Insights
ONE OF THE GREATEST CHALLENGES of helping a company in crisis to recover is the lack of accurate and rapid decision making by the incumbent leadership. The most common problem encountered is the constant misguided view that their company needs an industry expert to turn it around. I am forever advising that what is needed is a company expert, a transitional manger expert, not an industry expert. The penny drops when I point out that it was an industry expert leading them up till now that got them into trouble. Companies are typically filled with industry experts in their production, marketing and service teams, so that is not the skill needed in their next CEO.
What is needed is a special type of leader who can make the best of all the industry expertise within the company.
Don’t ignore the experts. One thing I encounter, not often, but from time to time, is a death knell for growing private companies. It is when a founder CEO, struggling to control growth, hires experts, either employed or consulting, then proceeds to ignore them believing he knows better. It is a sign that the CEO was really trying to hire someone who agrees with him, in other words yes men. An example is hiring a marketing guru then expecting them to just make your marketing plan better, not accepting that your marketing plan is what’s wrong.
A turnaround CEO knows how to solve that problem.
Governance, invented by James Watt to control the speed of his steam engines, is a feedback mechanism. Control is established when a part of a system reports to and is accountable to another part. The CEO reports to and is accountable to the Board of Directors. When the CEO is also the Chairman of the board, they are reporting to themselves, so all control and accountability is lost.
A turnaround CEO recognises this as a problem.
Market research. It is not unusual for an inventor or entrepreneur with a novel business opportunity or a company founder to believe that the whole world will be as enamoured with their creation as they are. Being too close to the trees to see the forest means they don’t contract, or worse, ignore, independent market research preferring their gut feel.
A turnaround CEO always determines market size from independent market research.
Closely held companies. At times a founder accepts funds from public investors to pay for the growth of their company, who now are co-owners, and then continue to run the company as if it were still their own. Such tightly held companies generally grow slowly, fail to prosper and offer limited shareholder opportunities.
A turnaround CEO will establish governance and management decision making structures in such companies to remove micromanagement by founders.
Check everything. The pages of The Vandemonian are absolutely full of amazing insights, lessons, innovations, that Allan uses in his company turn-around engagements. Absolute gems some of them.
A turnaround CEO will always question the established methods.
The board of directors is the highest authority in any company. What the board says goes. A good CEO is only as good as their board.
A turnaround CEO will always ensure a strong and healthy board.
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