Before we go into the details of the brand turnaround project, I would like to give a short statement about being a women leader: YES, I AM A WOMEN BUT I have always behaved without thinking I am a women. Work place is competitive for all (men and women) and what will make difference is results, how to get them and how you develop your team& work with others. I have always tried to lead by example. When I took this turnaround challenge, I was the first women to do so and my sales force and customers were mostly men. I gained respect step by step from all. Then I tried to balance the team with more women as I believe the balance creates a good mix and is part of diversity.

Let’s look at the brand turnaround project:

• Industry: Apparel
• Positions held: Sales Director and then General Manager
• How hired: Internal promotion via internal interviews
• Brand turnaround context: First signs of decline when I applied for the role. At that time I held a sales director role on a smaller brand within the company and became with the new role the first women in that role for this brand in this market!

STEP 1: FACE REALITY

• Meet customers, spend time in the field with the sales team on different channels
• Assess in depth & evaluate impact of decline on your budget in terms of revenue and profitability
• Hold conversation with your top management and be transparent
• Hold meetings with your direct and indirect team and be transparent about the challenge to over come
• Start working on actions to minimize the current gap to prepare the brand turnaround

STEP 2: CHANGE – “INSANITY IS DOING THE SAME THING OVER AND OVER AGAIN AND EXPECTING DIFFERENT RESULTS” EINSTEIN QUOTE

Same behaviors will generate same results. Once you know that you need to identify what changes are required. You need to be radical and drive their implementation.

STEP 3: FASHION APPAREL REQUIRES ALSO PROCESS AND STRUCTURE FOR A SUCCESSFUL BRAND TURNAROUND

Apply the same principals in apparel than in FMCG but in a simple, smart way. This approach was new at that time for apparel industry.
Principles:

1. Prioritize your accounts (revenue/profit criteria)
2. Plan your visits/calls 4 weeks in advance
3. Share your final plan a week before with your manager of the whole organization
4. Prepare each call with clear quantified objectives and define agendas
5. Debrief on agreed actions regarding the next steps and the achieved results
6. Keep all information in the customer file.

Drive execution of this new way of working via your managers team and ensure by yourself it’s done. Be consistent on it if you want your team to believe in it and do it.

STEP 4: CELEBRATE SUCCESS WITHIN YOUR TEAM AND GROW YOUR TEAM CONFIDENCE

Failing at delivering budget creates tension and month after month, team starts lacking confidence. This is reason why it’s key to start celebrating even small success from one team member or one region with all. It gives a light and put everyone in a different mode. It’s like in sports. If you believe you can make it, you train yourself and there will be a day when you will be successful.

STEP 5: NEVER COMPROMISE SHORT TERM WITH MEDIUM TERM

Brand turnaround comes from several factors but there is a big one called “brand equity” on which sales have a great role to play. Sales have to drive revenue within the frame of brand equity! This is never to forget. Align with marketing and merchandising on brand objectives and ensure sales force understand them and have also qualitative objectives to reach and reason behind those targets. Ensure you deliver your short term with quick win that will not damage your medium term objectives

STEP 6: BRING RETAIL BEST PRACTICES INTO WHOLESALE

• Sell out focus is key any case.
• With a retail back ground, it’s obvious.
• For ones having work in wholesale, it has been a learning path.
• Focus most of your team on improving sell thru results of their customers.
• Act as a retailer for your customer! It’s has been a key mindset to develop and actions to put in place.

STEP 7: CELEBRATE SUCCESS WITH ALL

Important to take time to celebrate and pause to review progress and how success has been achieved. Celebrate with all within the company to ensure team spirit is kept in good time also!

STEP 8: BE DEMANDING, CONSISTENT AND RESILIENT AND FAIR TO YOUR TEAM!

If you want your growth to be sustainable, you need to keep driving implementation all initiatives and ensure processes are used at any time. This is restless effort!

