Organizational Transformation
by CRP Managing Partners
Scott Avila and Mark Barbeau
Scott Avila and Mark Barbeau, Managing Partners at CRP, contributed a chapter titled “Turnaround Planning and Execution” to the book entitled Enterprise Transformation: Understanding & Enabling Fundamental Change, published by John Wiley & Sons in 2005.
Avila and Barbeau provide a comprehensive overview of how to transform a trouble organization or a division; they discuss five key elements of turnaround planning and execution, including common factors that contribute to underperformance, the leadership qualities required in a successful turnaround team, the critical process of assessing an organization, and the development and execution of a comprehensive turnaround plan.
Business underperformance can be caused by a number of factors, the most prevalent being 1) internal – a failed business initiative, indecisive leadership and poor planning and controls and 2) external – competitive pricing pressure, changing market dynamics and increases in costs. A variety of factors indicate the extent of distress within an organization such as declining financial and operating performance, reactive versus proactive planning, institutional denial and broken relationships with customers, vendors, lenders and shareholders.
Avila and Barbeau explain there are four stages to a turnaround:
1. an honest and realistic assessment,
2. stabilization
of performance,
3. the development of a turnaround plan
and
4. execution of the plan.
The first stage is a clear, honest assessment of the situation. The assessment seeks to answer such questions as why the company’s customers value its products or services, how the organization creates value, key operational and economic drivers, the direction of the industry and how the company will compete in the future, along with the company’s strengths and weaknesses in all aspects of its business.
The assessment provides a foundation for the development of the turnaround plan that will, once implemented, result in revolutionary change in the organization. The assessment should also identify the skills and expertise of the transformation team required for the organizational transformation to be successful. Generally, the qualities of a successful turnaround team member include quantitative thinking skills, high-energy, a collaborative nature and a positive attitude.
The turnaround team provides the leadership to effectively guide the company through the development and execution of the turnaround plan. The first phase stage of the turnaround plan is the development of short-term actions that will immediately stabilize the company and cease further erosion of the business. Upon stabilization, the next phase outlines the pragmatic actions that will continue the transformation process and position the company for sustained and significant growth.
Next, the team manages the implementation of the turnaround plan using an iterative process of plan-act-review that values information, speed and adaptability. A turnaround plan requires constant review and adjustment, relying on timely and accurate management reports that focus on the critical success factors to make quick and responsive decisions.
Avila and Barbeau conclude by identifying the one indispensable element required to successfully transform an organization – communication. With effective communication between the team and its internal and external constituencies, the chances of the organizational transformation being successful are significantly greater. All of the organizations constituencies must embrace the process. As Avila and Barbeau put it: “the turnaround team is the driving force in setting the organizational transformation process; however, the success of this process will be dependent on the entire organization.”
To read the full text of the chapter and other topics related to organizational transformation, look for Enterprise Transformation: Understanding & Enabling Fundamental Change in bookstores or online at www.amazon.com.
© 2006 Corporate Revitalization Partners, LLC. All Rights Reserved