Turnaround Management

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Corporate renewal and restructuring during times of financial distress. Explanation of Turnaround Management.

All about Turnaround Management

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What is Turnaround Management? Description.

Turnaround Management involves the formulation and implementation of a strategic plan and a set of actions for corporate renewal and restructuring, typically during times of severe corporate financial distress. Often with the help of outside turnaround consultants or strategy consultants, a Root Cause Analysis is made and a turnaround plan is devised and executed, assuming that the firm still offers the potential to return to financial solvency, profitability and strategic viability.

Root Causes of Strategic distress

There are just a limited number of root causes for corporate strategic distress:

"Acts of God" - Certain risks may occur and cause irreparable damage (despite proper anticipation and thorough preparation).
Poor Vision / Understanding of the Market
Poor Strategy
Poor Business Model / Execution

More Immediate Causes of Strategic distress

Typically, when these root causes are not dealt with properly, they will cause a range of problems, which can then trigger a corporate crisis:

Lack of expertise, experience or education, weak management
Market circumstances, weak economy
Business economical reasons, earnings crisis
Bankruptcy of holding company
Board level arguments
Fraud, insufficient financial controls
Overly optimistic sales projections
Financing problems, liquidity crisis, excessive debt burden, undercapitalization
Operating cost levels too high
Very strong, successful competitor
Overinvestment
Insufficient resources, underinvestment

Often these triggers are interrelated, and several causes are involved. Slywotzky and Drzik have categorized these triggers in 7 Classes of Strategic Risk.

Steps in a Turnaround Process

The first step in a turnaround process is often to change the top management or leadership of the business and to appoint an experienced turnaround manager. Often strong, Commanding Leadership or even Charismatic Leadership is exerted. The turnaround process typically consists out of the following key steps (in approximate chronological order):

Assess the situation and future business viability
Implement emergency steps ("stop the bleeding")
Develop strategic survival plan
Implement the plan, restructuring the business. Survive the crisis
Return to normal operations, profitability and growth
Prepare for departure of turnaround management

Special Interest Group - Turnaround Management

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Forum - Turnaround Management

Discussions about Turnaround Management.

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Best Practices - Turnaround Management

Here you find the most valuable discussions from the past.

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Expert Tips - Turnaround Management

Here you will find advices by experts.

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Resources - Turnaround Management

Here you find powerpoint presentations, micro-learning videos and further information sources.

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