The saying goes: “There’s no point crying over spilt milk.” But what about when your company is facing a restructure? In our experience, a restructure is a breeding ground for chaos if you don’t take charge. Here we examine some of the challenges you might face.
Expect the unexpected
We’ve seen first-hand the challenges that seem to come from nowhere during company restructures. The challenges mainly fall into one (or more!) of the following four categories:
Typical challenge? Mid-crisis, your CEO steps down – precisely when you most need direction. The impact? From an operational perspective, the team will flounder, which compounds financial challenges.
PR wise, it doesn’t send a great message to shareholders and investors if the head honcho is headed for the hills. This is just one of the challenges companies can face during a restructure.
Leveraging a crisis
For all the problems associated with restructuring, sometimes it is only when a company is in the midst of crisis that management are able to radically and rapidly transform the business.
We’ve supported many businesses during periods of stress and distress – and found there are four key rules you must follow in a crisis, if you’re really going to address underperformance and return to sustainable profits.
Stay agile – In a crisis, continuous prioritisation is paramount, as the plan changes on an hourly, daily and weekly basis. Agility is required as management focus on the commercial end goal. It is important to have clear sight of the commercial value and a top level plan, whilst allowing teams on the ground the autonomy and trust to achieve the end goal, holding business units to account against this alone.
Ruthlessly focus on money – In a crisis you have to address any activities that don’t add value, as well as costs in general in order to stop the haemorrhaging of cash. It might surprise you how much wasted operations and costs you’ve accumulated.
Regularly critically reviewing activities, focusing on value add cost allows management to remain informed and take those tough decisions early, cutting the waste and reassigning resource to the most profitable activities.
Set a time boundary – In a typical turnaround situation the most pressing question is “How much time does the company have before management need to call in the administrator?” This is driven by how much cash your business has.
When it’s business as usual, management get bogged down in the day-to-day. As difficult as turnaround transformations can be, the sheer urgency of the situation forces you to face the problems directly and quickly.
Collaborate effectively – Often, you’ll find that you create the most value and the best efficiencies where you collaborate right across your organisation, yet this is where most companies fall short. Crisis brings together people from across the business; people set aside their personal agendas and focus on the problems at hand.
Effectively facilitating collaboration can make the difference between your company going under, or transforming.
In the modern business landscape of disruptive market entrants and more frequent and painful macro shocks, companies must continuously evolve and reinvent themselves to remain relevant. Now more than ever, a transformational mind-set needs to be embedded into the DNA of the organisation and these rules need to be put into action before difficulties are encountered.
Mike Moffett, partner, operational restructuring at PwC[rb_inline_related]
Share this story