos-- you're just happy to get out on the other side alive and in one piece.

Fortunately, each of these undertakings (never an especially great word to use in situations like these) was a success in terms of accomplishing most of what we set out to do. While I was plenty tough on the members of the management team and worse to the indifferent directors and investors who had created the challenges and the chaos (many of whom didn't hang around for too long), I was able to save nearly all of the jobs for the people who had been trying as hard as they could to make their businesses successful and to take care of their customers. It wasn't their fault the companies were in trouble, but ultimately their finances, their families and their futures were at risk. To a very large extent, it was on me to look out for them.

In one sad case, where the whole Dotcom world had just imploded, no amount of magic I could muster could put all of the pieces of Humpty Dumpty back together again. When a business starts out as mainly smoke and mirrors, it's most likely to end in tears and misery-- and this I-builder baby was no exception.  Chalk that one up to "experience," which to me is basically what you get when you don't get what you want. The Dotcom era didn't reward anyone's experience in any case because we all found ourselves in a place where no one had ever been before, and nothing properly prepares you for the first time. It was like feeling parts of an elephant in the dark - everyone had a different piece of the puzzle and no one could get their arms around the solution.

But at least I voluntarily chose to take on the task and I knew what I was signing up for and I had, to a large extent, control over my own and the business's destiny. In some other cases, and in some startups, you find yourself in the midst of a tense turnaround whether you planned it, desired it (almost never), anticipated it, or simply found that you couldn't ignore or avoid it. I've seen this particular movie a few times and it's even less enjoyable and more painful. But we bear on, boats against the current, borne back ceaselessly into the past.  

Nonetheless, the many trials and tribulations of the last few decades have supplied valuable, applicable, and effective lessons.  Should you find yourself in the turnaround tornado, willingly or not, here are four basic ideas to consider. I call them the 4 A's:  Attitude, Altitude, Action and Acknowledgment.

Attitude is where everything starts, starting with you. If you're gonna set out on this most difficult journey to make things better, you better begin with the complete conviction that it's worth spending the time and making the trip. You need more than a rationale - you need a level of enthusiasm, confidence and commitment that is completely contagious, along with an unrelenting passion and a demonstrable sense of urgency. If you don't fiercely believe in the dream and a better future, you won't be able to convince anyone else to join your crusade. You need to proceed as if success is inevitable. Otherwise, it's not worth the blood, sweat and tears that you will surely shed.

Turnarounds are all about a willingness to sacrifice what we have at the moment for what we could become. There's no certainty in these deals other than the guarantee that things must change and the knowledge that, if you don't keep going, you'll never get there. All great battles are lost in the middle, when the going gets toughest and the pain of the process overcomes the early passion and enthusiasm and presents real challenges to your persistence. You may be hanging by your fingernails, but you need to always keep your head up high. Your attitude ultimately determines your altitude.

Altitude is about aiming high and shooting for the stars. No one wants to sign up to be just okay or just as good as the next guy. If you're not planning on going all the way to great, why would you go at all?  Anyone can be average, but average is officially over these days. "So what" is no solution and you quickly find yourself slipping further into the swamp. You can be absolutely certain that there will be changes in the plan along the way and plenty of bumps and bruises as you progress, but to succeed you'll need to be stubborn on the vision but flexible on the details, and always looking ahead. Remember that someone always gets the best seat in the house. Why not you? And shame on you if you don't ask for it. If you don't ask, the answer is always "No".

You may not ultimately get all the way there, but thinking small and selling yourself short is a self-fulfilling prophecy. You've got to show your people a compelling vision and a clear path to achieve the desired outcomes. The trip won't necessarily be short (turnarounds always take longer and cost more than you hoped) or quick and easy, but the goals and the end game have to be important to everyone involved as well as ones that will make a real difference in people's lives. Once you know where you're headed, you've got to get busy.

Action is what brings the plan to life. Deciding on a course is nice but insufficient. Prompt action is absolutely essential. You can't win a race with your mouth. People pay far more attention to what you do than to what you say you're going to do. When you do things right, your actions speak so loudly that there's no need to hear what you've said and that's especially good news these days because no one listens to anything anyway. They learn by observing and by doing and you have to personally and consistently lead the charge.

Your actions need to be tightly focused, clearly defined, and carefully measured. Tell your people what's expected of them and what sacrifices will be required in order to accomplish what needs to be done. Hold the team accountable and keep them mercilessly on schedule because it's easy, amid the chaos, for schedules and deadlines to slip and for important things to get lost in the cracks. Don't worry at the outset about home runs and the long-term until you've addressed and resolved some of the most immediate fires. Take on the biggest problems first, but understand that even Superman couldn't solve most of them overnight. Short-term wins and early, even modest, successes help to build the team's confidence, improve morale, and restore long-lost momentum.  

Acknowledgment is basically all about the idea that nobody today does anything important all by themselves and it's critical that, from the very beginning, you appreciate and recognize the efforts, actions and step-by-step accomplishments of the key team members. Don't overdo it and don't spread it so thin and wide that it loses any credibility or value. Not everybody gets a trophy, but almost everyone will have an opportunity to make a real contribution to the cause that needs to be acknowledged. Silent gratitude isn't appreciated by anyone. 

The last key element in the entire process is trust. People are willing to be led on an uncertain journey as long as they believe that they're not going alone, that their leaders are right there beside them, and that the process and the pain will ultimately get them to a better place. As you take things apart, let people go, change the ground rules, and shake the foundations and the faith of the flock, you need to be sure that you also show them a willingness to renew and rebuild the business, a commitment to invest aggressively in a better future that they will share, and the courage to continue even in the face of opposition, obstruction, and negativity. A shared goal is an incredible source of power.  


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