The notions of company turnaround

Organisational crises, decline in performance and companies falling short of achieving set strategic objectives are common occurrences, both in the private and public sector, around the world.

For this reason, business management theorists and practitioners have, for quite some time now, been fascinated by the notions of company turnaround strategies.

There have been continuous research efforts to disentangle the formulas for “success”, to figure out the distinguishing characteristics of “visionary” companies, seek timeless management principles that consistently distinguish “outstanding” companies and search for gold medallists among companies.

These efforts are unlikely to end in the foreseeable future, hence the question: How does a company manage to turnaround from a near-death organisational experience and non-performance to a flourishing company?

This question can be answered from two angles, from the world of business science (theory) and from the world of everyday life (business practice).

In our view, business management theorists and academics invariably suggest romanticised management concepts, such as developing grand and visionary strategies, setting “big hairy audacious goals” (BHAG), coming up with “silver bullets” and visionary leadership as critical in turning around the fortunes of a company.

However, no matter how sweet sounding and romantic these concepts might be, triangulating them to a practitioner’s view is essential.

From a practitioner’s viewpoint, and from a “real life” business management perspective, several themes stand out as vital in turning around the fortunes of a company.

Perspectives from a business management practice are requisite because the wise not only learn from the classroom, but from daily occurrences as well.

In fact, there are more lessons to learn in the field and in practice, which, as a matter of fact, should inform and shape what theory and educational curricula should be about.

Excessive idealisation and theorising have their limits, especially in the case of a practical and real-life situation like organisational non-performance or a financial crisis.

No matter how sound the theory may be, unless it translates successfully into real life situations and experiences, it can only remain book or reported knowledge, devoid of personal and practical experiences.

Therefore, we need to open our eyes and minds to what is happening around us through daily social interactions and learn from those experiences.

What can we learn from business management practice with regard to turning around the fortunes of a company?

Recently, one colleague with many years of experience in business management and consulting made a striking statement with regard to dealing with an organisational crisis, company non-performance or in turning around the fortunes of a company.

He said as far as he is concerned, only two actions – namely “keeping the cheque book” and “centralising everything” – are needed in turning around a company.

Since cheques have been phased out in Namibia, “keeping the chequebook” in this instance refers to instituting tighter controls over the organisation’s procurement processes and activities.

Without tighter oversight, as well as efficient and effective procurement processes, there is likely to be a substantial “capital outflow” out of the organisation.

When casually reflected on, “keeping the cheque book” and “centralising everything” run the risk of oversimplification, especially from the often too theoretical business management stances.

However, when deeply reflected on, they hold a certain true value.

Leadership and management cannot afford a laissez-faire approach in the face of an organisational crisis or serious non-performance, but should rather adopt a watchful and a hands-on approach, which our colleague referred to as “keeping the cheque book” and “centralising everything”.

Without attentive oversight and a hands-on approach, vision and strategy, no matter how lofty they might appear, are meaningless.

The secular and popular belief is that first direction (vision, mission and strategy) is essential and then everything will fall in place. However, daily-lived experiences reveal that first right people – who can “keep the cheque book”, have the ability to teach others in the organisation and can say no to ill-discipline and other wasteful habits – and then vision, mission and strategy follow afterwards.

“Centralising everything”, “keeping the cheque book” and adopting a hands-on approach all embrace the practice, discipline and commitment to be attuned to key moments in the organisation.

It implies that leaders should not only be ceremonial and spend endless time in meetings, but also perform technocratic tasks by having their eyes on the bottom line, making time to read and review a myriad of documents presented to them and focus on internal systems, processes and structures.

In order to affect corrective and innovative improvements, so as to turn around successfully from problems to success, best corporate leaders fulfil both technocratic and ceremonial roles, remain students of their work by continuously asking, not only why, but also how and when.

All in all, the take-away statement from all these is that in turning around the fortunes of a company, leadership and management must be emotionally intelligent, sufficiently sensitive and attuned in knowing to what extent to “centralise everything” and to “keep the cheque book”.

• Matthias Ngwangwama is a Namibian business management academic and practitioner.
• He is the managing director of Namibia Wildlife Resorts Limited (NWR), but writes in his personal capacity. The views expressed in this article are his own.