Turnaround Management
Over a million managers and consultants are working together on management issues via 12manage each month...
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Turnaround Management |
Over a million managers and consultants are working together on management issues via 12manage each month... |
Corporate renewal and restructuring during times of financial distress. Explanation of Turnaround Management. |
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| Siva Chakravarthy - India | Turn Around Time | "Can anyone explain me turn around time" |
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| Anthony Belon - Malaysia | Linear Programming and Turnaround Management | "In business speak, as I understand it, Turnaround Management (TM) also involves strategic decision making. As such, I see that “making strategic or optimal decision” is an essence of TM. In Management Science, Linear Programming (LP) is part of quantitative methods & decision analysis. LP as a decision-making-tool has several applications which include the followings: (a) Marketing - media selection & marketing research (b) Financial - portfolio selection & financial planning (c) Production management - a make-or-buy decision, production scheduling & workforce assignment. As such, LP has strategic application in business decision(s) (to minimize loss and/or maximize profit) in the context of TM." |
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| Jagdish B Acharya - India | Two Dimensions to Turnaround Management | "There are two dimensions to turnaround management; who leads it and what are the process stages. We may put who leads on x-axis and put insider at 0 and outsider at 10. Put process stages on y axis with diagnosis at 0 and solution at 10 in this scenario. I see six process vectors; 1:{(0,0) to (0,10)}, 2: {(10,0) to (10,10)}, 3: {0,0) to (10,10)}, 4:{(10,0) to (0,10)}, 5: {(7.5,0) to (2.5,10)} and 6: { (2.5,0) to (7.5,0)}. My preference would be for vector 5 as representing the most common turnaround process which is led mostly by outsiders and solution led by insiders. It is difficult for insiders to see the whole picture and recognise the need for a turnaround. In the same way, outsiders can never give a full solution." |
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| Leonard Kambona - Kenya | Whatever the Name Tag, Turnaround Management is Desirable | "In Kenya, the method goes by the name tag restructuring (often used by the media. Now this 'restructuring' has taken different forms including bringing in consultants or 'technocrats' as often communicated to the public. I shall define TM as a process of transformation that involves management practices, programmes, techniques etc designed in models and tailored towards reviving company's profitability in the shortest time possible. You may want to use the hammer as one of the techniques to shock the system into action. Whatever the tool or method or model Turnaround Management is desirable." |
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| Gautam Chatterjee - India | Periodic Health Check | "In my opinion the sickness of the organization can be pre determined if a health check is periodically done. We use the profit pool technique to determine the robustness of each profit centre and as well determine the future within the visibility, availability." |
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| Jagdish B Acharya - India | Turnaround Management is like Surgery | "If an organisation is viewed as a person and its health is taken as its condition then management is good practices which keep it healthy and turnaround is the treatment when it has fallen sick. Managers are like doctors who treat organisations and turnaround managers are like surgeons who have to intervene and do major operations. The solution will depend on problems afflicting organisation but in essence it is treatment for ailments." |
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| Catriona - UK | Hoffman Model | "This seems like an impressive Turnaround Strategy Method... Has anyone heard of the Hoffman Model, it's a method I've been recommended and I was wondering if anyone has any details concerning it?" |
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| Narendra - India | Turnaround Management in India | "I am impressed by the method. Probabily in India this method can be widely applied by outsider intervention in a company, coz my personal experience with few companies make me say so." |
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| Anonymous - USA | Insider or Outsider? | "I wonder, what is preferable? Use an insider for a turnaround, because (s)he knows the complexity of the situation very well, or an outsider, because (s)he can act independently and without any attachments to the current situation and stakeholders?" |
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| Jagdish B Acharya - India | Recognizing When Turnaround is a Must | "The most important part of the whole exercise is to recognize if a turnaround is required or if some path adjustment will do. Doing frequent turnarounds may not be good for an organisation as it has some disruptive effects also. In my opinion when the rate of change of profit is continuously going down for more than three terms or is contrary to the general business trend, there is a need for turnaround. Another method could be using control chart techniques of SQC to recognise if the deviation in profits is significant and needs a turnaround." |
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| Rob Snelders - NL | Turnaround Management is not a Method | "I do not see the value in this addition and I do not see where 12manage is going to:
* Turnaround management cannot be considered a Method, Technique
* Turnaround management - as depicted - is just an approach, but it is too shallow and empty to provide any value.