STEP 9: KEEP DEVELOPING YOUR TEAM AND EMPOWER THEM

Spend time in coaching and developing your team. Identify within your team who could be your potential bench and prepare him as best as possible. It will allow you to be promoted and feel secured if you have a successor ready for the role.

WHAT I LEARNED:

• Work under business and financial pressure
• Be transparent
• Say what you do and do what you say
• Be consistent
• Be demanding
• Encourage your team especially when times are tough
• Invest time in coaching & developing your team

About the author: Nathalie Schneider, an experienced commercial executive director, with significant expertise of leading multi brand brand retail operations. She has a strong track record of aligning teams. As a senior business leader, she is adept at strategic planning, change management , driving execution of profitable sales results and delivering continuous improvement in sectors of retail, wholesale and fashion.

View Nathalie’s short bio

A business turnaround success history

Revitalised the company , successful Due Diligence, acquired a start-up and established a Joint Venture with a fortune 500 all within 12 months followed from fast growth , global expansion and acquired within 3 years.
Company: Medium Size , 5 years in B to B business , offices in 7 countries (Hong Kong ( Headquarters) , USA , 4 EU countries , Japan ) , selling in approx. 15 countries through partners and company present across the whole value chain from Product/systems planning, design, manufacturing (outsourced) to marketing and sales with partners.
Industry: Renewables – Lighting Solutions
Job: Hired as Global Managing Director to Turnaround the company with 2 years contract and the founder kept the CEO title with focus on Business Development.
How Hired: I had met the founder and CEO in a conference 3 years ago and after 2 failed turnaround attempts he approached me and asked me if I could help.

Company status when i joined:

• Various shareholders were managing the different subsidiaries and there was a very fragmented strategy as well as no agreement on fundamental common policies. So No 1 company
• People competencies and skills not up to the level for a fast growth and global company ambition
• Lack of adequate processes for a full value chain and multinational footprint.
• Product/system Quality issues
• Lack of Product Strategy, Product management, Innovation processes and outsource processes
• Slow design process
• Slow manufacturing and supply partners
• With a few exceptions low quality sales partners
• Loosing money every month
• Good Brand name in a few countries and won a few key projects. Something to build upon.
• Execution of projects: Not mature with delays and quality issues
• Relatively ok from cashflow point of view. One problem less among so many.

1. Turnaround Phase I

After 1 month talking to all key people and attempting to understand the Business starting from Customers and Sales ( B2B was slow and new to me as I came from a fast and global Consumer Electronics background with many restructurings and turnarounds ) I decided to focus first on the whole value chain excluding Marketing and Sales . Before the Marketing and Sales area could be addressed the Shareholders Structure had to be simplified/changed as these minority shareholders were controlling marketing and sales subsidiaries.

After 30 days it was disclosed to me that the founders had the ambition for a Joint Venture with a big global Fortune 500 company and the serious talks could even start within 2 months with due diligence within 5-6 months . I said wow, let’s make it happen and sharpened the focus.

As all companies are succeeding or failing due to People I decided as first step to focus on People changes starting from the 2nd month. After I decided with which functions I needed to start first I hired a few key and experienced professionals which I knew personally from my previous career and together with the very few existing competent people started redesigning the processes and planning replacements. Together with the experienced professionals we made a plan to change 60 % of the people (within 6-9 months) in the Headquarters (Hong Kong) without yet touching the marketing and sales subsidiaries worldwide.

It was clear that this was a risky process but we did not have any other option with what was coming to us. With the better people we brought on board many of the existing employees decided to leave themselves making the life partly easier.

Evaluated all short term expenses that could be reduced and took the necessary actions. Within 60 days I met all subsidiary shareholders and all key employees outside of HK. It was clear to me that with the current shareholders it was impossible to create a serious global company and I made it clear to the major shareholders in HK that this needs to be addressed within the current year otherwise this 3rd turnaround attempt is planned to be a failure . It was agreed to happen at the right time within the coming 6 months cause such process takes time.

