After the Turnaround

After years of executing successful turnarounds I began to notice something about the companies I had performed the turnarounds on and it surprised me. 

Having always stayed in touch with my previous employers, clients and friends I would check in with them about once per year.  What began to happen, after I left, was the companies I had turned around were beginning to show the same signs of trouble they had the last time.

I began researching, with the cooperation of my old clients, employers and friends, what happened.  Discussions centered around industry changes, competition, the market place, the product line, organizational structure and customer viability to name a few.  This was all informative BUT it was not enough to put the companies in trouble again.  What was happening?

Remember there are 3 things necessary for a successful turnaround:

1.        Core business profitability – you don’t grow your way out of trouble.

2.       Financial and Operational accountability – creating sustainable and measurable results.

3.        Organizational change – the culture MUST change with the new vision of the business.

What I came to understand was we were accomplishing 1 & 2 with great results.  We spent hours and days focusing on the data, making decisions based on the facts supported by the data.  We looked at the processes and systems and made the necessary changes to support our projections and plans.  We trained and retrained employees in the new way of doing things. 

What we did not immediately recognize was we were changing almost everything BUT the underlying way we made decisions, the way we communicated.  The companies lacked clarity on what the future looked like without the cloud of trouble/bankruptcy overhead. 

Once the companies had attained solid financial footings they fell back into their old habits.  Results and accountability took a bad seat to status (executing a successful turnaround) and likeability (letting exceptions rule the day).  Politics came back, holding each other accountable was seen as less necessary, the future lacked clarity and discipline was not important.  They were getting back into the trouble they had worked so hard to get out of.

What to do?  The long term survival of a company as it exits its turnaround phase MUST be vigilant, have an almost maniacal attention to results, discipline and accountability.  They must continue to exercise their new found skills in decision making and clarity about the future.  Continue to execute like the turnaround is still in full stride, to begin to relax is a sure ticket, Back to the Future.