Maybe it's just a trigger to sell the Premium membership, but doing so 12manage is losing my high regards." |
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| Mohanned - Tunesia | Turnaround Management and Culture | "TM is a challenging process that depends of leadership of the manager and the organizational context to engage success and profitability. But the cultural context of turnaround management is the most important key to face this challenge. The culture how change is accepted can be more or less suitable to this process." |
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| Daniels - UK | Recovery and Turnaround | "It is my impression that most recovery and turnaround scenario's are too complex. The true challenge comes trying to charter and implement a desired course based on inherent complexity. What are your thoughts on this subject?" |
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| Dave WItt - USA | Start with Call to Action | "I support the idea that turn around mgt be considered a method. I would highly recommend that the first step be a call to action section - enabling the managers to determine the urgency of the situation. The risk of closing the doors or the loss of the stakeholders investments, needs to be taken into consideration for the speed at which a turn around needs to happen." |
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| └► Anthony Belon (Malaysia.) | Filing for Bankruptcy Protection - a Form of Tm to Restructure | "The current news that Japan Airlines [JAL] is filing for bankruptcy protection is a well-thought plan. Call it a strategic national turnaround management initiative." |
| └► Jagdish B Acharya (India) | Check Health, But not Only the Profitability | "I agree that sometimes periodic health checks may reveal the need for a turnaround. But it may not do so in all cases, as the changes that occur during periods of checking may not be big enough to catch attention. One has to take long term health checks. Performing only a profit check may sometimes become the cause of such an emergency situation. If the result is to close or neglect less profit making divisions then it may eventually burden the other units and cause them to become less profit making divisions. A realistic danger." |
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| └► Edgardo C. Diansuy (Philippines) | Diagnostic Research with the Internal Resources for Better Appreciation of Root Cause | "I appreciate your comment. Basically, periodical diagnostic scan of the organization must be part of the system. This will update every segment of the organization on the work program as planned. Hiring of consultancy or surgical approach will be done as the last recourse. Intrinsic hiatus can be better appreciated by the internal resources exposed to the normal organizational system." |
| └► Agni Chatterjee (India) | Is Downfall Due to Internal or External Factors? | "When we talk about turnaround management, we basically talk about building strategies to rebuild or renew an organisation. Root Cause Analysis being the first step towards this process, the most important thing to keep in mind is to see whether the downfall of an organisation is due to internal pressures or lack of internal capabilities, or due to the external environment. If it's due to internal pressure then we can take necessary steps and revamp the whole organisation and restructure it, but restructuring an organisation facing challenges posed external pressure is not in anybody's hand. An organisation gone down due to external forces is very difficult to revive. If their is no market for the product an organisation is making, no turnaround management plan can save it." | |
| └► Frederick M Price Md (U. S.) | Turnaround Like Surgery | "I do not at all agree with you. A surgery is a predetermined, preplanned approach to solving a medical problem. A turnaround manager must undertake several tasks simultaneously and often change his approach midstream. Hardly the same." | |
| └► Azhar Kazmi (Saudi Arabia) | Corporate Doctors | "That's why turnaround specialists are called 'corporate doctors' who help organisations regain their health. But just like in medical fraternity there could be some quacks too. So beware!" | |
| └► Jeswan Singhps (Malaysia) | Turnaround Management (TM) | "TM encompasses a fundamental review of an organisation's strategic direction and often happens when the business is under major threat. TM often entails transformational change eg from one company to two or three in response to major market challenges." | |
| └► Jagdish B Acharya (India) | A Difference from Surgery | "Based on comments of Dr. Price, I correct myself. In surgery one often does not try untested methods because life of patient is at stake. However in Turnaround Management (TM) one has to quickly recognise that it is a TM situation, analyse what should be done fast, act, check, correct and so on. Quite often there may not be any previously well known and tested methods for the situation in this case." | |
