Nov 132014

Dr. Earl R. Smith II

I recently completed a turnaround engagement with a mid-market company. The effort was successful and the story of the turnaround was typical of many.

My initial foray into any company identifies those threats that are likely to bring it down. I refer to this as triage. In this case there were a range of threats. The first that needed attention was the management style of the CEO. She was imperious and aloof. That approach had permeated the entire senior team. It was clear from the beginning that there was a divide between senior management and the rest of the company – that was causing both conflict and inefficiency. I chose to begin the engagement by working closely with the CEO.

I organized a leadership assessment that covered the entire senior team. This involved seven of the most senior executives. We drew data from three levels of the company plus the board of directors. The entire program – including the analysis of the data – took only a week. Once the analysis was complete, I organized a session to present the results. In addition to the senior team, we invited members of the board of directors.

It would be an understatement to say the meeting was rough going. The first response to the data was denial – this could not be true. However, the pattern was undeniable. After the initial shock started to settle down, I began to outline the impact of the effects of the leadership style that the team had adopted. The difficulty was that this style evolved without much thought. It flowed from the attitude of the CEO towards the role a leader.

Because the company was in crisis, the CEO accepted that the need was to act quickly and strike at the root of the leadership issue. The plain fact was that little was possible until her team became more effective. We organized an intensive series of working sessions. They involved both members of the board of directors and the broader team of the company. We also made sure that the visibility of the effort was high – the company as a whole knew that changes were in the wind.

After two weeks of work, we came to a clear and common vision of the changes needed to turn the senior team around. Because of that effort, two of the senior team members were let go and we initiated searches for their replacements. The rest of the team continued to work on their leadership skills.

With the renovation of the senior team going well, I turned to diagnosing the challenges facing the company. We organized an organizational assessment. We gathered data from the entire organization plus from several of the company’s key customers. It was completed within four business days and the analysis of the data took another five. Initially I presented the results to the senior team and board. After that meeting, I presented to an all hands meeting. The list of challenges appeared daunting at first.

  • The company had a poorly defined – almost amorphous – value proposition. Key customers disagreed with the focus
  • The focus of the senior team was almost exclusively on strategic planning – their efforts at implementation were far less effective than needed
  • The disconnect between the senior team and the rest of the organization was a major source of conflict
  • The company did not have an effective customer relationship management system – opportunities were lost because follow up was unfocused and sporadic
  • The company had engaged a wide range of consultants without a holistic vision for their engagement – nothing fit together – consultants were sometimes working at odds with each other – there were no effective metrics for any of the consulting engagements
  • The company had very ineffective financial controls – the cash flow management system was primitive
  • Focus on product development was fragmented and sporadic – the customers were not involved in directing the efforts
  • The internal friction was eroding the effectiveness of the organization – the corporate culture was corrosive
  • The organization was made up of a series of fiefdoms – the leadership style of the CEO had cultivated these divisions – the team was not playing as a whole

I remember the atmosphere in the room towards the end of the meeting. The implications of the data were overwhelming. The last part of the session involved convincing the entire team that the challenges were not impossible to overcome. I spent some time telling ‘war stories’ about other companies that I had worked with. Then I laid out a plan for addressing each one. There was a chance – if everybody focused and made their best contribution – to turn around the company.

Next Time – Meeting the Challenges

© Dr. Earl R. Smith II

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