Burnarounds: Unlocking The Double Digit Profit Code

Ignoring Warning Signs of a Turnaround

So you read my last post on what the warning signs are. And you found that your company has 2 or more signs. Truth be told, you probably have more than two but since you may not be in touch with reality, you can't see it. Your people are probably telling you everything is fine. That is because either they don't see it-or more likely, they don't want to admit to the boss that everything is not fine. Why? Because then they have to accept responsibility and fix it.

But you haven't done anything about these warning signs have you? Got a big long laundry list as to why you can't (or don't need to ) do anything about these warning signs? I thought so. Go directly to jail. Do not pass Go and do not collect $200. You are part of the problem. Actually, you are the problem. Better hope your Board doesn't find out, or you may not be the problem for long. This is the reason Board's bring in new CEO's. Because the old one either can't see the problem, or won't do anything about it.

And why is it most CEO's won't do anything about impending disaster. They are afraid. Afraid things will get worse if they mess around. Afraid of the reaction they will get from their employees. Afraid their senior managers will ignore them (they probably already do that). Get off your duff before it's too late! Take action! The British Are Coming! The British Are Coming

Warning Signs of a Burnaround

A Burnaround is like pre-hypertension. You don't have high blood pressure yet, but if you have "pre", you will very likely develop high blood pressure unless you do something about it. Think of a turnaround as the high blood pressure. If your company needs a Burnaround, you will very likely need a turnaround very soon. And keep in mind that many companies never survive a turnaround. A turnaround is like cancer. The patient can die from the disease, or the treatment can kill him too.

The disease of a turnaround is poor or non-existent profits driven by a host of operational and organizational practices. That can kill a company. The cure is major organization and operational surgery. That can kill the company too. You don't want to get in a turnaround.

The good news is the pre-Burnaround warning signs are easy to spot. In the next few postings I will tell you all about them.

Entering the Burnaround War Zone

You can’t build a career, or a company by maintaining the status-quo. If you want to maintain the status-quo, you should get a government job. They are good at that. Well, maybe not so good. And if you want to make huge gains in your career, or your company, you have to make huge change. Sometimes it needs to be massive, gut-wrenching, nail-biting change. Other times it is vast, sweeping change, but not so gut-wrenching.

And the companies that need change the most are the ones that have changed the least. I speak from experience here. In one case I was in a turnaround situation of a 100 year old company. The genetic coding in a company that old is unbelievable. I have to tell you changing a culture that old and that entrenched is damn near impossible. And no matter what the B school profs tell you making sweeping changes in a culture like that takes years. Long, hard, painful years. If you ever sign on to a deal like that as the CEO, make sure you get yourself a multi-year contract. It will take at least that long.

And make no mistake. A Burnaround is a war zone. Just about everyone will be against you. So buck up and get ready for a rough ride. A ride you, or the company might not survive.

Ask About The Elephant In The Room

CEO's have to ask the right questions to get the right answers. That may sound simplistic but by that I mean the penetrating, below the surface questions to peel back the onion and expose the real issue or the real answer. There is an elephant in the room and often nobody sees it, or wants to recognize it until the CEO does.

It's your job as a CEO to ask the questions nobody else is asking. The questions that reveal the soft underbelly of the organization. The questions that need asking. Questions that are potentially embarrassing or controversial. In fact, the more controversial the question, the better. Don't ask the what's-ask the how's. And then listen really hard for the small voice that will alert you to a problem-or an opportunity.

I Hate "Either-Or" Decisions

It's your job as a CEO to force your people to make the right decisions as opposed to the expedient, easy, or "either" "or" decisions. Once in a while someone will propose an "either we do this or this happens" decision. As an example, "either we lower our price or we lose market share, or my favorite, which is "either we lower our margin or lose customers". I hate "either-or" decisions. And as a CEO you should too. Whenever I hear "either-or" my guard is up. People who think in "either-or" terms aren't thinking at all-they are taking the easy way out.

When they do, it is your job as the CEO to reframe the question. It's your job to be unreasonable. Here is what I say-"Guys, we are not going to lower our price and we are not going to lose market share." Once you put that stake in the ground it forces the organization to look harder at the problem and come up with more creative solutions. And yes, sometimes you will be forced into an either or choice, I understand that. But make that is your last, not first resort.

Other People's Opinions Are Wrong

It is true that people will be wrong 99% of the time when asked about an idea you have. If you have an idea for something, a new product, a business, a new way of manufacturing something, I have no clue as to whether it will work or not-and neither do you.

Ideas are vaporware until you bring them in the material world and try them out. Until then, nobody really knows if they will work or not. The problem is there are too many "yea-buts" in the world who are afraid your idea will make them look bad if it works. And the business world is full of "idea assassins" (see my previous post on this), who have a vested interest in your failure. That is why so many people will tell you your idea is no good. If it never sees the light of day it proves them right. And remember, trying something new risks failure. Idea assassins are more comfortable never trying anything.

I don't ask opinions on a new idea-I get it out there into the world and let the market be the judge.