Thursday, April 30, 2009

Turnaround Requirements – More CEO Ousters Underscore the Need for Better Strategizing

The recent ousters at GM, Bank of America and scores of other companies should be a warning to other CEOs that they have to strategize differently. Running a company is like driving at night in unfamiliar terrain on a winding road. You may know your long-range objective, but you can only see up to the range of your headlights. Beyond that is a mystery. So while the company’s objective may remain constant, the plans must be flexible enough to withstand rapid modification to meet market conditions and still be successful.

Many CEOs who don't want to step aside still rely on an antiquated strategic-planning process that often doesn't help them make better decisions faster. Once a year, they require the head of every business unit to compile a strategic report that includes three-to-five year financial forecasts. A fraction of this data is used to decide budgets, but most ends up in forgotten files. In most cases, the data is outdated before it is used.

So that once-a-year strategic plan is next to useless. It slows the decision-making process and is too detailed to be valuable to the units trying to manage the business.

It is difficult to believe that this still exists, assuming the company has a plan in the first place and many don’t. In this economy, no wonder so many companies are in trouble and its not just Chrysler and the auto makers that are filing for bankruptcy.

Clearly a much more flexible plan is required. In order for it to have a chance to work, managers below the executives must be engaged in quicker, more continuous decision making. Monthly full reviews of the plan are required with weekly updates and adjustments.

What is worse in these times is the cost cutting that has been done without an overall game plan. In many cases, this has undercut the company’s ability to execute the programs it does have in place. Many turnaround executives can strip out the costs, but it is important to also identify opportunities, harness resources, and create the plans that can build the business back. Just being a numbers person isn’t enough.

CEOs need turnaround experience these days. If they don’t have it, their tenure as a CEO is going to be short. “It has been my experience that just like in white water rafting, without the right expertise, you will be tossed out and the venture doomed,” says Walter Shill, managing director of the strategy practice at Accenture.

Three questions for you.

1. Do you have a plan that is flexible and works in today’s dynamic economy?
2. Do you have the cost reductions and the plans that identify opportunities to build the business back now and when the economy turns?
3. Do you have the turnaround expertise required to keep your “white water raft” from flipping or do you need to get it?

Contact us. We can help.

Thanks
John


John Maver
President
Maver Management Group
(925) 648-7561
Maver Management

View John Maver's profile on LinkedIn

Wednesday, April 22, 2009

What’s the issue? Business planning or just doing?

The recession continues and more and more businesses are failing - failing and being forced out of business, failing enough to have significant losses despite large layoffs and a desperate focus on cost cutting or failing through having little idea of how to turn the business around and keep a meaningful cash flow.

What’s the issue? Is it too much planning or too much action?

Are they failing because they have spent so much time creating the mission, vision, objective, goals and measurements for their strategic business plan that the opportunities have passed them by? Or are they locked in to outdated plans, programs and spending? Or is it more a case of having leadership that is unable to cope with the realities of today’s dynamic marketplace?

On the other hand, is it because they do not have a basic business plan that they are following and are just winging it? In this case, everyone is going full speed, but not in the same direction, no matter what you may think and certainly not toward a specific goal.

Or worse still, is it because they are faced with analysis paralysis and actually doing nothing? This cause a company to seize up and the organization grinds to a halt.

Actually, the failing may be the result of some or all of these elements. Business plans are a MUST for every company. However, they need to be actionable. And they need to be acted upon, adjusted and acted upon again. They shouldn’t be binder thick. In fact, we recommend that they be kept to one or two pages. Otherwise, they are not read, used properly or followed.

What are you doing in your company? If your company is struggling, is it due to over-planning for the business with concentration on the theoretical plan and not taking the appropriate action? Or is it all action and no known overall plan. Clearly, it can’t be an either/or if you are going to survive in today’s economy. It is a reasoned combination of both planning and action.

Do you have a written business plan? Is it simple and understandable to all? Has it been communicated to others?

Are they taking action on it? Are you adapting the plan based on the ever new market feedback? Do your customers know what you are trying to do and the benefit in it for them? Are they supporting your direction?

What are the results and what needs to be changed?

So many companies are focused on cost cutting that they are not generating revenue that is desperately required for cash flow and support and also undermining all future efforts. Now, and when the economy turns, it is going to be the company with the successful plans put into action and market honed that will prosper.

Managing in today’s turbulent times isn’t easy so don’t think you can do this on your own. Get some help from experts who have been there before and can help lead you through the problems.

This can be a time for you and your company to actually prosper but you have to do it smartly.

Thanks.

John
John Maver
President
Maver Management Group
(925) 648-7561
Maver Management

View John Maver's profile on LinkedIn

Saturday, April 11, 2009

Don’t Blame the Plan… Blame the Boss! Turn it around!

My friend Lewis Green wrote an article on this subject in 2007, part of which is included in this article. Since that time, the economy has tanked and many businesses have tossed out their strategic plans. Some have even tossed out their bosses. As companies struggled to stay alive, they have focused on cost cutting. Some bosses have been smart enough to lead the development of a plan that is in tune with their current realities while others have just cut. The “cutters” are and will be in trouble

Lewis asked “Is there anyone in business foolish enough to claim strategic planning always achieves your goals and results in success?” Certainly, having the plan alone will not result in success

Management consulting firm Marakon Associates and the Economist Intelligence Unit surveyed senior executives at 197 companies. Respondents said their firms achieved only 63 percent of the expected results of their strategic plans. And in a white paper entitled Three Reasons Why Good Strategies Fail: Execution, Execution, Execution, which carried the above research, Wharton management professor Lawrence G. Hrebiniak says MBA-trained managers know a lot about how to develop a plan but very little about how to carry it out. “Most of our MBAs receive great training in planning but far less in execution,” explained Hrebiniak.

Based on my experience, these findings are correct. When a plan is developed and that is missing so often, the failure comes from poor execution. Execution with brilliance comes with experience.

Some say that executives can not always be held entirely responsible. As long as shareholders and board members insist upon short-term results, only the most powerful and fearless executives will reap the long-term rewards and margins that strategic planning can deliver. But isn’t that the challenge for CEOs. That is what is causing the lifespan of CEOs to become shorter and shorter and the need for turnaround executives to come in and rescue the company.

So how do we as CEOs, executives and senior managers most effectively use strategic planning and get the desired results from it?

• Do annual strategic planning to provide overall direction but make monthly adjustments to stay current. You will be amazed at how quickly your business plan can be outdated. This applies to all businesses—whether a sole proprietorship or a mega multi-national corporation. While this provides a longer term direction, it takes advantage of flexibility and resilience.
• Be confident. Set high goals, short and long term. Don’t be intimidated by the Street or the Boardroom or your own fears. Those who merely set goals they can easily make never get around to stretching the business to achieve higher margins and outstanding profits.
• Use metrics to measure every goal in every functional area.
• Align every department, function and employee so that every ounce of the business’s energy is directed at achieving the goals set within the business plan
• Tie pay and benefits directly to success or failure.
• Do not focus on cost cutting. Make the focus of the plan marketing and sales. Companies have to operate cost effectively, but without revenue there is no company,
• Communicate, communicate, and communicate! If you want your plan to succeed, every member of your culture must be engaged and informed.

Turnaround management is about identifying the issues and opportunities, creating winning plans and then executing to satisfy both the short and long term objectives. So stop blaming the plan and the boss and start turning the business around.

Let me know how you are doing or how I can help.

Thanks

John



John Maver
President
Maver Management Group
(925) 648-7561
Maver Management

View John Maver's profile on LinkedIn