Behind the Scenes of a Business Turnaround – Week One

When a company, board of directors, or investors call me in to handle a business turnaround, it usually means the situation has reached critical mass; they are at the end of their rope and need some experienced help in righting the ship and moving it forward again. If they could have done it by themselves, they would have done it, right?

So, it probably goes without saying that I expect some chaos when I arrive on-site to begin the engagement. And that’s what I usually find…

In a chaotic world, everything is reactionary. Everything is focused and functioning for one purpose – to generate sales. I call it “making the month,” and it’s a critical mistake and one that I too often see businesses make. Why? This results in the blowing up of every system, every process, and every plan, thus feeding the chaos.

The schedule becomes a useless, constantly changing document as the entire organization focuses on getting the product out the door no matter the consequences. Shipments become not only the primary focus but the only focus. Employees rack up overtime, inventory, rework, and scrap spikes. Customer expectations fall short, and morale slips. It’s chaos, leaving the leadership team confused and ineffective.

And which shipments have priority for going out? Why the biggest revenue orders, of course. The poor guy with a $15K order will be way behind the $175K order.

Morale is down – you can see the unhappy faces as you walk the shop floor. On the first day or so that I’m there, a manager, supervisor, or machinist may tell me he’d be gone if he could find another job. Quality is slipping as the product is shipped without much in the way of QC. I’ve actually had an executive in this situation tell me, “Don’t worry about it. We’ll fix it when it comes back.”

I once found a program manager using fresh-baked cookies to try and get their products processed ahead of another order – and it worked. Seriously?

And there’s fear. Many people are afraid I’m coming in as a hatchet man, which is not the case (although I will make sure everyone’s in the right position – more on that later.)

When it comes to a business turnaround, the primary order of business is settling out the chaos, and the first task I’ll focus on is scheduling. Everything in the company should revolve around the schedule. With this common focus, real issues start to appear quickly. “We don’t have all the parts to complete the assembly.” “We don’t have that tool.” “This machine is down.” With those issues identified, we’re now in a position to address each one.

If there aren’t regular production meetings, we start by implementing them and looking at the entire process together – step 1, step 2, step 3. And we don’t just sit around a conference table either! We walk the shop floor together – me, the production manager, the quality control manager, the engineering manager, the program manager – everyone who has a piece of the process. These early morning walks are critical because as issues arise, we can get them fixed ASAP – because we have all the key players. We need to stay focused on the schedule.

Then, we create a real production schedule based on customer due dates. We develop a process flow. Do this on Monday, this on Tuesday, this on Wednesday. Is there pushback? Of course! “You’re going to get a call from this customer.” “My manager will not be happy about this.”

And that’s fine because that’s what I’m there for – to develop the process to rectify the chaos, get things moving, and model the leadership needed to move forward.

In the first two weeks, we will line out the schedule, set the priorities, and define each element of the schedule to ensure it stays on track. Then we’ll lock it down; the only one who can change it after that is me. I’ll take the authority and responsibility and become the senior guy.

That’s a lot of control for a business to give up, but it’s at the heart of what we do in a business turnaround – and it works. Leadership is where it starts – with me stepping in to make the tough decisions, work with the organization to stay the course and hold people accountable.

Then we can start to calm the chaos, which we’ll talk about next time!

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