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 In most cases, the data is outdated before it is used.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.


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

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