You were just appointed the CEO of a company in distress. You are expected to quickly turnaround the business. What do you do ?
I was asked that question a couple of weeks ago and so I sat down to write my draft action plan. Looking forward to hearing yours.
Here is mine:
1. Define the situation, the objective and the timeframe
2. Step outside of the building – customers/sales first
3. Communicate inside constantly
4. Management team involvement
5. cut low margin product lines
6. Invest and prioritize high potential growth engines
Let me explain:
1. Define the situation and the objective – Before acting, I believe in analyzing and planning. I would define whether the objective is revenue, profits, cash, order intake etc. and what is the time that I have to sold the issue. If I have 6 months I would act differently than if I have 18 months.
2. Step outside of the building – customers/sales first – Tough times are the best times for your competitors to steal your customers. I would focus on serving the current customers. Then I would focus on generating new prospects and at the same time better understanding the market. There is nothing like a firsthand experience of the market and a CEO should constantly do that instead of hearing about the market in internal meetings in the office. Every customer that I, as a CEO visit, has better chances of leading to a sale (assuming I know how to sell my products) since my competitor will probably not have the CEO come over for a customer meeting unless it’s a strategic customer.
3. Communicate inside constantly – tough times lead to uncertainly. Employees hate uncertainly. The spend much more time on rumors and guesses than on working. In such times you want your employees to give 120% and not 70%.
4. Management team involvement – The management team needs to know that this is not only “my problem” but it is “our problem”. I’m sure they know their business better than I do, so they can find better ways to create efficiencies and improve performance. They must be on board !
5. Cut low margin product lines – There are always these low margin products that generated nice revenues historically and so no one had the guts to make the unpopular decision of shutting them down. Well, it’s about time to do that (assuming we are after profit and not revenues).
6. Invest and prioritize high potential growth engines – The market will eventually recover. The company needs to be ready for that, as this is the best time to grow (ask Cisco, Intel and others). To do that we need to have new high potential products and so an investment in the future is a must (Most CEOs focus only on short term projects, forgetting that there is a tomorrow).
Lastly, I highly recommend reading Lou Gerstner’s book : “Who Says Elephants Can’t Dance?” Inside IBM’s Historic Turnaround.