The Interim Turnarounder

My motivation, part 1:
Highly underestimated: empathy and decency

»I shape the company especially for the generations to come.« This is a response frequently heard from family entrepreneurs when it comes to the main features of their business policy – which also applies in times of crisis: short-term improvement is necessary – but never sufficient.

When requirements are formulated for CROs, the focus is on overcoming the crisis fast: measures must be effected quickly, the figures must be right again, the company’s own track record is to be straightened out. What is often left behind: crisis-ridden brands due to disturbed employees and clients, who, as a result, shop around with the competition. From my point of view, this is a fatal mistake, as what is done is only aimed patting each other on the back and does not aim for the benefit of the company.

The same applies to empathy and decency. These values do not appear in search profiles – and if one asked, people’s reaction would probably be – with a protesting sigh – that empathy and decency can be taken for granted. If one asks those employees who were dismissed in the course of the restructuring measure, or close suppliers, the picture often looks different. It had to be done quickly, no question. However, maintaining fairness in cases of separation and certain crises in life would not have been a question of time, but only a question of attitude and decency in conversation. And what permanent employees, suppliers and partners think about the behaviour of their company’s managers in a crisis – that essentially determines how positively the future will be shaped.

My motivation, Part 2:
Gaining a vision of the future when there allegedly is none

We often focus too much on maintaining the status quo – instead of preparing for the future. In periods of transition or crisis, effective and sustainable turnaround measures first and foremost depend on a vision of how things can work in the future.

Indeed, it will be especially helpful to discuss visions of the possible future with all of the enterprise’s key stakeholders at an early stage in the process. This is because owners, advisory board / supervisory board members, managers, employee representatives, major customers and suppliers, sales partners, and investors can all be expected to make valuable contributions to the enterprise’s future success. Consulting with them will enable them to make their contributions.

Visions of possible futures can be developed quickly. Once a consensus on these visions is reached, the executive management will have a basis for strategic decisions. This is how opportunities arise, a new sense of optimism is created and a clear understanding of the sense or nonsense of short-term measures.

Interim turnarounders help to map out the future and support management and employees of an enterprise to focus on the necessary measures to ensure it despite the extraordinary circumstances.

My motivation, Part 3:
Brands in crisis

One of the most dangerous vicious circles that can arise during a turnaround is the negative effect that a crisis will have on a brand. Customers will inevitably ask themselves questions if things begin to look precarious:

Should I buy from the company if insolvency could soon prevent it from delivering replacement parts or services, or should I switch to a different brand now? In addition to such rational considerations, a brand’s excellent image – the product of many years of dedicated efforts – can begin to fade. If there is no turning of the tide, brand attributes like cool, successful, consistent and reliable, quickly will be replaced by their opposites in the minds of customers.

This is the entry point for the skillful interim turnarounder. With respect for and deep understanding of the brand, open communication with key stakeholders and proactive efforts to secure their loyalty, he will keep a firm grasp of the reins and secure the brand’s future. Executive management also will need to turn in its best performance: customer relations, active market communication and visions of the future have to be in their focus.

My motivation, Part 4:
Business model agility

Crises often arise from cumbersome or obsolete business models. While this has always been the case, the speed at which business models fail has accelerated considerably. While liquidity generation, cost reduction, sales promotion and workforce downsizing may be necessary short-term measures, they should not distract attention away from the need to overhaul the business model – or better create a strategy to overhaul it and subject it to continuous review.

Good interim turnarounders are adept at working with small, interdisciplinary teams on such strategies. While doing so, they are often confronted with a demotivated mid-level management, still in the “valley of tears” and preoccupied with painful budgetary cuts. Indeed, reestablishing a sense of self-efficacy and opportunity among mid-level management is an important key to new business success. It is only when middle management takes its fate back into its own hands that the successful turnaround starts.

This makes the issue both a strategic task and management challenge for the CRO.