Open-Book Management: How to Lead a Turnaround
Jim Collins’ 2001 book, Good to Great, celebrated 11 standout companies with vibrant, winning cultures and track records of substantially and consistently outperforming their peers from 1965 to 1995. In his next book, How the Mighty Fall, he explains that in just eight short years, 10 of these 11 benchmark companies already showed clear signs of losing their core discipline and focus. Why? According to Collins, they began chasing goals apart from their core strengths and competitive advantages, then resorted to “silver-bullet” solutions to sustain their heralded winning streaks. So what is the secret to staying keenly focused on our core strengths while maintaining healthy performance?
You recognize when a turnaround is needed. Even if your company is not complacent, you can still feel cashflow pressure from reduced demand and revenue. Perhaps you’re struggling to maintain critical staff and resources while paying the bills. Hard economic times can put CEOs and business owners in a lonely position, but there are steps that can be taken to turn a company around while establishing strategies to weather future challenges. Letting your team play a critical role in this effort will spark new ideas, establish better communication, and prevent fear or cynicism from crippling employees.
Leading a Turnaround
Turnarounds are labor intensive but often foster long-term success, especially when CEOs invest in their employees as partners on the journey. Collins led four major turnarounds for companies with complacent, reactive employees, transforming cultures and creating healthy foundations for growth. The common ingredients in turning around each of these businesses were:
- Recasting a compelling vision, mission, and core principles for all to pursue
- Making continuous improvement a basic expectation and an underlying driver of the business
- Educating employees on business logistics, critical metrics and deliverables, and how to drive improvement in their areas of responsibility
- Making performance and progress personal by defining business units, product lines, and team metrics tied to the overall company plan
- Ensuring that all managers and supervisors are able to communicate and practice this new approach
- Removing employees, at all levels, who proved unwilling to learn or unable to embrace the changes
- Modifying compensation by slightly reducing base pay and putting a portion of annual pay at risk, with top-to-bottom shared pain or gain — all tied to company results
- Helping everyone track their performance and compensation by discussing monthly, quarterly, and annual results in interactive sessions to cement real-time learning and participation
- Celebrating success and helping those who desire to improve
Using this approach, turnarounds of mature yet declining businesses were achieved in a period of 18-24 months. Cultures were reset, excitement rekindled, results sharply improved, and naysayers removed, reestablishing each firm with a strong foundation for growth.
How The C12 Group Helps
For decades, the C12 Group has guided business leaders through challenging times. We can help you develop strategies for engaging your team and getting them on board for change, ensuring proper communication and intent focus. Reinforcing personal responsibility and teamwork is never easy, but we’ll work with you to develop a strategy that is targeted and timely for your business. Get started today by finding a C12 Group near you.