Recover and transform: How to fast forward to a time when you’re winning again
Martyn Strickland from Deloitte shares his article, Recover and transform: How to fast forward to a time when you’re winning again with us.
Are you feeling the pressure?
Following 23 years of unbroken economic growth, Australia is experiencing a period of unprecedented disruption which means managing your businesses performance isn’t exactly straightforward.
In this environment, stress, underperformance and disruption can creep up on you faster than you can adapt, creating three types of problems:
- Historical disruption – A step change in performance driven by a structural alteration in market or industry dynamics that is larger and faster than you can respond to, and affects sales, earnings and free cash flow.
- Gradual decline – A continued downward trend in industry attractiveness or a company’s ability to compete, resulting in diminishing performance and potentially loss of market share.
- Future disruption – A step change in performance, expected in the future, due to new entrants, new business models, regulatory change or economic shifts.
So how should you respond?
Whilst cost reduction, growth, cash and capital may all be part of the solution, knowing what the precise recipe is, and what the key ingredients are, is what saves you time and money when it really matters.
Are you addressing the underlying causes or burning time and money?
If you want to make the most of your scarce resources, identifying and addressing the underlying cause of under-performance is critical.
In these situations, it is easy to know that you have a problem, but often hard to work out why.
So how do you work out the why, and therefore the what to do, so you don’t waste scarce resources addressing issues that don’t really matter in the long run?
Like all good problem solving, a forensic style focus is required to identify the root cause, define and test solutions this is how you bring a laser like focus to recovery.
Your top three priorities define your critical path back to winning again.
From here, there are often thousands of things that could be done to recover and transform your business but typically, as few as three key priorities will make the difference. The challenge is that while these ‘hinge points’ are often obvious in hindsight, they are hard to see when you start out.
In many cases the most powerful hinge points lie in what is most threatening to your business. For example, it is easy to worry when your customers accelerate their sourcing programs. However, in more than one case what this has signalled is a willingness to consider higher risk service models, which can be exploited for mutual gain.
When you make it your mission to focus on what matters most to close the gap between current and winning performance your top three, not your top 1,000 you make the most of your scarce time and money.
What drives recovery and transformation success?
Unlike many change programs, where you might have two-three years to restructure the business, these situations lack two things time and money.
Let’s be real now a fast and effective turnaround isn’t straightforward it is often chaotic and overwhelming.
Good recovery and transformation links together a series of sprints to stabilise, fix the core and return the business to growth.
- Stabilise the business – Maximising cash, stabilising operations and stakeholder support to buy time and create options.
- Fix the core business/restructure – Strengthening the profitable core and build a better business to earn the right to grow.
- Return to growth or successfully exit – Organic profitable growth, transformation and M&A to achieve full potential.
During these sprints the game changes, from a typical early focus on cash, capital and stakeholder management, to driving profit, re-aligning the enterprise to the new reality and banking the change, to M&A, strategy and capability.
In the end, when you get this recipe correct the right ingredients at the right time you will fast forward to a time when you’re winning again.