| └► Mary Brooks (England) | Surgery, Hammer or U-Turn | "One of my business interests was in trouble last year and despite all the turnaround techniques that can be used and employed, sometimes it takes transformational changes (the hammer) or a U-turn to alter the course of the business. I used the hammer eventually and we are now "the phoenix rising from the ashes". The other turnaround stuff we used ended to be "bleeding edge" not "leading edge" in terms of time and money; sometimes brute force is the only way. Next time I will not hesitate! :)" | |
| └► Jeswan Singhps (Malaysia) | No Holds Barred Action | "Congratulations Mary Brooks on your single minded focus to doing things differently. I am convinced that when things come to a head then it's got to be the showdown after the slowdown approach. Determined action to change the game plan and make things happen again are the only way out to produce results. Needless to say, the input by the leadership is most critical. Cheers" | |
| └► Mary Brooks (England) | TM | "Thanks Jeswan! Sometimes the single minded focus of a leader is seen as bullying, particularly in the UK. We more and more pussyfoot around, trying not to upset anyone, trip over an employment law or alienate the business fraternity in the 21st century enlightened world. But I do firmly believe now after seeing the results of a drastic action, that strong leadership and decisive action wins the day. I am sure there are differing remedies for differing businesses too but doing things right, and doing the right things are imperative in an optimum time and part of moving forward, recovering from downturn.:)" | |
| └► James Mchugh (UK) | Emergency Surgery | "In routine planned surgery - such as Hernia repair - the key to success lies in selecting the safest approach and being as thorough as possible to minimise risk. A key question is whether to risk surgery at all. There's always the possibility that it might go wrong. A good surgeon knows not just how to operate, but also when not to operate. The other type of surgery is emergency surgery (eg when someone has been stabbed in the heart) when speed is of the essence. There is little time for pre-planning, and the surgeon must often change the plan in mid-operation depending on what they find. Although there are key principles to adhere to, no two emergency operations are ever the same, and there is consequently little in the textbooks to help decide what to do. Therefore solutions must be made up as you go along (and also of course there's no time to read up before operating). Success rates are lower in emergency surgery than in elective surgery." |
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| └► Jeswan Singhps (Malaysia) | Turnaround Management and Taking the Bulls by the Horn | "Mary Brooks - taking drastic action in certain work environments can be challenging and often disturbing as it may be viewed as contrary to local work norms. Usually a new dynamic team is given the challenge with their biggest hurdle being to keep the change pessimists at bay. The leader's message has to be cut and dry as todays challenge of management is not to just survive but thrive. I agree with Mohanned that the cultural setting must be embraced. In Indonesia work results are best achieved in a spirit of work and job enjoyment. Cheers" | |
| └► Michael Cardy (USA) | Surgery or Peeking Out of the Box? | "Surgery implies the problem is within the organization, a specific area. While this often is the case, sometimes a better understanding of the issue at hand would bring about a better cure than simple amputation. In America I find SME's that mimic insanity as Einstein defines it: "doing the same thing time and time again expecting different results". Many of my clients fail to see the environment has changed and adjust accordingly (competitive threats, opportunities, failure to innovate). Surgery would kill them, seeing the organic-dynamic changes afoot outside their door can sometimes spare the amputation." | |
| └► James McHugh (UK) | Amputation is Last Resort | "Michael: amputation is always the last resort - and never used unless there is a cancer, or a limb which is irreparable and toxic and its retention would kill the whole person. Most surgery is about repairing problems, strengthening weak points or pulling structures together, rather than cutting away of body parts. As you say, removing an individual or part of an organisation is one approach, but it's often more appropriate to understand and fix a problem rather than sacrificing the whole limb which is never risk or cost-free." | |
| └► Azhar Kazmi (Saudi Arabia) | Dilemma in Turnarounds | "I feel that the basic dilemma in turnarounds must be the difficult choice between implementing a surgical or a humane turnaround. Both have plusses and minuses. The need for turnaround arises in a crisis situation and crises call for urgent action. The urgency sometimes may lead to hasty (not quick) actions resulting in further problems. On the other hand, pausing for considered action may result in better action but delayed." | |
