The two types of leadership...
The reason why many firms find it difficult, if not impossible, to turn around an underperforming business unit is that they have the wrong type of leader in place for that unit, given its current situation. Regardless of the number of times the Board or executive management draws a line in the sand and issues ultimatums, the unit still doesn’t get turned around. Frustration then builds for both the leader and those with ultimate decision making authority, and it usually ends in the loss of an otherwise good leader.
This occurs because there are two types of leaders, transactional and transformational. Transactional leaders have value to the organization and are very good at keeping a well performing business unit going under most circumstances. However, they do not have the capability to design or implement a turnaround. For that, you need a transformational leader. Transformational leaders can also perform transactional leadership, but because transformational leaders are rare, they are best utilized in transformational situations and can be valuable at turning around troubled areas of the organization.
If your organization doesn’t have a transformational leader with turnaround experience and availability, a sound approach for handling the turnaround is to seek outside assistance in the form of an interim transformational leader, or a turnaround advisor. This is done with the understanding that the transactional leader will resume their position once the turnaround is complete and the business unit has been stabilized. In this manner, the turnaround gets done quickly and correctly, the organization retains the talented transactional leader, who still has a lot of value to the organization, and the transactional leader avoids being placed in a situation where he or she cannot succeed.
Call us at (863) 529-2126 if you need an interim transformational leader or turnaround advisor.
Why a prototype-based decision model is beneficial...
Conventional decision models that require extensive data collection and the development of a rigorous “best solution” increase risk unnecessarily in a turnaround situation because they are time consuming, inflexible, and produce delayed feedback regarding results.
Turnarounds are best accomplished rapidly and with a sense of urgency. As a result, an iterative prototype-based decision model is most appropriate for accomplishing turnarounds. Yet, few organizations use this approach simply because they are unfamiliar with it.
The prototype-based model applies the Pareto Principle, where 80 percent of the benefit comes from the first 20 percent of the effort, in conjunction with a system of leading and lagging metrics that support a real time analysis of the effectiveness of the chosen approach. This enables rapid adjustment of the approach in response to new information, or unintended consequences, and produces a higher probability of success.
require transformational leadership
Copyright 2014, Performance Management Group, Inc. (863) 529-2126
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The process is like a visit to the doctor...
Performing a turnaround requires a process similar to that used to diagnose and treat medical conditions, and it needs to be implemented with a sense of urgency.
The first step is to determine if the organization is experiencing any life threatening conditions, and, if so, immediately provide interim treatment of the symptoms. Such conditions could include cash flow problems, quality issues, or the potential loss of key customers.
Next, we diagnose the underlying internal and external root causes using analytical tools. The results of this diagnosis provides the basis for developing a well-crafted turnaround plan. This plan includes a system of leading and lagging metrics for monitoring progress.
Once developed and approved, the plan is implemented, metrics are monitored, and adjustments are made using the prototype decision model to achieve the desired outcomes. Turnarounds vary in duration, but typically take about one year. The ultimate goal is to produce a stronger organization capable of sustainable growth and profitability.
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