If you look around, you’ll notice many once high-flying companies get stuck. They are either in a downward spiral or simply experiencing a slow death. Instead of looking for creative ways to break out, many choose the safest paths of cost cutting and settling in order to fix yesterday’s problems – but they aren’t taking advantage of tomorrow’s opportunities for a bounce back. Boards and C-suite executives need to start a new dialogue about the complex and wicked challenges ahead of them. This takes strategic foresight and resilience.
Resilience, says psychologist Robert Wicks, is “the ability to learn from and rebound from challenges, adversity, and stress.” When you’re resilient, you’re able to keep going mentally and physically in spite of the pain, grief, and anger that may come with adversity. It is different from denial and having a false sense of confidence. Boards need to look beyond current problems and draw on constructive coping mechanisms, such as optimism, positivity, acceptance, and faith that things can be changed without giving in to hopelessness. You need to believe that you will not only survive, but also stage a bounce back.
But not many executives like corporate turnaround missions, and I have walked away from a few in my career because if the commitment and the readiness aren’t there, the chance of success is lower than zero. When you take on a corporate turnaround job, the first challenge is that the clock starts ticking immediately, and the more you dig into what’s going on, the more you realize how difficult the situation is. Then, when you look at the clock, you realize you’ve used up half the time (and cash flow) before you even got started. The second challenge is that there is no time for indecision; you simply have to make a decision and run with it. You need to believe that what you’re doing is right.
Here are some ideas if you’re tasked with helping a once-great company bounce back:
01/ A good bounce back strategy needs to start with immediate and effective stabilization. Much like paramedics arriving on a scene, the first thing they do is stabilize the patient. The idea is to prevent any worsening of the situation, whether dealing with defecting customers, cash flow, or employee morale. Get rid of those that pay lip service to change, but are putting their personal interests ahead of the company. It is not difficult to identify who they are.
02/ An effective bounce back strategy needs a good view of the future, demonstrating a shared destiny. Seeing your company with fresh eyes may be impossible from the inside, and it is necessary to bring in consultants to provide strategic foresights. The outside view of the industry is critical. And don’t forget: it is the board that witnessed the company dwindling into a death spiral, and they need to be managed so that transformation leaders can do their job.
03/ A true bounce back strategy must go beyond the financials. It needs to focus on long-term strategic health in addition to financial heath. A strictly balance sheet-based turnaround strategy is often a red flag, as companies tend to make deep cuts – including in areas where they need to invest to sustain a healthy turnaround. You should not reduce costs at the expense of competitive advantage or growth opportunities.
04/ A sound turnaround strategy must stop managers from wasting time blaming others for a company’s problems. There are always external factors, but a company should be able to navigate those changes and focus on what makes people think they cannot control their destiny – which is not something you want to have in a turnaround situation.
05/ A sustainable turnaround strategy needs to address the most fundamental problems, tackling the deepest underlying core causes and not just the symptoms. Bounce back plans must be sufficiently broad and deep to ensure that all the mission-critical strategic and tactical issues are addressed. Incremental approaches to change will not work. At the very core, do you have a great product to offer? Or is your company operating at the end of the S-curve, where investments would not yield much return and it’s time to start a new curve?
06/ A successful bounce back strategy needs strong leadership. Contrary to the thinking that it takes a ruthlessly hard-driving dictatorial style to make things happen, it in fact takes a lot more than that. It takes both a top-down, command-and-control leadership style combined with a soft leadership style to bring a sense of purpose or a shared destiny to the company. Not many leaders possess both, and it takes both to master a turnaround.
07/ A true bounce back strategy must be supported by a high-trust team. A bounce back is not one person’s job, and it needs collective creativity and energy to power up the company’s morale and battered confidence. The team not only needs to buy into the vision, but also communicate this belief across and beyond the organization. Everyone must own the change; it is not just the job of senior management. Trust is key and needs to be built from bottom to top, and is a result of integrity, transparency, and accountability.
08/ A strategic turnaround needs focus. Strategic focus is what makes a sound strategy. You will be surprised at how many large organizations are operating without a strategic focus, essentially running on autopilot. Strategic focus means there is an end state – and a destination must be intrinsically and economically attractive based on an underlying demand for that service or product.
09/ Behind any bounce back is an emotive and strategic dialogue. These interactions among stakeholders and leaders are crucial to employees’ motivation and trust level. The leadership’s vision and value must translate into employees’ perceptions of trust and credibility. Employees form leadership prototypes in their minds, and then use these schemas to compare with other leadership styles. They do it in a subconscious level.
10/ To sustain a high performance bounce back, you cannot make performance your core focus – that will mislead you. The real performance is depending on the soft strategy, which is the corporate culture that fosters collaboration and trust, and reinforces alignment that will sustain any renewal.