Corporate Turnaround

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Bank managers at the gate - Rated
Like prehistoric tribesmen, businessmen tend to communicate values through stories and legends; and few themes generate more legend and more myth than corporate turnarounds.

Turnaround stories are fun; they paint big pictures with broad brushstrokes; they feature dramatic episodes and larger than life characters. As one of these characters 'Chainsaw' Dunlop writes, "You are not in business to be liked. ... If you want a friend get a dog. I'm not taking chances; I have two dogs." Turnaround experts are a stark reminder that Al Capone also wore dark suites and would probably be trading today, if only he had paid his taxes.

Clearing aside the hype, rescuing a company requires a combination of long and short-term thinking, empowerment and control, leadership and good management.

First and foremost, a turnaround requires a good team; building and directing that team is the prime task of the leader.

Much is written about teams but in reality most business teams are committees, where people write minutes, attend to protect their interests, and argue their point of view. A real team is a small group of people with complementary skills and a common, overriding goal. Successful turnarounds are case studies in teamwork; turnaround team members learn to trust and anticipate, and often look back at this period as the only real team experience of their working lives.

The team is critical as a turnaround is too much for an one person to handle, particularly given the time the leader spends on stage re-assuring stakeholders, employees, creditors, financial institutions and suppliers. Part of the mythos around corporate turnarounds comes about because the leader acts as lightning rod to the outside world.

The other part is the critical short-term activity, the need to cut fat, to re-negotiate contracts, to focus and to eliminate the non-core. Successful turnarounds are associated with 'cutting once and deeply', with dramatic cash flow injections and with brinkmanship negotiation practices.

This is not to ignore the long term. 'Neutron Jack' Welsh of General Electric, despite his name, articulated the 'number one or number two strategy' that took General electric to a decade of spectacular results. And Dunlap himself says, "If you don't have a vision of the future you are going no-where .... you can't inspire ... the remaining people ... if you don't combine the cutback with a vision of the future." This, he says, is the real art of leadership and management.

In their book, Slatter and Lovett claim that "(good) turnaround management is (good) everyday management". Certainly, as they themselves point out, management in a turnaround situation tends to be more autocratic; but then more decisions are mission critical, what Charles Handy refers to as 'decisions below the waterline'. A good book covering turnaround is a useful book in day to day management.

Corporate turnaround is about good management, albeit sharpened by the spectre of the bank manager at the door. It has a text book approach based on an earlier book, Corporate recovery - A guide to turnaround Management by Dr. Slatter. It is systematic and full of useful frameworks, matrices and graphs. It covers the symptoms and causes of decline and the characteristics of crisis situations as well as a framework for achieving turnaround and checklists in terms of crisis stabilisation, stakeholder management and achieving focus.

This is a useful book about good practice and although it is drawn from real examples, it is not a book about super heroes. If you want super heroes, I recommend a subscription to KTV. I'm not taking chances - I have a subscription to Cartoon network too.

Corporate Turnaround. Managing companies in distress. Stuart Slatter and David Lovett. Penguin Books 1999.

A pretty good book on corporate turnaround - Rated
This text builds on an earlier effort of Slatter's called Corporate Recovery (1984). It takes less of a process outlook than the earlier text, and this remains the only criticism I have of the current book. Otherwise, it is written in a clear style which makes its contents accessible to students, researchers and practicing managers alike.

In all a very good book on turnaround - I consider Slatter the best in the field in writing these books, having reviewed most of the literature. Maybe its because his findings are research based and not idle musings. Whatever the case, I would recommend this text to anyone with an interest in the field but would suggest that you augment your reading with his prior work on corporate recovery...

blend of academic research with practical experience - Rated
The book builds on Stuart Slatters earlier work first published in 1985. For the last 10 years Slatter, a professor at the London Business School and Lovett, senior restructuring partner at Arthur Andersen have collaberated in many way to develop methodology and training based on Lovett's experience in the front line and Slatters in the classroom.

The book was reviewed by a number of experienced practitioners before it was published . This is what they say:

"This an ambitious book which covers the full range of turnarounds and performance improvement issues. It provides the reader with clear insights into creating and implementing an effective turnaround".Peter Smitham, Managing Partner, Schroder Ventures.

"A well researched and practical guide to the processes involved in rescuing companies which might otherwise perish - should be a must read for all those proffesionals and execuitives involved in managing & advising companies". Louis Franks, HSBC Investment Bank.

"A comprehensive and logical analysis of the problems associated with turnaround companies...Turnarounds require management Writ Large. This is essentially a book on management under stress". Ian Hay Davison, Chairman.

"I believe this book by David Lovett & Stuart Slatter will become acknowledged as the definitive manual on Corporate Turnaround Management...Found in every businessman's top right hand draw".Bill McGrath, Chief Executive, British Gas Energy Centres.

The book shows that management of companies can restore their business to viability through application of the seven key ingredients to a succesful turnaround. Each of the key ingredients and their relevence to returning a business to profitable growth are explored in a no nonsense manner drawing on numerous case studies where the authors often have direct involvement.

In order to manage a crisis, management must first understand and face the reality of their current position. The authors introduce the concept of the Reality Gap. Many attempts at turnarounds have failed through management not appreciating the importance of this concept.

The book explores the importance of managing relationships with key stakeholders who are often taken for granted when trading is good but who can control the agenda when matters get tough.