| └► Sulleiman Adediran (Nigeria) | TM-insider or Outsider as the Surgeon? | "We need the inside knowledge (organizational culture) for the outsider surgeon to succeed. Otherwise, some of the "whys?" may be difficult for the outside to provide a workable solution... My take is that the consultant must work closely with top management if Turnaround Management will be successful." | |
| └► R. S. Mathur (India) | Speed and Grit are of Essence | "Executing turnarounds cannot be without its share of pain, whatever may be the extent or depth of 'surgery' (as some of us might prefer to call). However, both speed and grit are of essence to get the 'patient' up and about. Sulemman, I'll go with your take on using the services of an consultant to carry out the surgery dispassionately." | |
| └► Azhar Kazmi (Saudi Arabia) | To Do or not to Do | "Well said, James McHugh: "a good surgeon knows not just how to operate, but also when not to operate". That statement captures the essence of the dilemma between a surgical or a humane turnaround that I referred to. The corollary to James' statement is: how does the surgeon know when to operate and when not to operate? I believe this comes from the reservoir of knowledge, years of experience, and - more importantly - internalising that experience. Also something nebulous that goes beyond mere knowing and experiencing: that leap of faith into the unknown, if one can call it, not having in the past anything similar to rely upon except one's intuition and confidence. That's the stuff leaders (not managers) are made of." | |
| └► Lt Col Prasad Sn (India) | Communication and Mobilizing Pride | "I fully agree with the usage of words like 'surgical operation', 'hammering' etc. In addition, the actions have to be bold, audacious, sometimes unconventional till you realize the turnaround. While doing all this, timely, frequent communication both ways at all levels plays is important.. That is, even the last man has to feel that he is working for 'that objective' and feel proud of the organization. Eventually, it is that personal pride which drives each one to contribute to the turnaround." | |
| └► Tshinyiwaho Phidane (South Africa) | Reach a Stage of Bleeding | "Turnaround Management is one of the most important interventions for organisations. The biggest challenge of this is the transfer of skills to internal stakeholders who have to reach a stage of bleeding. How do we ensure that as TM consultants, we ensure that the organisation employs an ongoing self assessment and acts decisively before external surgeons have to be called." | |
| └► Professor Jaswant C Gandhi (India) | Study and Diagnose First | "Let me share my experience as a consultant. Turning around business is like treating an organisation-person. Before we jump to surgery (to use metaphor), we need to study, diagnose and then treat the patient. In the process we put human beings involved, systems, procedures, core and peripheral organisational values, the cultural context of the board, etc. on the table and then we decide with the well chosen team the procedures, time frame and the cost for proceeding with the mission. So surgery is only one of the options to be deployed depending on the context. And this context is subject to change in every case." |
| └► Edgar Zuñiga (Peru) | Insider or Outsider | "Based on my experience, you need to build a team including outsiders and insiders. Insiders help to design the strategy for the turnaround and outsiders to implement it." | |
| └► Gian (Netherlands) | Insider or Outsider | "Good question, but (as usual) the answer is: "it depends". What is leading the company to disappointing results? If it is inertia coming from previous successes, than maybe an outsider could be the best way to go. If the reason for the bad results has to do with re-alignment of resources than maybe an "insider" could get the job done in a better way (the signal to the other employees would be one that says: "we appreciate you all and we think you can pull it off without any external help"." | |
| └► Patrick Yankey (Ghana) | Turnaround management | "Use of an Outsider promotes new way of doing things. Turnaround mangement is a major technique that works succesfully in small organisations. I have seen results with this method." | |
| └► Abbas (Pakistan) | Insider or Outsider | "I believe that sometimes employees are so tired of old stuff work that they need inspiration to motivate themselves ( as this principle is widely used in Football). I would go for an outsider with a good reputation." | |
| └► Jagdish B Acharya (India) | Outsider is Necessary | "When the situation has gone to a level that demands turnaround, it is only an outsider who can help. He has no stake in past, can be considered unbiased, can really change and can be seen as a savior. The solution will however come from insider's knowledge and outsider's understanding and analysis. Insiders may know the solution but may not force it, due to some limitations from top and hence a suave and articulate outsider can get that solution out of insiders and present it in form by which it brings turnaround." |
