As businesses remain in lockdown, the #1 question continues to be: “When can we return to normal?” A peer into the crystal ball about the economic recovery once the COVID-19 quarantine ends, is murky. Predictions range from a sharp, V-shaped rebound to a gradual climb out that lasts a year or more. Other views point to an even longer, drawn-out recession followed by a very slow recovery.
Whether the recovery is swift or painfully protracted, one point is clear: in today’s environment, every business is a turnaround business. To survive, companies require leaders skilled in reversing or jump-starting under performing and/or lackluster businesses. Since many companies won’t be able to automatically tap into this specialized experience within their current management team, it is safe to say that the turnaround leader will be in high demand.
Turnaround is an art
Throughout history, the most renowned artists have combined raw talent (DNA) with a relentless determination to practice and perfect their craft. Knowing how to recognize the DNA of the turnaround artisan is the first step in moving toward recovery and renewal.
How to recognize the turnaround leader
The key qualities of leaders who have the skills and experience to effectively navigate a turnaround include a bias for action, candor and agility. Turnaround leaders trust in their ability to communicate the sense of urgency it takes to align the organization around a common goal (the successful turnaround). They have the capacity to persuade and leverage the formal and informal power bases within the organization who must embrace the mindset needed to achieve the turnaround.
They model the resolve it takes to shake the organization out of complacency. They understand how to shift the broad corporate mentality from being content making small, incremental improvements or tweaks year-over-year, to living with a constant perception that the organization is facing adversity in survival mode. The inflection point comes when the majority of the organization embraces the notion of working against a continuous threat. In this context, the turnaround leader has supplied the team with the courage they need to confront and challenge deeply held practices and paradigms that must be adapted.
Turnaround leaders are decisive. They are able to make quick decisions that strengthen the financial position of the company. Often the first step is to evaluate OPEX and SG&A expenses to slash spending and preserve cash. These calls, effectively applied from the turnaround playbook, are painful but necessary to the survival of the organization.
Pivoting at the Inflection Point
Companies that only hunker down and retrench ignore the advantage they gain by pairing defensive measures with offensive action. True turnaround leaders do more than cut costs. They know that there is an opportunity to take share at a time when the competition is focused on pure survival. These leaders stretch their teams to deal with paradox – in this case growth in contracting markets. They pivot their teams to a commercial turnaround mindset. This calls for a high degree of creativity, not only from the turnaround leader but from the organization as a whole in order to pursue new customers or adjust products and services, etc. that are built around new ways of thinking.
Companies that choose the status quo in a desire for stability above all else face an uncertain future. Those companies that take a strong defensive posture are likely to endure through the crisis but may have more trouble on the rebound. The companies that will thrive in the new normal will be those that demonstrate the agility to adapt both their operational and commercial strategies. For many companies, this turnaround will require an investment in new leadership DNA.