Operational Improvements and Turnarounds

Management teams whose companies are experiencing anemic revenue growth, inadequate profitability or negative cash flow may find themselves under severe pressure to improve performance. A turnaround strategy may be needed. Objectives may be easily stated, but the answer of how to achieve them is rarely obvious. Why is the company getting outperformed by peer companies in the same industry?  Is it simply a question of “right-sizing” the company’s facilities and expense structure, or will this risk sending the company into a doom loop? In what areas should investment spending be increased to take advantage of growth opportunities? How can the company finance that kind of spending when financial resources are so thinly stretched?

Chandler will work with the CEO and management team in thinking through these vexing challenges and charting a turnaround path. It may start with basic product line and business unit profitability analysis. Some proven management principles that Chandler has used for many years may be applicable, such as:

  • Every product line must pay its own way. Raise prices, reduce costs or exit product lines that aren’t contributing adequately.
  • Starve all but the essential. Eliminate all programs, departments and activities that aren’t clearly essential to the turnaround.
  • Make every product line one you are proud of. Products or services that are inferior to the competition, even if contributing, must be re-designed to leapfrog the competition. Do not tolerate mediocrity.
  • Implement the One-Two Punch. Shrink the business to its healthy core and then increase investment in that core. There are no sacred cows, but negative energy must be counter-balanced with positive energy.
  • Remember that what gets measured gets done. Implement key metrics that will ensure steady improvement in performance.
  • Divide and conquer: Assign key objectives and tasks to each member of the turnaround team. Hold regular follow-up meetings to report on progress and take corrective action.

Part of the philosophy of turnarounds is to push the responsibility for profitability management to the lowest practicable level. It is important that managers at all levels share ownership of the problem. They must be trained in the disciplines of execution and taught how to manage by the numbers to deliver the required results. Part of everyone’s brain must also, however, be thinking like entrepreneurs in coming up with creative growth opportunities.

The company must create a one-to-one correspondence between the manager’s and the company’s interests. This may require a change in the compensation system to reward those who can deliver significant improvement and penalize those who cannot. The company must adopt a “no excuses” culture. All reward systems must be in alignment with company needs and objectives. Chandler can help the client sort through these issues and formulate programs that will ensure steady improvement in performance.