The Starting Place for the Business Turnaround

In turning around any business, I have learned there are priorities which have to be considered. You may be going, "Sure. Priorities. I get it. Of course. So what?"

What's “so what” is that many executives don't realize that priorities in any turnaround is not what the turnaround artist has to do to turn the business around, the priorities relates more to the case of the problem the business finds itself in. The experienced turnaround artist knows he has to understand what the problem is before he can turn the business around. 

The First Question

The First Question to ask in any business turnaround, usually isn't ever asked. Or if it is asked, it is asked too late. But usually, nine times out of ten, if not more, it's not asked at all. I am not exactly sure why it isn’t asked, but it’s usually because of a three things: not experienced in business turnarounds, too busy (the executives have other day-time jobs), or because they rush to judgement. 

So the question is this: What is causing the business to slow down? 

• Is it the leadership of the organization? (are they inept, can't market, aren't client friendly)
• Is it a bad culture of the organization? (no quality, performance, excellence attitude; slow, sluggish; not caring, no empowered workforce, topdown management; or something else)
• Is it bad processes that create multiple problems? (order processing, proposal timeliness, delivery of product, and other process related items)
• Is it a missed opportunity during the period when the market was hot for services or products that the company missed?
• Is it bad marketing?
• Is it bad sales people?
• Is it a bad product or service?
• Is it a bad reputation of the firm?
• Is there too much overhead causing the price to the customer/client to be too high?
• Lack of cutting edge products or services? (lack of innovation)
• Is it a combination of the above items?

Or has something happened outside of the organization?

• Is there increased competition?
• Is it commoditization of the products or services? (competitors willing to sell it cheaper)
• Innovation from competing firms?
• Is it a new regulation?

A Rush to Judgment

Here's the big thing--the first thing management tells me when I get the phone call or when I sit in the board room: "Our sales organization needs to be replaced."

It doesn't matter what industry, what day of the week it is, whether the person is the CEO, CFO, or President of the Division, it always boils down to this: "Our sales people aren't selling enough. Therefore, they all need to be replaced. Fired. Shot. Killed. Let go. Riffed."

The first time I walked in the organization, the very first day, I right after I get the orientation from HR (there is always this "scheduled" hours or a day of so-called training or orientation--which is nice--but in utter chaos--it's always lost on me) I meet with the sales management or what's left of it. 

The Magic Potion (aka the cure)

Because most organizations have down some "fixing" of their own before I come in, the organization is shell shocked. Everyone is looking over their shoulder, looking for other employment or the organization has been decimated. The "fixing" a lot of organizations undertake is like taking some sort of magic cure. The belief is, If we drink this magic potion, everything will be all right. 

Stated another way, more specifically, the cure looks like this: “If we fire John, we can replace him with someone else--someone better."

The management of the organization then brings in another person--a sales leader--over everyone in sales--someone who has a great track record. This person is going to make everyone dance a certain way. Get people—and this is really what I hear, “Out of the office” to sell. 

Voila—magic. The turnaround is now days away. 

However, one thing management doesn’t realize in the their quest for the savior, is that not all track records are created equally. The track record of the savior is a track record due to a hot market or a hot product or because the person's previous organization has a very defined market.

 This last reason, the “defined market” requires a little explaining. The 

company the person with the track record has is because someone was smart enough to realize that the firm needed to focus and become number one or number 2 in that specific niche. Usually, that defined niche is because of someone else—not the sales leader who is brought in. 

I am not saying the new sales leader isn’t good at building sales organizations. What I am saying is that the new sales leader may not be experienced in turnarounds. These are two different solutions to two different problems.    

A sales leader that is brought in, is only qualified for arounds, if the sales leader established a new market or performed a turnaround previously. And here is something to note: the best turnaround specialist is a specialist who has failed at a turnaround before.

But back to the point. Replacing people needs to be done with precision, and for the right reason.

Replacing a Sales Leader and Sales People

No one wants to admit this of course, but finding a replacement for a previous sales leader or a new sales person takes weeks, no, strike that, months. And usually the replacement person/savior who is brought in takes another two or three months (usually six months if you want to really know the truth) to get their feet somewhat firmly planted on the ground. This means they understand the organization, the people, how things work, the market, the services and products, and who is who. Not the least of importance—the clients and what they are buying. 

In the meantime, sales people are jumping ship and service delivery and product people are all antsy ("When is the new guy going to do something?" they say to each other).

In addition, the executive team is wring their hands. Executive management goes through a period of “Wait, let’s see what the new guy does” and then to “Wait, did we hire the right person?” and then to, “We need to push this new guy, things aren’t happening, we need action, we need performance, we need a business turnaround.”

And your competition is picking off your established based of “loyal clients.”

