When thinking of business “turnaround,” names like McDonald’s and Samsung come to mind as they struggle to navigate the changing market and waning consumer interest. Yet, a business at any stage of growth may require a turnaround, or ‘pivot’ on its core strategy. This is a concept with which many startup founders are familiar.
I am all too familiar with the turnaround concept. I left a comfortable role at Microsoft and chose to take on the challenge of becoming the CEO of a newly acquired business within a larger corporation. Within 18 months I managed to turn around its decline into double-digit growth.
During this time I had to decide which role I would take as the leader of a troubled company. I found that I had to be both a doctor and captain, and that there are five key steps that led to turnaround success for my team, our customers and myself.
Diagnosis
The first challenge I faced was deciding whether to speak first with unhappy or happy customers. As a rule of thumb I follow an 80/20 rule, focusing my energy on the happy customers; I find it’s easier to do more of the good to turn this to greatness than focus your energy on the negative. As a leader, this is the time when you need to listen, listen, listen. To obtain the most pertinent information, I asked a few key questions: What are we doing well? What should we prioritize to fix?
If you are hungry and dedicated to making your vision work, you need to take charge and steer your crew in the right direction.
I then focused my attention on the organization’s key influencers to ask them the same questions. Instead of selecting this group from company performance rankings and HR records, I spoke to the individuals who I heard had the largest influence and credibility from across the group — making sure I had representation from across marketing, sales, operations, product, support etc. I wanted to begin to build a trusted network of advisors and influencers. From this initial group I then asked them to name two further individuals they held in high regard. Here I had to analyze the various company ailments.
Then I reviewed the wider market and major trends at play that would impact future business decisions, noting any recurring themes that required more attention. For example, I found that we excelled in the level of service provided to customers — something that we would need to maintain, and also use to our advantage, through PR, awards and case studies.
Check Your Instruments
Most employees, like patients are able to self-diagnose; but it’s also important to look for answers beyond internal myths. Here I had to go back to business basics. As a tech executive plagued by data, I believe in insights. I also believe that where you have the knowledge and expertise, you should be prepared to get your hands dirty and do your own analysis, rather than distracting your team.
I spent more than 60 hours reviewing renewal rates, new cash sales, cost per customer acquisition (CAC) and quality of the sales pipeline. For me it was all about new business, sales and retention. Having a boat without instruments makes it very difficult to navigate — the data you choose to read is critical in understanding both your present situation and in predicting your future course.
The biggest pain point we faced was that we were losing revenue but we did not know why. I knew we could not rely solely on historical reports and analysis. We needed to identify any outliers and pull new data sets to better diagnose the root cause of the problem.
By building the turnaround on solid data insights that I knew were accurate, I was able to validate business decisions and create a dialogue with our top 60 employees (managers and influencers) on our future path and vision.
Is There Appetite For Change?
At this point two questions still remain. Can the company be saved, and are you the right captain to save it?
Once you have validated that there is a market opportunity, and your business has the DNA to address the opportunity and deliver value to customers, it’s time to take this back to your trusted network. Do your employees have the appetite for change and, even more importantly, do you? At this point I had to ask myself, do I jump ship or stick around? My decision had to be clear; there was no short fix, and it was going to be a long ride.
You need to believe in the opportunity and that there is enough good left to fight for. The challenge in front of you needs to give you something personally, so that you can maintain motivation even during the tough times. I also sought support from my family — I knew that this was going to be a bumpy ride and they needed to be on board.
For me the decision was clear. I joined the company to enact change. We were an organization still aligned to a greater mission and hungry to be able to achieve success again at scale. During the toughest times I took a step back and thought about someone starting out, like the mail-boy who would be able to improve his prospects thanks to our services. For you it might be the financials, the leadership opportunity or media limelight. If you are hungry and dedicated to making your vision work, you need to take charge and steer your crew in the right direction.
Time To Set Sail
It was now time to share my diagnosis and seek agreement on the proposed course of action. I gathered the key stakeholders to get their buy-in and sign-off. This included the founders, investors and shareholders who would allow me to deliver my vision by providing access to the resources I needed to mobilize the organization toward its transformation.
Can the company be saved, and are you the right captain to save it?
These stakeholders also allowed me to map an appropriate course that aligned with the company’s key strengths. As we began to implement the changes, I was cognizant that the treatment was not having a negative effect on teams. I implemented a Pulse Check where I personally met with individuals from across the organization to gather feedback and make any adjustments as quickly as possible. This took an investment of around 50 hours, but allowed me to take action swiftly and effectively.
We initially had a few ‘cultural’ onboarding challenges when we brought on new talent to address skill gaps. We had to quickly adapt our strategy for new hires; we began inviting a larger cross-section of individuals to take part in the interview process to ensure we were selecting the best fit for the team, as well as the most talented.
Your Job Is Never Done
Market and business requirements are ever-changing, so your job is never really done. As we got to work, I made sure we celebrated quick wins and I listened to my employees, customers and prospects to adjust the strategy as needed. I kept the Pulse Check in place, even though it was a major impact on my time. With all new employees I built in a 30/60/90-day check-in to understand their experience and listen to their recommendations on how we might do things differently. This has helped with retention, and I also benefit from fresh opinions from newcomers who have not yet been fully indoctrinated into the company.
If you want your company to remain current, you need to face ongoing innovation turnaround. You must invest your time to deliver effective communication. Even if you are strapped, you will need to find the money to invest in the turnaround financially — for us it was new video conferencing and comms equipment to increase face-to-face meetings, which allowed us to create trust and collaboration in a disparate team.
My closing advice to you is to consider the market first and shareholders second — as they will follow one another. Make sure you prioritize external factors and don’t get bogged down with internal meetings and unnecessary bureaucracy. When you get pushback, remember that while there is always resistance to change, the proposition of a “better future” resonates with every organization. Make this the vocal point of your mission and values for everyone to embrace, so you’re all rowing in the same direction.