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 getting it moving forward again. If they could have done it by themselves they would have, right?

So it probably goes without saying that when I arrive on-site to begin the engagement, I expect some chaos. 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? Because it results in blowing up every system, every process and every plan and thus feeds the chaos.

The schedule becomes a useless, constantly changing document as the entire organization is focused on one thing – Getting the product out the door no matter what 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 is going to be way behind the $175K order.

Morale is down – you can see the unhappy faces as you walk the shop floor. In the first day or so that I’m there a manager, supervisor or machinist may tell me that if he could find another job, he’d be gone. Quality is starting to slip as 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 am going to make sure everyone’s in the right position – more on that later.)

The primary order of business is settling out the chaos and the first task I’ll focus on is the schedule. Everything in the company should revolve around the schedule. And with this common focus the real issues start to show up 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 look 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, quality control manager, engineering manager, 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.

And then we start creating 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 push back? 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 make sure it stays on track. Then we’ll lock it down, and 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 for business turnarounds – 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!