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| └► Daniels (UK) | Insider / Outsider | "Very good question. The answer is fully embedded in the causes and symptoms of decline. If the management team is capable then perhaps only a new CEO and CFO need to steer the ship. However, this is not to say existing CEO and CFO's have not rescued companies before albeit they are the exception rather than the rule." |
| └► Richard Terhorst (UK) | Turnround Strategy | "Changing leadership is often not possible as ownership rest in management. One needs to ensure that the identified shortcomings are adressed in another way. Be it 2nd tier management or use of advisors on a retainer basis." | |
| └► Jagdish B Acharya (India) | Identifying the Need for a Turnaround | "One of the most common way to know that a turnaround need exists comes from auditors or shareholders through some damning reactions. When the share price falls down drastically, it is a sure sign of need for turnaround. But it may be too late to get fast relief. Let us look at other signs or reports which may point to the first step of need for turnaround action." |
| └► Brendan Dunphy (UK/FR) | Turnaround Managemeny | "I see Turnaround Management as a role rather than a tool or technique and yes, it may be an approach to solving a critical problem requiring drastic action." | |
| └► Debashish Brahma (India) | Turnaround Management | "Turnaround is not a new word, you require effort in maintaining a business in breakeven also there is saying " Business is like a Car; you require effort to make it move except downhill". Nothing happens automatically, you have to make it happen. In case of an increase in the bottom line you require positive efforts/executions and that is also a turnaround to greater profitibility." | |
| └► John Everett (USA) | Turnaraound Management | "This definitely can use some fleshing out, but I have been through a turnaround, and the CEO that took us through it followed exactly those steps with great results. Perhaps someone with experience can provide links to the specific management techniques requested by a previous post." | |
| └► Anonymous (UK) | Rob Snelders | "Rob stop whining!... this is a brilliant site. It has everything you want on one page and maybe you should stop being so stingy and upgrade to the premium package. I think the article is very valid baring into account the current economic crisis and provides a senior managers a basic overview of fundamental areas that should be considered if trying to conduct a turnaround exercise within a business." | |
| └► Jagdish B Acharya (India) | Method or approach | "Rob, you are not happy with inclusion of this subject in 12Manage because you consider it as an approach and not a method. I would like to know your views on how to differentiate between the two. In my opinion approach is just an option or way to look at a problem whereas method has some measurement, comparison, analysis, decision, action and results. In turnaround management one measures profits versus time, calculates or views at rate of change of profits and decides if it requires simple incremental adjsutments or needs turnaround management. If applied properly, it may result in change of results and so I think it looks nearer to method than approach. Please let us have your views." | |
| └► Heinzl (France) | Method or Approach | "Where is the human? Top manager or operator, internal or external, where are the people? Nobody talks about them. Indicators, numbers, statistics: all right. It is a language like I speak German, English and French. It is not because I speak that I communicate and you understand me. Call it turnaround management, method, approach, they don't apply your decisions. That are arguments. If none of the workers understand your arguments, none of the workers can apply your arguments. When your arguments, turnaround management, approach, method, can't be used all your analysis is a waste of time. The first thing to do is to audit the existing human situation, list & search all achievements available in the enterprise. That's an important work to do: first. Then whatever you decide you can identify opportunities inside/outside of the enterprise." |
| └► Charles Shillingburg (USA) | Turnarounds Need to Be Simplified | "I agree that the approaches used are way too complex for the average company to wrap their heads around and implement on a daily basis. I believe lean needs to be leaned so that organizations start making rapid improvements quickly and easily by everyone in organizations. Lean simplified needs focus on only key, simple measurables and need not encompass the myriad of tools that exist. It can be a simple as creating a method to reduce the quantity of supplies in a cabinet and keeping it that way." |
| └► Prof. Dr. Jekabs U. Leititis (Germany) | Start with Quick Wins | "At least in my business (health care) it is very important to identify and utilize possibilities for "quick wins" in the very early phase of the process in order to keep the motivation on a high level in all who are involved. Otherwise many of them will withdraw their allegiance before the real work begins." |
