In a VUCA world, it is not uncommon to see many companies tumbling down the aisle. Mismanagement, poor decision making, commoditization, radical market changes, leadership exits, founder’s demise or even a maverick competitor can make a sure step company loose its steps. Reviving near death companies not only needs restructuring but simultaneous rebuilding efforts. In our experience of working with companies across verticals we find management may pursue common interim strategies to revive the company.
Firstly, revival plans have to be more directional and dynamic, rather than grandiose. Board and the CEO must have a broad 6 quarter plan, but ensure your planning windows are smaller just 3 quarter rolling plans, and feedback is continuously used to quickly respond to market cues. View 20,000 square feet but eye what is happening on ground simultaneously. Assess the product lines, identify core one to invest and drop the “me-too” products. Identify what minimum variants are required to cover the market and limit the variety. Better ensure about 70% of parts and processes are common to gain from procurement and production economics. Identify approaches to become asset light including facility sharing, outsourcing, partial-sell off. Evaluate options to tap overseas markets including acquiring bankrupt or going out of businesses to gain access to key markets and newer models. Define partner ecosystem that can help increase market reach, and product improvements on a success fee model than investment model. Evaluate methods to shorten supply chains so that they could be served faster and with quality products. Assess methods to lower freight costs including assembly at site options and associated changes that may be required across the company.
On the finance front, conserve cash and invest in quick cash generation activities that may not need any investment (services and spares), cut unproductive capex and cost. Develop a cash management system and forecasting system to manage short term liquidity and efficiently manage working capital. Implement cost reduction and operational efficiency improvement activities. Discover the money your companies is leaving from post sales service and parts on table. Invest in a small team to sell services and spares. Work on your existing customer base and devise campaigns to upsell mandated parts and services. Integrate your post sales process, ensure parts and services are monetized effectively, first call responses are high and customer feedback on services has a positive impact on sales. Identify methods to reduce inventory including parts substitution, supersession or sale.
Identify process bottlenecks and operational inefficiencies. Devise simple systems to improve quality and response. Investing in customer relations to build relationship capital, but also defend your territories from your competitors. Shed away from centralized hierarchical decision making to flatter organization and an empowered sales team that not only covers the market, but also scans the flourish of ideas and friction at the customer end. Focus on doing more for less on sales front. Pursue a G5 customer strategy, largest five customers who offer multiple revenue monetization opportunities. Reorganize regional and product specific sales teams. Cross train, consolidate and upgrade sales skills.
Prune marketing costs and direct low cost social media and community branding efforts that help in dampening the negative vibes associated with the products and company. Build a simple reporting system that help in addressing how various units are delivering to mission, whether they are getting the maximum impact they from their expenditures and how effectively they are utilizing their budgets. Discard monthly or bi-weekly published reports and review, instead resort to open oral discussions on subsequent days or weekly that keep information flowing where it needs to go and cutting down the time on review prep work.
Team reconstruction is the heart of rebuilding the company. On the leadership front, what is needed is a firm hand with a gentle approach. Be focussed, direction obsessed without being overbearing. Soliciting perspective and opinions is welcome, but it must not paralyze decision making. A quick turnaround requires associates who can take challenges, unlearn, learn and re-learn skills. Team reconstruction is the heart of rebuilding the company. To succeed in turnaround, you need associates who believe the rewiring and can commit the requisite efforts. Ensure rumour wagons are derailed, communicate why things did not work earlier and how things are going to be different now. A tough call, but one required is to sidestep or ease out Smart Alec ‘s who can’t own and drive a team. Re-invigorate the team and ensure you have got the right people in the room to make things work. Focus on achieving short term results that will have positive impact. These small wins are essential to rebuilding the company. Rebuild the team by anticipating associates fears, anxieties and expectations. Avoid focus only on sales and numbers, invest enough to rebuild morale. Restructure with re-motivation.
Dr TR Madan Mohan and D Balasubramaniam