Say you’re on a small sailboat in the ocean and a fire breaks out; a sailor’s worst fear. There are no fire departments in the ocean. And if the fire gets out of control and you abandon ship, you’ll likely be in a perilously small life raft in rough seas and you may not be picked up for days or weeks, if at all. When bad things happen in the ocean, all sailors immediately plunge in and work together to fix things. Alone at sea, we know that ignoring bad situations comes at our peril.
Business Performance Improvement (BPI) and Turnaround Management involves managing change in evolving and often bad situations. If you’re going to “improve” something, you have to change it from its current state (the As Is) to an improved state (the Will Be). In a troubled company, getting key decision-makers to recognize a crisis and support change is not always easy. Even the best business leaders get complacent, in a state of inertia, even when things are going really bad. Denial and hope are wonderful things but they don’t get the job done. The only way to get a BPI or Turnaround Management project off the ground is to demonstrate that the company is on a burning platform that is soon going to sink if action is not taken now.
It is said that “costs are sticky on the way down” meaning that you often cannot get costs down quickly enough. There are always cost-reduction overhangs, like ongoing severance or rental payments. And, yet cost reductions are where you can most quickly put out the fire and right your ship. Say your cost structure only brings 10 percent of the sales down to the bottom line. It is usually easier to reduce costs by, say, $100,000 than to raise revenue by $1 million. Those cost reductions might involve making tough and emotional decisions, sometimes going against the status quo of friends and family in closely-held companies. Emotions, personal history and personal vested interests can cloud judgements and delay decisions precisely when critical time-sensitive decision-making is needed. Independent outside assistance is often required to get off a burning platform.
We’re available to help you get off your burning platform. We also facilitate customized one-day, on-site and entertaining Business Performance Improvement workshops to help management teams identify and prioritize new BPI initiatives. Feel free to call us to discuss how we could help you.