Having completed a dozen turn-arounds – usually in the role of Interim CEO / COO / GM – I’m often asked, “Are there consistent actions you take the first week at each company?” to which I answer, “Yes…and no.” ‘No’ because each company is unique, with it’s own set of problems, strengths, and market constraints; therefore each company requires a unique set of actions. But ‘Yes’ because I have settled on a consistent process for the first week, a process that helps me determine the real problems and possible solutions.
That said, there is one action I always take the first day; although the companies I’ve helped turn around have been in very different industries – from electronic ink to wireless mesh to software (of many types) to heart defibrillators to video games – each company needed cash to survive. So the one action I always take the first day is……to tell the head of finance I want, within 36 hours, a detailed understanding of the sources and uses of cash. You can’t turn a place around if you run out of cash.
So here’s the process for the first week, pretty much no matter what the industry:
Day Zero. Before the assignment starts I meet with board members, investors, and the CEO (if he’s to remain) – the ‘interested parties’ – each of whom is either a proponent or opponent to my assignment. (The opponents are usually board members aligned with a founder who is at risk of being moved aside.) The ‘good news’ about these conversations is that each person has a very clear view of exactly what the problems are and exactly what solutions should be implemented. The ‘bad news’ is that these clear views of the problems and solutions are often diametrically opposed to the views of other board members! Therefore, as I approach Day One I do not reach any conclusions based on these conflicting conversations.
Day One. When I meet one-on-one with each of the Vice Presidents during the first day, I still do not expect that these conversations will result in my finalizing any conclusions about either the problems or the solutions; each VP has their own agenda which clouds the overall picture. But I do conclude two things this first day: Which VPs are ‘with me’ and which are ‘against me.’ And which people – mostly outside of the VP ranks – are going to be the ‘key players’ to turn this company around. The ‘with me’ VPs are those who are not afraid to take their share of the blame for the company’s ills. The ‘key players’ are determined by asking questions like, “If I told you that someone just quit – let’s say Mary – and your reaction was, ‘That’s bad news. Of all the people in this company the last person I’d want to see quit is Mary,’ who is Mary?” Though everyone wants to be able to name more than one ‘Mary,’ I insist on only one name. (Though once I have the name I ask them to give me a second name!) Sometimes they pick Mary because the company is only one-deep in her area of expertise (usually a problem), but mostly they pick Mary because she’s a ‘key player.’
Days Two and Three. These days are spent in one-on-one meetings with each of the ‘key players.’ I try to make this a low-key, casual conversation because many key players are individual contributors who have not previously been asked into the CEO’s office to give their view on things. I seek to obtain (a) the names of other key players, (b) their views on the cause of the company’s problems, (“So how did we ever get into such a mess?”), and (c) their views on possible solutions (“If you were CEO and could take any action, what specifically would you do to turn this place around?”) During my first week, these people are a huge source of information; going forward they will be a huge part of the solution. I end each ‘key player’ session with a comment that keeps open the door for future one-on-one conversations, allowing me to bypass the layers of management between us. (“I see you spent three years at IBM. At some point I’d be interested in hearing your view on some of the best practices you learned at IBM that we should implement here.”)
By the end of Day Three I’ve a good handle on the company’s problems, I’ve identified and met with all the key players, and I’ve ideas – often conflicting – on how to solve things.
Days Four and Five. These days I ‘test drive’ the various conflicting problem-solving ideas on various people, without yet identifying the source. Only after we’ve settled on a set of solutions will I then give proper attribution to the sources. (“Someone suggested we sell off our best selling product to our main competitor so that we can focus our resources on our soon-to-be-released product which has the potential to open up many new markets. What’s your take on that?”)
End of the Week: By the end of Day Five I have a mental plan on WHAT needs to be done to turn the place around, though I usually do NOT yet know HOW we’ll pull this off. (“We need to cut our expenses by $2 million per year and increase productivity by shutting down our London development center – which is in the middle of a huge product release – and reconstituting the operation in Dublin, all without missing more than one week in the development schedule. How are we going to pull this miracle off?”) After a weekend contemplating the solutions, the challenge of Week Two will be to figure out the “HOW”.
Satisfying and Fun: When these turn arounds are complete, what’s most satisfying is that it is usually a group of existing ‘key players’ – some VPs, many individual contributors – who have pulled this off. These existing employees – when properly lead, and when augmented by a few new hires – are usually able to turn the company around quickly.
Post Scrip: Interim vs. Permanent: Although my role in each company is often not announced to the troops as being interim, that’s the arrangement I have with the board. Interim gives me far more flexibility and power to get the job done. If you are interested, see this post for the ‘pros and cons’ of interim management, and this post for the characteristics of situations where interim management makes sense.