Poor decisions by stubborn leaders are to blame for the worst institutional failures
Turnarounds will always be around. Perhaps it’s just the mindset I’m in, but an increasing number of turnarounds and business rescues seem to be required. Times are tough.
Turnarounds cover the full spectrum, from local stores to industries, major corporations, political parties and even sovereign countries.
Failure, to the point where a turnaround is the only option, is often the consequence of incremental decay, tiredness and neglect. These may be easier to tackle than other causes, such as product obsolescence, irrelevance or simply a mistake. The worst failures, though, are the result of poor decisions, made practically deliberately by stubborn leaders.
In an increasingly competitive global landscape, success is measured almost in real time. People who are feeling comfortable are confused. However well established products or services may be, management comfort zones lead to brand arrogance, which has disastrous consequences. Watch out — open the door just a little and the wannabes and disruptors will eat your lunch.
No matter how exciting the growth trajectory, if it cannot be funded, the company won’t make it. Many inappropriate funding structures have destroyed a noble cause (and left the idea for the next person to pick up and prosper).
Volkswagen has appointed a new CEO after Matthias Mueller steered it through the aftermath of the emissions cheating scandal. It’ll take a tough individual to clear the stench.
Brexit must by now surely have been recognised to have been a mistake — a mess, with very little hope of the UK being able to craft the right deal from a position of such weakness.
Whether it was a mistake of the masses or just a bad bet by political leadership, this must be a classical case for Control-AltDelete. Put it to the vote again and I’ll bet the result will be different.
Regarding leadership blunders, look no further than the Donald Trump “You’re fired!” TV programme, which went on to become a presidency that will eventually require a restart, never mind a turnaround. Starting a trade war with China is supreme brand arrogance.
There are too many examples of failing economies (Venezuela, Cuba and Russia, just to name some in the news), where entrenched leadership doesn’t embrace change.
Turnarounds will only take place once the new, young breed of politicians has taken over. Fortunately, they are gathering in increasing numbers, around the world.
If something needs fixing, it first has to be accepted that it is broken, after which the truth about the reasons for it have to be uncovered. It will not always be obvious until it has been found, but when it has become abundantly clear it has to be accepted. The proper cure can only follow the proper diagnosis. Not only does the disease need to be identified, but also its depth of infection; different stages require different medicine.
The problem always has to do with the incumbent management and stakeholders who presided over its manifestation. Change them first. Find the new CEO, back the new CEO — no new boss, no change.
There has to be investment. Getting lean is part of getting fit, but to fight, particularly from a position of lost ground, the institution will have to be strong. A failing business is not simply cured by making it smaller. In fact, that may precipitate its final demise.
As the new CEO, it takes time to find out who’s who, and first impressions don’t often endure, both ways. You meet the school bully first on the playground. But you must set a deadline for the new people deal to be done, and then deal it. Tolerance lowers standards. Turnarounds are not popularity contests, but they don’t have to be demolition derbies either.
In the end, it will be the change in culture and core values as well as broad-based buy-in for the new direction — not just the individual at the top — that will sort out the successes from the failures. Organisational culture attracts its own kind and dispenses with those who don’t fit in. Get that right and the future self-corrects, requiring less and less intervention.
Sometimes it’s too late, the damage is too deep, the operating environment is already structurally flawed. But mostly one person can make a difference, with stakeholder backing.
There are any number of work-in-progress turnarounds in play in SA’s own backyard. The country also has deep pools of talent and expertise. I think we’ll be okay.
WATCH OUT — OPEN THE DOOR JUST A LITTLE AND THE WANNABES AND DISRUPTORS WILL EAT YOUR LUNCH