Organization Turnaround & Transformation
Common Issues & Concerns
Clients who engage with us in Organization Turnaround & Transformation have a common set of issues and concerns:
- Stalled growth
- Unsupportable or out-of-line overhead costs
- Declining margins and profits
- Unprofitable, impending cash crisis
- Declining market share
- Shareholder returns unattractive; Investors rattling their sabers
- Competitors gaining advantages
- Key leaders and employees leaving
- Organization bureaucracy and dysfunctional processes
- Customer satisfaction slipping or low
In the face of these challenges, companies typically attempt common turnaround approaches, including: reducing costs, installing new organization structures, changing out senior management, rationalizing product/customer/market (geography), continuing status quo and hoping the market changes, or all of the above, but piecemeal at different times. Given the 70% failure rate of typical change processes, many companies struggle with a sustainable, impactful solution.
There is a continuum of client business improvement needs that range from better ways to grow or improving existing business performance that we address in the Strategy Integration and Business Design section to the need to turnaround a struggling business.
In our experience, companies who have successfully completed a turnaround process share common elements:
- They embraced the downturn as a critical turning point to make radical but needed changes.
- They understood that the turnaround process is holistic, involving the entire organization, not simply a few of the executives or a specific piece of the organization.
- They followed a disciplined and structured process that examined and refreshed strategy and targeted capabilities and aligned the entire organization in support of better performance.
- They boldly selected and bet on internal leaders and teams willing to tackle the turnaround challenges and redesign process.
- They cut through the perplexing and paralyzing business dilemmas (internal conflicts around business models and strategies) that had stalled their progress.
- They were willing to take dramatic actions to right the company — major cost reductions, significant changes in strategy and capital deployment, business realignments, new structures, new senior and mid-level leadership assignments.
- Speed was a major driver. They accomplished the design and proposal work within a few month’s timeframe.
When this commitment is there, we are able to guide companies to help solve what feels like unsolvable problems, resulting in significant improvements and successes. Key elements in this holistic, integrated process include: implementing new structures and teams within first six months, significantly reducing costs in the first year, with additional savings in succeeding years and turning around revenue and profitability growth within 1–2 years followed rapidly by increasing share price performance as investors recognize that future prospects have changed.
Client Insights & Impact
A struggling travel and leisure company took advantage of a market downturn to refocus through a comprehensive review of their global business. They consolidated 6 brands, 3 global regions, and 3 competing investment models into a single integrated company and unified leadership team, took out $200m in costs, and realigned global and regional support functions. Over the subsequent two years, their stock price increased fourfold.
A global logistics company was 9 months from an impending liquidity crisis when new management embarked on a life-saving turnaround. Initial cost reductions of $90m in first year, followed by another $100m in second year provided needed investment to rethink and retool their customer strategy and operations network. Their mantra became “pick it up on time, don’t break it, and deliver it on time.” Over the next few years the stock price tripled and they won awards as industry best-in-class and best place to work four years running.
Effective collaboration does in fact drive results. When colleagues work together effectively, the process is highly engaging and exhilarating. At The RBL Group, we have been fortunate to work with a number of cross-functional teams who had a focused goal and left the...read more