After 90 days the first negotiations started with the fortune 500 company and within a few months we reached a basic agreement of preliminary terms for a Joint Venture to be followed within months from a due diligence before we go to the negotiation details including the legal lengthy process.

Preparing for the due diligence process

8 months later and preparing for the due diligence process we had replaced 60 % of the people to be replaced , redesigned all processes and started working to buy out the minority shareholders ( 6 legal entities around the world ). When this process had been finalised we started to replace and add a few new marketing and sales employees.

9 months later a successful due diligence process took place with a delegation with as many people as all of our HQ employees. We have been complimented about a few processes that have been considered world class and many good people!.

At the same time and in order to increase the value of the company before final negotiation started we acquired a start-up partner, a company crucial for us to create competitive solutions. This has been discussed a few months earlier and executed within a few months.

As all above was going on we had to improve our product quality, make our offerings more flexible , increase speed of design and execution, address delivery reliability and finally sales growth and profitability improvement .To achieve that beyond focus on internal process improvements we decided to improve the quality of our supply and demand partners . 2-3 new and more competent manufacturing and component suppliers have been chosen , we started evaluating a few new downstream solution sales partners with better capabilities as well as we pursued partnership with 1-2 partners we could create new Innovative solutions together.

Joint Venture negotiations

The last 3 months of the first year on the job have been devoted on execution of all improvements, introduction of a new company operating model and Joint Venture negotiations which were very lengthy with great leadership from the CEO but at the end we signed the JV agreement 12 months after I came on board. Moreover we started the preparation to execute the new JV Business Plan.

What an unexpected first year with so much work , much broader focus than originally requested , many successes AND the key message that any turnaround focus can be different than for what you have been hired for !

2. Turnaround Phase II

After the JV agreement was signed , our main focus was to deliver the JV business plan which had as main focus min 50 % sales growth per year for 3 years . Started by establishing a new Mission , Vision and Operating strategy for the new JV which we deployed worldwide

With more competent & experienced people , better processes , new customer creation and interaction process , better products and systems in the pipeline, better suppliers and better downstream partners we were optimistic to achieve our growth .

To find out more about our customers and what to improve we started a detailed NPS (net promoter score) process including many qualitative questions.

To strengthen our brand in a competitive way we decided to devote more attention to marketing with focus on website, superb marketing content & materials, PR, partner events and digital social networking to create a community!

The main challenges we had to eliminate and/or solve were:

1. Avoid to be slowed down being in JV with a big company. We negotiated in advance as much autonomy as possible.

2. Life cycle of the most of our projects/solutions were average 2 years and we needed to grow sales with above 50 % within 1 year. We managed to achieve it with a list of strategies and tactics :

2.1 Attempted to leverage the JV partner for short term sales : It did not work as we had completely different business model than the partner who did not have access to our market segment
2.2 Extended our business model with a different distribution strategy to enable shorter term sales : that worked only a bit
2.3 With the newly introduced design processes + new more flexible systems + new supply partners we could speed up our systems design and delivery by 6 months as well as offer a lot of flexibility and satisfy many more customer requirements : Consequently we focused to find and win faster projects ( 1 year lifecycle) and this strategy worked partly .
2.4 With the better people that came on board as well as more flexible systems and faster deliveries we started to win projects from competitors as we could deliver faster and better systems & solutions!
2.5 Some of the better newly acquired sales partners helped also to increase sales.

3. As we became more competitive (faster, better quality, more flexible, better partners that build a better ecosystem,…) we set the foundation for structural growth and we reached agreement (Lead from the CEO) with the JV board to invest in more sales resources so we started hiring people in 10-12 additional attractive locations worldwide . People were located in existing premises of the JV partner but kept autonomy reporting to the JV. We were hoping in more future synergies as well but it did not happen as much as we expected because of our different business model and market segments.

