PWC Turnaround Directors’ Survey

PWC’s latest Turnaround Directors survey makes interesting reading and whilst it does not specifically relate to the SME market, some very useful points are made.

Firstly, that there is a general reluctance of management to admit that they are struggling.

In addition to this being a primary barrier to seeking help, it also points to the inexperience of management teams.  This should not be taken as a slight however, as it merely denotes lack of experience in the range of challenges they currently face.  My perspective is that SME owners and management teams should not be cowed by the prospect of admitting that they don’t have all the answers.  How could they… no-one does.

By their very nature, Entrepreneurs tend to be sector specialists, highly knowledgeable in their own field.  The more successful the company has been, often the more focussed they have probably become.  As we hone our business strategies to keep a commercial edge, so we become more and more like a thoroughbred racehorse… very fit for purpose, but not so useful when we suddenly need to turn our hand to other things.

The PWC report also highlights the preponderance of sub-optimal strategy or business models in challenged companies, along with operational issues above and beyond those caused by the recession.  This also ties firmly back to the inexperience of management teams and to the many challenges associated with change.

It is human nature to believe that we need to work harder when the going gets tough.  This results in our becoming more and more focussed on the problems at hand, rather than standing back and seeing the challenge with a more holistic perspective.  The easy analogy is to think of Neo in the Matrix Trilogies, who by learning to look at the world in a different way, is able to be faster and more effective.

But even Neo did not make this transformation alone.  Often it is perspectives of people outside of the management team who hold the key to unlocking renewed vigour, passion, creativity… not to mention breakthrough business & marketing strategies or operational restructuring.

This can be leveraged internally, through the harnessing of valuable and often forgotten insight from employees… and engaging with this knowledgeable and frankly interested mental resource has the secondary benefit that it can also help revitalise all-important internal communication.

Turnaround transformation can also be leveraged through the engagement of externals, be they business coaches, company doctors or turnaround managers, depending on the size of the company in need and the depth of the problems.  Viewed with the fixed mental model of a management team in distress, they might represent a cost that the company might ill-afford.  But they also represent a huge opportunity, far beyond their price.

In addition to helping the embattled SME management team to refocus and reinvigorate their troubled company, they are also helping to broaden the management experience of those concerned.

We don’t actually tend to learn a lot by succeeding, so we have two other alternatives:

  • Much is learned by failure, provided we then have the opportunity to reflect comprehensively on what has happened… and provided we can afford to fail in the first place.
  • Alternatively we need to be prepared to receive wisdom from outside.

And since we also learn most not by being told, or even shown, but by being involved, the involvement of an external in helping us solve our crises is as much an investment in personal development as it is in turnaround.

The PWC report bears reading from this perspective and also sounds a note of warning to those Directors and owners who fail to take heed.  Too many owners are being forced into Administration when they could have worked their way out of their current predicament… but only if they are prepared to take action early.

Management teams with experience will do this and they are the ones who have the most to gain by their actions.

http://www.pwc.co.uk/pdf/turnaround_directors_survey_executive_summary_oct09.pdf

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