Back to the Basics

To put this all into perspective, let me ask you a question, a question that is a little off the beaten path here relative to this issue—but I find makes my point. 

You have been out to eat. I know this about you. You have been to a restaurant too. And I know this too, you are probably smart. And because you are smart, you know that owning a restaurant is a lot of work. There is more than meets the eye in running a restaurant. Running a restaurant goes from having serving staff, to preparing and cooking the food, to getting customers in the door and back again, and spreading the good news. But there is even more. It’s getting the right food, hiring the right serving people, the right location, as well as having nice seating, background music, lighting, and a whole host of other things.

Let me boil the complex business of owning a successful restaurant down to something simple. Something we can digest—if you don’t mind the pun. Which of the following three, would you rather have in terms of a restaurant in order to be successful?    

• A line of starving customers
• Great serving people (waiters/waitresses, hosts/hostesses, busboys
• Great food

The answer is, 100 times out of a 100, is a line of starving customers. 

You Always Want to Find the Line of Starving Customers

You  always want to start with a line of starving customers. If you have a line of starving customers, you can get your business going. Your meals can even be mediocre. If the customers are starving, your meals can be less than mediocre. Your serving people can even be rude.

Of course, as people satisfy their hunger, they may want better food and better service. But without a group of hungry people to feed, the business is doomed. Of course you could argue that people come in to restaurants for the ambiance, the pleasure of the date, the business meeting. But that’s important only if people aren’t hungry, which we will get to in a minute.

But if I were to open a business, I’d want to place my restaurant in a place that had very hungry people.

If you take this analogy or metaphor, you see that the business that you need turned around, first needs to be a in a place where there are hungry prospective customers. If no one is hungry, you can have the best product that no one needs.

If you have identified a place where there is a hungry line of people, the next thing you do is you get food for them. The next thing you do is not find the best serving people. 

Remember, if the people (customers) aren’t hungry, the best waiters and waitresses cannot make people eat poop or even mediocre food. Even the most polite and considerate waiter (or waitress) cannot make up for crummy food, small portions, burned food, or late food.

So this means the second thing you have to have is really good food. This may mean niching your food to a specific cuisine. You may have to cater to people who like Italian, Chinese, fast-food, or seven-course dinners.  You have to specialize. To specialize means you build a reputation to a degree. It’s “Hey, let’s go to Joe’s. I am in the mood for some Italian tonight.”

It is never, “Hey, let’s go to Joe’s. I’m in the mood for something general.”

Now, if you have crappy serving people, and there are other Italian restaurants, you are going to have to spice up the serving people to create part of that dining experience. 

Don't Get It Backwards

This is where you start. You start with the market. Most businesses that are in trouble, have it backwards. They start with  trying to find the best serving people. 

If you have an underperforming restaurant you don’t say, “Let’s fire all the waitresses and waiter. They suck.” They can’t sell the bad food the chef prepares. They aren’t the once causing the food to be burned. They aren’t the ones who are causing the food to arrive late to the table.

You start with the questions above of course. You look at the market questions first. Second, if there is a market, the second question is the services and products. If you find you have great services and products, you may have an internal training problem and a marketing problem. Perhaps the differentiators are not defined clearly. Perhaps the products and services need to be refined. Once these things are done, you now turn to the sales people.

I Am Not Always Popular

I recommend one thing that always turns the organization on its head when I come in. I ask the executives to pick five prospective clients. Identify the right person or people in those five prospective client who they are to sell to. And then call or email or network to get an appointment with those people. And then go in and meet them. in 90 times out 100, even though the executives say they will do anything to turn the business around, they never follow through.

Of those who do, the 10 out of a 100, these executives  go sure, until they pick up the phone. Then they place the phone down and instead of picking it up to call the prospective client for an appointment, what they do is call someone from sales or marketing and say, “Get up here to the paradise club, where we executives sit, I need you to explain what the service does so I can explain the benefits in order to get the the appointment.”

What happens next is that the executive learns that the messaging from marketing sucks. it’s too garbled. it’s too long. It doesn’t resonate.

What these executives learn for the first time is, it perhaps isn’t the sales team that is not performing, it may be something else.  

I hope you get this—because it is this little diagnostic—that will help you find a starting point to your business turnaround.

Kiss Me and I Will Turn Into a Beautiful Princess

A young gentlemen was crossing the road to get to work, when all of a sudden a voice called out to him. "Pssst," said the voice. Then the voice said, "Over here. I am down here."

The young gentlemen, glanced around and then saw a frog. The frog stared up at the young man and said, "Kiss me and I will turn into a beautiful Princess."

The young man smiled, bent over and scooped the frog up and placed the frog into his pocket.

The frog, excited with the thought it would finally get a kiss, then realized something wasn't quite right. So the frog said again, "Kiss me and I will turn into a beautiful Princess."

