This e-book, written by Erik Van Rompay, tells you about the life of a turnaround guru and about hidden behaviours of executives when they are called in to rescue a company. Our turnaround executive presents 120 real-life situations he has experienced during 4 of his most recent rescue assignments as interim executive, with many examples of good and bad practice and some unusual strategies applied.
More and more groups struggle to maintain profitability, to maintain their market presence or expand by integrating new activities. These strategic expansion plans or recent acquisitions did not deliver the expected results and increased the fragility of the company.
Not to forget that permanent rising competition, nervous markets, burned-out executives, the arriving of low-cost labour costs with the European expansion and increasing social advantages created a climate where things need to change very fast if a company wants to survive. A big bang is needed and the call for a strong corporate renewal professional is more than critical.
Operating in the eye of the storm, I have to deal equitably with angry shareholders, frightened employees, wary customers, stupid legislations and the resistance of some board members. Everything is turning at a huge speed around me, ready to destroy the company and me. All forces are against, but I manage to do the unexpected… create renewal.
But this is the kind of assignment I like – extremely difficult, fast paced and not for the faint-hearted. My past 4 missions delivered extremely good results but it was hard, extremely hard as I received at each mission the 39 lashes of the corporate world. In each case and don’t ask me why, I managed to create business survival – and in 3 cases even market leadership.
At the end of each mission, I thought I saw everything imaginable but no, at each mission, I discovered a new set of 39 tortures. Every turnaround job seems to be a unique survival case.
This document is not a handbook neither a set of items you should try. It is just a testimony on things that happened. I don’t know why I reacted in that particular way but I did it as I felt it was the best thing to do. Use my lessons (or do I have to say lesions) to make you think about your own management style and the behaviour you can have to keep your business running in difficult times.
I translated the 39 corporate lashes into 39 confessions as in a lot of cases, I did things differently than the classical business practices – and I presented each of them with 3 of my field experiences.
Never forget that a turnaround executive is an angel; send from above with the mission to transform HELL into HEAVEN and there is no stairway to escape. He has no other solution than transforming hell into a nice destination.
Concerning lifestyle, I like is the following saying: “A turnaround is the one that jumps out of an airplane without a parachute but it does not bother him as he knows he can rely on his skill set and experiences to find THE necessary solution before touching the ground.”
Ready to jump into the coloured world of turnaround businesses?
Turn the page and enter the tough, hidden world of business renewal…
Chapter 1: Starting the job
- Detecting the board-liars
A company only calls in a turnaround executive if they find themselves in deep, deep trouble. Only in one mission, I got the right information from the shareholders. In all other cases, the executives and shareholders created their own vision, telling me a story far away from the truth. Some of them wanted me to fail; others transformed the truth to make me accept the assignment.
Up to me to discover each time the real reason why they contacted me, as there can only be 4 following business reasons:
- Financial Turnaround
- Product/Service Turnaround
- Market Turnaround
- Organizational Turnaround
It is extremely important for me to understand exactly which of these 4 problems I have to fix. I can’t forget that shareholders can pick me to fail, just for their own ego as my failure proves they were good executives themselves (Can you imagine the specialist is doing worse than they did before!). On the other hand, they can also want me to fix everything at the same time but due to the crisis situation, I can only serve one single cause. As I mentioned many times, I am there to fix the company, not the light bolts. If I have the opportunity to meet several people of the board to discuss my future mission, I am filtering their sayings to detect the most critical item to execute. Picking the wrong one means I am doomed before I started. And failure is something I can’t permit.
Field experience one: so-called Communication Turnaround = heavy layoffs
I was called in this time to fix important service problems between a 20 head subsidiary and its customers due to major communication problems. So my mission was to solve the “people” problem and implement some good communication channels. When I arrived on the premises, I discovered not 20 but 55 people. When I got the vice president on the phone some minutes later, he told me that they didn’t wanted to tell me that my real mission was to implement a layoff plan to arrive in the end with a headcount of 20 people, the point where they would be financially secure.
So I started a heavy restructuring program to implement a smoother organization allowing me to keep the same service quality but at the same time, reduce the staff numbers. I arrived to 23 people (or a decrease by 54%) still with the same service delivery but still losing a little money.
Field experience two: so-called Service Turnaround = Organizational Turnaround
I was called in to fix important problems with an extremely low performing IT service delivery department and to replace the existing team of 60 people with subcontractors, as they were completely incompetent. At least, that was the thing suggested in a crisis report written by a Big Five consultancy office. After a 2-day audit (things had to go fast), I have identified the problem as a huge bunch of coordination problems and the lack of investment in technical equipment – but the team was good. Two days later, I presented my action plan based on extra investments in material and some new service items. As my action plan needed to be compliant with the Big Five report, my suggestion was somewhat Machiavellian as I asked the delaying of the layoffs by 6 months, just to create an environment suitable to welcome the new subcontractors. In the next 6 months, I changed completely the service infrastructure and IT delivery but as the problems disappeared, I kept the same team on board.
Field experience three: so-called Organizational Turnaround = company closure
I was hired to fix a problem with extremely weak performing managers and to replace all of them in the next 15 to 30 days. I had one week to identify key employees that, through internal promotion, could take the place of these managers. In reality, the problem was not with the managers that were key people in the survival of the company but with some of shareholders that wanted the bankruptcy of the company so they could buy the customer base at a low price to create a new company. I did not follow the shareholders’ orders as I kept the managers. I started instead with a complete financial turnaround – followed two months later by a service delivery turnaround and one year later with a market turnaround giving us full market leadership after 18 months.
Personal thoughts: I still wonder why shareholders present me a different situation. The only answer I can give is that the corporate power play already starts with the selection of a turnaround executive and the delivering of inaccurate information is part of the tactical game. I know rather quickly when they are lying and that I am part of their power play so I don’t say anything as I need a job to make my living.