The old adage “If you keep doing what you have been doing, you’ll keep getting what you have been getting” will no longer wash in the current environment, says Stephen Eames.
I don’t have a crystal ball, but I have a strong feeling that turnaround is seriously back in town. Monitor is considering changes to its regulatory strategy, because of a belief that some historically successful foundation trusts cannot fix looming financial problems without radical restructuring and wider whole system support. This holds true for many aspirant foundation trusts still in the increasingly challenging pipeline.
Most people understand turnaround as a process that takes an organisation from a situation of poor and declining performance to one of sustained delivery. This is a bit of a one dimensional world view though, and any organisation that wants to stay ahead of the game in times of uncertainty should have turnaround clearly on their radar. There is an old adage: “If you keep doing what you have been doing, you’ll keep getting what you have been getting.” This won’t wash in the current environment.
International research shows that turnarounds are common: that over 30 per cent of large organisations run into turnaround territory within 10 years of inception. Successful leaders spot the risks early and respond quickly in a relatively unstructured way, so as to avoid a serious decline in fortunes. However, specialists argue that up to 80 per cent of these cases fall into a further cycle of decline within five years. Now, there may be a whiff of self-interest wrapped up here, but it seems there is room for improvement.
The touchstone of sustainable turnaround is recognition that decline is rarely, if ever, attributable to a single cause. It is often an accumulation of poor decisions, ineffective actions, misplaced commitments and poor communication that becomes self-perpetuating.
The Turnaround Management Society has studied 150 cases and found that most turnarounds focus on specifics and symptoms, rather than holistic solutions and root causes. They have produced the international turnaround management standard, which is essentially a guide to delivering sustainable and positive change in restructuring institutions in decline or seeking growth.
The standard points leaders towards developing a structured approach that grasps the strategic and operational complexities as well as the granular detail required to deliver successful turnaround. It means bringing together what are often competing strategies into one all embracing approach, turning a complicated web of quality, marketing, service and financial plans into hard-nosed, street-savvy programmes to tackle serious crises or strategic drift.
For those involved or about to become involved in turnaround, here are a few tips.
Number one: cash is king. This may seem counter-cultural in a patient-centred public service environment, but we all know that a positive cash flow is an absolute requirement in surviving and thriving.
Next, get down to the coalface and do the initial diagnosis yourself, avoiding the risk of bespoke turnaround strategies that do not suit your purpose or, worse, lack the promise of longer term recovery.
Alongside this, know your numbers inside out and do due diligence to death. This way you are more likely to be focused on changing those systems, processes and behaviours that really will deliver results.
Adopt a tough but fair leadership style, balancing a transactional approach with an emphasis on grip, with a more transformational and collaborative style that has an emphasis on long term returns.
Avoid complacency and thinking that a turnaround strategy is only for organisations or services in trouble. Many once renowned companies would attest to the need to dispel this myth. The best thing to do is to build rigorous turnaround management into routine management.
Fundamentally, turnaround situations do not respond well to implementing a straight line analytical process supported by strong project management – you ignore the human side at your peril. Most wicked and complex challenges involve social and political factors that by their very nature militate against dramatic change. So a good dose of disruptive innovation and coordinated organisational development is required.
Putting this together amounts to a mountain rescue kit for stemming the tide of decline, restoring stability, renewing and regenerating services or enabling highly successful institutions to maintain a continuous cycle of high performance. In the end though, most experienced turnaround specialists would say that quick turnarounds are usually financially driven and do not have staying power.
If you want to have the best chance of sustained recovery or stronger positioning for success, then cultural and wider performance change is necessary, so plan for a long march, not a quick fix.