Lessons from Turnarounds
So you want to build a best-in-class organization? Great, there are many books and articles that should help you on this path. But wait, you are working in a company that is in financial trouble, has limited funds available or worse, and does not attract the top stars that you would like in order to become best-in-class. Below is the description of how I overcame similar situations.
"The low degree of difficulty allowed even inexperienced staff to create many quick wins and in the aggregate we achieved good results"
Many have read the book ‘Good to Great’ by Jim Collins. One of his key advices is “First Who Then What”, getting the right people first, getting the best people on the bus. Easier said than done, we all want to have the best people in our team, we continually review our staff and attempt to develop (and replace) people so that we only have great performers. Notwithstanding that environments change and today’s top performer may not be tomorrow’s top performer in a different situation, it is difficult to put in stars in every position. And it is difficult to even attract those stars to a challenging turnaround situation with an uncertain future.
The hire and fire approach
Years ago, in my first turnaround experience we had 30-50 branches, some of which were profitable, some of which less so, and several were losing money. To drive the turnaround, we focused on people, replacing the managers of the money loosing operations with new ones. While this got us into the profitable zone, it was not a recipe for long term success. The probability to get 30-50 star branch managers is not very high and the turnover in management (and other staff) actually hindered consistent and repetitive success.
The structure and process approach.
At my next turnaround experience we almost went the opposite way. Instead of trying to replace underperforming managers and getting the best people in every position, we would focus on implementing best practice processes (and consistent) systems everywhere. The result was maybe not a quick turnaround, but instead we created a lasting one, starting years of record profitability. In the long term these processes and systems allowed for consistency and were less dependent on people, both management and staff.
With a greater focus on processes (and systems) versus people, we were successful in getting significant changes and improvements implemented. But how to achieve the best-in-class processes and systems, if you do not have the funds and great staff to support them? Key focus areas were Continuous Improvement (CI), Benchmarking and Outsourcing.
The power of continuous improvement (CI)
The real difference is much greater when you think the difference is only minor. We focused on projects with lower difficulty (e.g. time, cost, effort, risk, complexity), but that could yield quick results. When working on those CI projects, we also asked staff to focus on commonalities, e.g. spending time on the 80 percent rather the 20 percent. That way changes could be easier implemented elsewhere or scaled up. We delegated many tasks among existing staff. The low degree of difficulty allowed even inexperienced staff to create many quick wins and in the aggregate we achieved good results. Broad involvement / staff empowerment and the many success stories of the staff in various engagements led to better motivation especially in the tough and many times frustrating environment.
Below is the format we used:
• Everybody selects 3-5 projects No Brainers/Quick Wins If larger activities, simplify and/or split in several tasks
• Monthly reporting on process PowerPoint Slide with bullet points Wall Poster
• ‘Lean’ training provided using an internal resource.
• Possible “Kaizen” event for a major project
Both benchmarking within and outside the organization are activities that can be achieved with little effort and costs. We were able to delegate many benchmarking exercises to resources within the organization. Having many branches and locations helped here, we encouraged managers to meet and work with others in different offices. Learning from each other’s experiences and successes resulted in speedier implementations, greater acceptance of change and lower costs. Outside benchmarking both within the industry provided many ‘copy and paste’ solutions that were tested elsewhere and hence required less development efforts.
With limited staff (quantity and quality) available, many tasks will not be able to be done in-house. Outsourcing was the only solution. Some benefits of outsourcing are clear and widely reported on, such as access to specialized resources, internal cost savings on infrastructure, increased efficiency, focus on core areas, overall cost savings, etc. But many times overlooked are the various (many times free) services that vendors and potential vendors are doing to streamline your processes. Especially when we did not have the skill sets in-house or were pressed for time and money, those activities jump-started many changes. In the end it was a win-win for both. We reached the cost savings and efficiencies and the vendors got additional business.