The Elements of a Successful Turnaround CEO
Perhaps sometime in your CEO career, you may get an opportunity to lead a business turnaround. The situation may be simply results-driven, or it could be a combination of that and debt accumulation. Whatever has been the root causes of the organization going in the wrong direction, if you accept the assignment, there are some things you need to consider.
I will say this at the outset also without making it one of my bullet points, but never ever criticize previous leadership and management. They may well have been totally responsible for the current condition of the organization, but your role now is one of relentless honesty and positivity. No matter the current position of the organization, you must be honest and own it. Ask everyone not to bring up past failures or try to lay blame. The only thing that matters is the new normal you are about to create together.
Here are some of the elements I think you’ll need to really hone to be successful in this venture:
1. Be fearless
You will not be successful in a turnaround situation by making safe and easy decisions. You must formulate a vision that will take a lot of hard work but is achievable. Most of all, you need to trust your instincts about what is the right thing to do as far as the vision is concerned. You must put faith in the execution of achieving the vision and then make sure you and your team work really hard to make it happen. You will fail at some of the things you attempt, and, in the failure, you will often discover a better answer and a better way. Even if you fail hundreds of times, all will be forgotten with one big success. You must have boldness to move forward and keep pushing through the mistakes and mishaps because even if you fail, you can rest assured you did everything at a high level of effort, which is so much better than failing because you were afraid to try something.
2. Overcome the fear of restructuring
You will probably have to make some fairly major changes to the current structure. Remember, everything is aligned to get the current result, so if you want different results, you need to create different alignment. Sometimes this is in the structure, sometimes it is in the strategy, quite often it is both. If you have someone to answer to such as a board, stress a reasonable amount of time after the restructure before results appear. Nothing less than three years is doable and perhaps it may take five. If faster results are needed, you may want to question whether or not you want to stay here, because typically the organization did not start failing in one year, neither will it turn around in that time.
3. Hone your focus
You don’t need several home runs; several base hits and some multi-base hits will do nicely over the short term. Select your outcomes with focus and resolve. As I stated in point 2, make sure you are being reasonable and realistic with the benchmarks. The organization needs wins, not more failures, and sometimes the difference is simply the time frame you choose to base the results on. Another point regarding focus especially as it pertains to your strategy, remember, being the best at one thing is better than trying to be the best at everything.
4. Have a long-term end game
This is where you may want to work backward from your end result let’s say, 10 years down the road backward to today. This way, you can set your vision for the finished results you want to achieve in the business turnaround and then reverse engineer back to your short term one to three-year honed focus.
5. Above all generate momentum and then don’t lose it
The second hardest thing in business is to generate some momentum. The hardest thing is trying to generate it after you had it and then you lost it. Momentum helps power your business forward against the resistance it is facing in the marketplace. This improves your employee and manager morale and puts them in the position of being able to see what your successful picture looks like down the road if they keep up the momentum. Your job is to provide the cultural atmosphere for them to thrive through innovation and ideas to help propel them. Reward them for these things as best you can. Behavior that is rewarded is repeated.
Certainly, being in the position of a CEO in a turnaround business is different than being at the helm of a market or industry leader. Personally, I enjoy a good fight from the bottom or middle as being one with better monetary and emotional rewards. While this article is not exhaustive about the process, I believe these five elements provide the fifty-thousand-foot level view of approaching a turnaround situation from the CEO seat.