29 Sep Strategic Change in the Turnaround Organization
By Matthew M. Thomas, COO / Senior Design Partner at Design Group International
An organization found itself stuck with long-term declining market share, declining revenues, and rising costs. These changes had been all so small and incremental that they had snuck up on the organization’s leaders, so to speak. But now, suddenly, cash reserves had hit a tipping point, and leaders knew they were going to have to go in for deep cuts, new revenues, or perhaps some combination of both, to stay in business. Their leadership team was divided between those who wanted to tighten everyone’s belts and those who dreamed of the good old days, and how they thought with just a little more effort by a few people, they could recover. Their leadership meetings took most of their time going over reports which no one had read ahead of time, and the major discussions were about what information needed to be on the reports, and which should be left out.
When they hired their next new executive, this organization began to feel the pinch even more, and finally faced the reality that they were going to have to restructure, develop new revenues, train different kinds of leaders, cut certain kinds of expenses and programs, and develop entirely new core business all at the same time, if they wanted to move forward. They realized they were a turnaround organization, and they had a lot on their plate. They realized they needed to act strategically to make sure these multifaceted components could resolve positively without creating more chaos and perhaps taking the organization down prematurely.
As many leaders can attest, working with an organization in a turnaround situation is a complex undertaking.
I’ve had several opportunities to work with turnaround organizations, and all of them have at least two major challenges:
Creating a New Narrative, and Regaining Strategic Perspective.
In this article, we’re going to look at using strategic change as a tool for an organizational turnaround. We’ll start by reviewing the two challenges (and their solutions), and then how strategic change can make those solutions possible.
Challenge 1: Creating a New Narrative
Organizations in turnaround situations often have a narrative that frames the past as the best days, the present as difficult, and the future as either further decline to death, or as so positive as to be disconnected from reality. Into this narrative are injected nostalgia, fear, anger, sadness, and dreaming.
The turnaround challenge to this narrative requires making a more objective assessment of the organization’s story and changing the organization’s viewpoint to see that today is the opening chapter of a new story, rather than one of the later chapters of a previous story arc. The new story can have different outcomes than the old story did, and the drama of the new narrative can become exciting and engaging as people now engage as protagonists, instead of spectators – able to have agency in the outcome.
Challenge 2: Regaining Strategic Perspective
Turnaround organizations – and particularly their leaders – are either so stuck in the immediate problems of the day as they have always been framed, or so detached from reality that they cannot face the real organizational challenges in front of them. For those stuck in the immediate and the urgent, their responses have often become reactive, are rarely even tactical, mostly implied, and rarely forward-thinking. For those who are detached, their detachment can manifest as apathy and also as a rosy dreaminess – neither of which allows them to face their challenges for which they have responsibility.
The challenge, then, is to move both types of people to a strategic perspective: one that gets out of the immediate, the urgent, and the day-to-day, and moves toward long-term perspective; and one that draws those disconnected (dreamers and the apathetic) back into healthy engagement.
Strategic Change as a Turnaround Tool
Strategic change, then, becomes the turnaround organization’s primary tool to address both turnaround challenges. The strategic best practice of assessing the organization’s current state allows implicit narratives to be made explicit, and, once brought out into the open, can be addressed and modified. Moreover, the current state assessments allow for the immediate and urgent to be put into a larger picture that often suggests that these issues will not be sorted out overnight, and allow for the organization to build in more strategic ways of dealing with them.
Most of all, a strategic change process allows for the organization to envision its future state. Once leaders have a chance to put vision to paper or PowerPoint, the organization can probe the beliefs and mindsets that underlie it. This can help serve as a reality check, as well as an opportunity to tell a new story. Furthermore, it can make the current challenges Chapter 1 of the organization’s new story instead of the Epilogue of the old.
These processes help organizations adapt to new realities, rather than merely fixing technical components that might be broken or out of date. Changing e-mail providers might solve message delivery problems, but strategically changing how an organization communicates and collaborates requires people to adapt to new ways of thinking, seeing, and experiencing life in their organization.
Strategic change works in a Tao-like balance of action and reflection, slowing some processes down, speeding others up, allowing leaders who are paralyzed to learn how to take action and make decisions, and for those who are reactive, fire-from-the-hip types, to slow things down and reflect enough to begin to make real decisions. Along the way, strategic change helps to balance action and reflection, helping them to work together for long-term good.
What have your experiences of turnaround organizations been? What narratives have you seen in play? Where were the strategic blind spots? How do you balance action and reflection?