There’s no simple answer when your company’s performance has persistently disappointed, but there are certain steps that are essential for returning to success. Think of the steps I share today as places you must focus your attention in order to trigger the shifts that can transform results from subpar to impressive.
1) Say the word “turnaround”. It may sound like a cliche, but the first step to solving your problem is admitting you have a problem. Too often, leaders make excuses and blame external factors: the economy is weakening, the supply chain just needs to catch up, etc. Even given such externalities, some of your competitors are growing and turning a profit. If you’re not, it’s time to tell your team and employees, “We are in a turnaround situation.”
2) Involve your team. Be frank and direct, but also listen. Depending on the size of your company, there may be numerous employees who understand the challenges better than your leadership team does. Find them and solicit their best thinking. The more you involve employees in your strategic shift, the more likely you are to get it right and to gain their buy in to the tough decisions and bold actions that likely will be required.
3) Define the problem. Margins are declining, sales have been in downtrend, but why? Have your capabilities fallen behind what the market needs and demands? Has your leadership team made strategic mis-steps? Decide whether your business model is still valid. Is the problem strategy or execution? This step is essential; you should emerge with a very simple—but not simplistic—statement of the problem you need to solve.
4) Develop a turnaround thesis. What are you going to do differently? Your thesis should explain “if we do X, then we should get Y results” and by when. This is the plan the company is going to execute, and it needs to be both realistic as well as comprehensive.
5) Take time for a reality check. Is your thesis viable? Do you have the talent, time and resources to execute it properly? Too often, management comes up with a plan that might work if you had more funding or scale or talent… but you don’t. It’s great to be aggressive and stretch, but stay grounded in the realities of the company’s capabilities and the risks inherent in your plan.
By focusing your attention on all five of these steps, you significantly increase your odds of executing a successful turnaround. But if you don’t admit the size and scale of your challenges, or skip a detailed problem definition process in favor of trying many things, or…you get the point—your odds of success plummet dramatically.