The first 2 years after the JV establishment we managed to achieve more than 50 % growth in sales per year and the 3rd year went also well when the JV partner decided to fully acquire the remaining stake of the JV shareholders and make it a 100 % subsidiary. I will stop the story here without explaining what happened afterwards but I will focus on the key lessons learned.

3. What we learned as this was a team effort:

Assembling a core team with the best people available for the task is number 1 priority.

Such a drastic, complex and fast turnaround can only happen with a good Team of top professionals having the right experiences preferably from a different industry , are determined to succeed , are able to think out of the box and are lead from an inspiring and disciplined leader.

To achieve breakthrough a focus on only 1 key business attribute is not enough. You need change of multiple business attributes. In this case we focused on:

FLEXIBILITY AND SPEED AND BETTER PARTNERS AND BETTER PEOPLE AND new customer interaction process AND…

Our 10 tips to achieve a successful business turnaround

• The Turnaround Leader + Team needs to be determined to follow the plan even if it is needed to disturb individual shareholder interests
• JV Partners with different business models and market segments can rarely add value to each other on short to medium term
• A JV needs autonomy to deliver.
• To seriously Innovate cannot be done within an established company which protects the established core business model without full autonomy!
• Software and systems/solution thinking becomes more and more important in our networked world.
• Learning by establishing fast feedback loops from market to the company is vital for success
• Leadership to inspire and focus people behind a bigger vision/purpose than themselves is key for success
• Embracing more and more digital marketing , crowdsourcing and all the new exponential technologies that go across many industries becomes vital for success
• EXECUTION. We delivered what we planned with many challenges but we did and that is what is counts!
• Finally we inspired and nurtured many better managers and employees that started with low level of exposure and learned so much with such a wealth of experiences within 3-4 years time period!

About the author: Mike Mastroyiannis is a highly experienced CEO of Business Units in Global Multinationals as well as CEO and/or Co Founder of technology start ups. He lived and worked in many countries and understands East and West. He created innovative scalable global systems and businesses (15 million to 2 billion USD sales, 100 to 5000 people) as well as reinvented, simplified, automated and grew effectively. He handled many fast turnarounds (6 – 12 months turnarounds) for big businesses as well as Start Ups. View Mike’s short bio

Part 1: Interim Management: Life at the Sharp End of the Business
Part 2: Interim Management: The First Week

Interim Management, is there a Recipe?

Ideally, what you would like to have is sort of a recipe, telling you what your ingredients are, how to stir them and finally at what temperature the oven should be set. Well, I cannot offer you quite that much and some readers might argue that we are not discussing a Jamie Oliver show but rather a more serious subject. But on the other hand, who dares to pretend cooking shows are not serious cooking? As a practitioner of interim management in financially distressed companies you do not want to spend a lot of time reading the learned opinions of academic experts on the subject.

Besides, there is a plethora of books. Nevertheless, we need to spend a moment on the question “is there a generally applicable way to approach things?” Let me add a word of caution: There cannot be a universally applicable manual because legal systems are different from country to country.

Hence, you will have to find the right manual for your country and in your language. Helpful is a manual with lots of check-lists and practical advice, meaning feasible and doable. The good news is that there are such manuals but you will have to unearth them. For a short English introduction into the subject and a compilation of case studies see the books by Stuart Slatter.

I for my part rely on Urs Leupin’s book although he is retired now. He is a lawyer and gradu-ated from the Army General Staff School and was later head of the credit recovery department of a large full service bank. This means he knows all the aspects of the subject and writes in no uncertain terms. And most importantly, the book does not stop at “which measures” but includes “how to implement things”. The following is drawn from his book.

The Four F’s – a Battle Plan

General Norman Schwartzkopf’s summary of any campaign is straight-forward: Find – Fix – Flank – Fight. Translated into the situation of a business turnaround this reads:

Find: Find the trouble spots (causes and reasons) to be able to react systematically.

