Recently, I attended the Tri-Cities NACD breakfast with Greg Brenneman of CCMP Capital as a one man panel and Bill Chiles of Pelican Energy Partners as the moderator. Greg shared his lessons learned from a career of leading turnarounds as a consultant, executive, board member, and private equity investor. It was about as well-rounded of a perspective as one person could give. An excellent session!
- Thanks to Longnecker and Associates, attendees received a copy of Greg’s book Right Away & All At Once which I read over the weekend afterward. Video of Greg’s talk is available here. So, you can have much of the same experience I had minus the networking and the excellent breakfast that the Junior League served (including bacon!).
A key aspect of Greg’s talk and the book is how the concepts apply both to being successful in business and as a person. Plus, he mentions throughout the book that the business concepts do not just apply to owners, board members, and CEOs. They can also be used by department leaders looking to be more successful within a larger organization.
The purpose of this post is to explore a few concepts from the perspective of a CIO or CFO, not the owner, CEO, or board. We will focus on the situation Greg labels as “Satisfactorily Underperforming.” This is the all-to-common scenario where a company is chugging along with pretty good numbers but there are problems churning below the surface. If not addressed, it could easily become a turnaround situation.
- I am not focusing on the turnaround scenario because if you are a sitting C-level leader at a company heading into a crisis, you are unlikely to be there for the turnaround. It’s an unfortunate fact of life. The best career path is to never go into the ditch.
Where to Start
The turnaround approach advocated by Greg is based on developing a very crisp and compelling one page plan. If you as a CIO or CFO do not have a succinct and compelling vision of what success will look like for your organization in the future, then you will want to get one. A huge, detailed binder type plan will not cut it because it cannot be easily communicated to and remembered by all the team members who need to know how to take actions daily to make things better.
Your plan starts with identifying the most important levers that drive success. For IT strategic plans, I always begin with a simple one-page model of how the business operates to identify what business problems the company solves now and needs to solve in the future. Simplifying the business to its core levers is not always easy and should involve some differences of opinion and debate.
Actions, Not Just Ideas
The next step for a CIO is to select the problems that can be solved better with technology and defining specific actions that will be taken. Given how much the terms “transformational” and “disruptive” are used these days, this is the point where getting creative and becoming uncomfortable is absolutely necessary. For a CFO, this might involve looking at how alternative financing strategies, new pricing strategies, and new KPIs could change the trajectory of the business.
For the entire business, Greg recommends grouping the actions into four basic categories: Market, Finance, Product, and People. For a CIO or CFO doing more of a functional plan, these could be adapted to be Stakeholders, Finance, Services, and People to have more of an internal feel. However, my opinion is that calling the first category Market is still better. Challenging people to think about what they are doing as a business serving a market should prompt ideas that are different than a traditional functional view.
Stopping Things is a Key Action
A “best practice” for turnarounds is to stop doing things that lose money. I put quotes around best practice because the idea is so obvious that it would seem to not need to be highlighted. However, businesses, CIOs, and CFOs all live with the accumulated weight of past decisions. If you want to survive the period of “satisfactory underperformance” and not be swept aside in a crisis, you will want to identify things that are holding you back and change them. All the good things you are doing will produce more value by getting rid of the things eroding value.
For CIOs, a tool that works is to perform a TIME Analysis on the applications and services being provided. This process is described in another blog post (see here) and it makes it much easier to get alignment on the things that you will stop doing. Similar concepts could be applied to a CFO organization in that many reports, tasks, and even controls may be outdated.
Turnarounds are Hard / Avoiding Them Can Be Harder
There are numerous other lessons and examples shared in Greg’s book. Business turnarounds do require an enormous amount of hard work. However, the process of analyzing the problems and deciding on actions is actually not that hard. A crisis focuses the attention and clears lots of the fluff and hypotheticals that slow down healthy debate and decision-making. There is generally clear data (e.g. revenue dropping) to make priorities clearer. The one bankruptcy I went through was actually a period of high productivity and learning for me and many colleagues.
It is much harder to deal with satisfactorily underperforming situations prior to the crisis. People may not perceive there to be a problem. People may see risks ahead but not agree on which ones are most important. People will not find it easy to let go of what has made the business successful in the past unless there is a crisis. There is risk in taking certain new actions. It really speaks to how much more creativity and leadership it takes to avoid a crisis and not have a need for heroics.