1. First measure: Acquaint the board and the existing management team with the task
2. Second measure: Timely identification of the acute crisis to guard against surprises
3. Third measure: Know the risk assessment situation of the company’s banks and their first reactions to the emerging crisis

Fix: Fixate the crisis situation (stabilise the situation so it does not get worse)

1. Fourth measure: Stabilise the starting position
2. Fifth measure: Implement the crisis management to guarantee the stabilisation and as a preparation for the handling of the crisis
3. Sixth measure: Get the principle decision by the banks to grant a moratorium based on your plan despite the breach of financial covenants (with or without a bridge loan, depending on the situation)

Filter: Identify the parts of the company worth keeping

1. Seventh measure: Implement the restructuring measures in the areas of management, products & services, finances and organisation
2. Eight measure: Identify and decide on the new strategic focusing
3. Ninth measure: Preparation of the financial restoration as the final step to overcome the crisis

Force: Push the areas of business within the new strategic focus

1. Tenth measure: Get the banks’ o.k. to the plan of financial recovery
2. Eleventh measure: Steer the course of the turnaround either alone or with a partner
3. Twelfth measure: Finalise the turnaround either in a cooperation with a partner, a merger or alone, depending on the situation.

Naturally, this is only the skeleton of the course of action and there is much more to it if you go into the details. Adaptations have to be made in specific circumstances and adjustments have to be made to cover the unpredictable happening quite often.

Company Myths

To conclude let me account for some of my favorite company myths which are also the most frequently encountered. In fact there are two legends in the first one, a special industry culture and a unique way of operating. The story goes like this. In conversations with many staff in your new company you are inevitably asked “Have you worked in our (branch of) industry before?” “Not exactly, but in similar companies and situations” “Well, you’ll see this industry is quite different from anything else and our company is unique in the way we do things.”

Now, in this situation you do not l.o.l. or give the tacky answer “Yes and that is exactly the reason why you are in trouble”. After all you are a pro and keep a stiff upper lip. The ones asking do not only think their industry is special in itself but that their company is even more special because they do things their own way. From there it is only a small step to believing that general business rules do not apply to your own company.

Another frequently encountered myth is the “niche market legend”. It usually unearths when you are probing market opportunities, competitive situations and either sales expansion or con-traction, the latter due to competitors’ action.

The killer argument to any serious analysis and discussion is the assertion “We operate in a niche market and hence are much less vulnerable to competition than the competitors’ products.” People tend to forget that niches may dry up or alternatively, grow and therefore attract new players; who recalls British watches or Swiss cars?

Do not be distracted by beliefs, you are the expert investigator, just plough through the thicket and dig out the facts. Interestingly, in most instances there was a reason that the company introduced the way they operate today. It is just that circumstances have changed, the reasons vanished years ago and nobody questioned the situation.

It is one of the most important duties of an interim manager to question all the aspects of the business. Sadly, more often than not it is be-cause the management have not asked themselves frequently enough fundamental questions about the business they’re in and how they operate. The end of the story is then the quagmire you will find. Remember, Nokia was a little known Finnish pulp and rubber company before turning into one of the leading global communication groups.

This concludes the mini-series on interim management.

Notes:
1. Corporate Turnaround by Stuart Slatter, Penguin Books, 1999
2. Leading Corporate Turnaround by Stuart Slatter et al., Wiley, 2005
3. Turnaround von Unternehmen by Urs Leupin, Haupt, 1998

About the author: Peter Wolf is an interim manager, management consultant and entrepreneur. After an international career in life sciences industry working for Swiss and US multinational groups he started his own company, Management Support, in 1996 in Basel/Switzerland. Since then he had consulted with numerous clients in industry, the health care sector and services. As an interim manager he helped change organisations in difficult circumstances, optimised business processes as a project manager and consultant and co-founded companies in the biotech and service sector, with successful trade exits and an IPO. He holds a PhD in physical chemistry from the University of Berne and an MSc in Business Studies from Warwick University. This blog post has first been published on www.management-sushi.com