The young man pulled the frog out of his pocket, smiled at it again and returned the frog to his pocket and keep on walking.

The frog, now frustrated, said, "Kiss me and I will turn into a beautiful Princess, and you can do anything--and I mean "anything" you want.

Again, the young man pulled the frog out of his pocket, smiled at it, and placed the frog back into his pocket.

The frog, now very frustrated, started talking a little faster, "Kiss me, I will turn into a beautiful Princess, and I will stay with you for a week and do anything you want. Why won't you kiss me?"

The young man pulled the frog from his pocket and said, "Look, I'm an engineer. I wouldn't know what to do with a beautiful Princess. But a talking frog--now that is really cool."

Leadership and Professional Conduct

Where there is poor management, there is office politics. There has never been more of an exact statement ever made, except for the statement "The sky is blue." Unless of course it's raining.

There is a parallel here. The parallel is that when there is office politics, the sky is hardly ever blue. In offices where there is poor management, there is little or no leadership. What people do is they resort to the lowest common denominator. The environment becomes negative. People walk around on guard. They are more concerned with how they appear, their image, their prestige, and thereby things turn into a zero sum game. Things become negative where people are so focused on not losing something that they are speaking in misdirections, sending cryptic emails, attending meetings to win or at least not lose, and performing actions to cover their backsides or take something from someone else.

The organization becomes dysfunctional very quickly.

This usually happens because the leadership of the organization doesn't know how to lead and set the example. It is often a result of warfare with other divisions. It is often a result of not setting principles and rule and speaking and living a code of professional conduct.

It is also a by-product of multiple organizations having separate P&Ls treeing up into another larger unit.

I realize I am on the verge, the precipice of organizational heresy. Every organization should live and die on its own. Eat or be eaten. Kill or be killed. Be number one or two. Good is the enemy of great.

I get all that. It's the stuff of testosterone, chest thumping, I am bigger and stronger than you, jungle warfare. We are beyond the jungle aren't we?

Teamwork is a force multiplier. Infighting or politics is a force divider. Politics weaken the organization. It is like the black plague of Europe--a scourge of death and destruction and panic.

A real leader understands the importance of professional conduct and behave in a manner that lifts people, inspires people to be better. To lead others take skill and acumen. To manage others takes no skill at all.

If you ask ten people, what would make you work harder, smarter, better--all of them would say, "Someone (a leader) who inspires." When asked what this means, people say, "Someone who respects my talents and allows me to draw upon my strengths."

Managers don't know how to do this. So they manage people like they manage projects. Managers look for what's wrong, they look for holes, and what can go wrong. This is a great way to manage a project and manage things. But it is a terrible way to lead people.

Inspire people. Look for their strengths and allow them to flourish. Explain how you want your managers to manage and lead. Explain that the goal is for the company to grow, the division to grow and that is one for all and all of one.

You know you are getting somewhere, when your team meets, and people are actually conducting themselves in a manner where people say, "How can I help you?" to another colleague and really mean it and follow through.

Don't Negotiate Like Willy Loman

Two Extremes Professionals Take When Negotiating
When I watch professionals negotiate with a client, they either give everything away--that is--they try to give everything the client wants--or they fight the client every step of the way because they "don't want to be taken advantage of." These two extremes  appear as acquiescence and hostage taking.

These two positions are on opposite sides of the spectrum, and appear to look like they have nothing in common. This, however, is not true. The thing these two positions have in common is that professionals who negotiate in this manner are not as strong as they could be when entering the negotiation. What I mean by this is these professionals have not thought through what their client needs and wants and have not tied these back to why the client needs and wants these things. This is the start to establishing your value.

Extreme Position 1: Capitulating is Not a Strategy for Client Satisfaction
What you have in these two positions is, on one side you have acquiescence. The professional acquiesces, he or she gives in, capitulates, by operating from a fear-based mentality in order to "win" the business. This give in approach is a weak position because the professional wants to "get it over"--he or she doesn't like the "game." And that's all a negotiation is--a game.

The other part of the fear-based mentality that runs through these professionals' minds is, "If I negotiate, the client will get angry with me, and perhaps not like me, and perhaps look for another provider of services and solutions."

I get it though, to some of us it feels like a matter of life and death. This is the underlying fear-based thought process. And that frankly, is where the trouble starts for the professional and the firm. When you feel you have everything to lose, you do.

One thing to realize that will help you change your need to capitulate is this: Clients'--all of them--never want to deal with "needy" people--or needy firms. To clients "needy" equals desperate. Desperate equals going out of business. Going out of business means no one else is buying what the professional has to offer. And if no one else is buying, why should I be the only one, thinks the client. Unless the firm is selling pencils--and since this is a commodity--the client doesn't mind getting a commodity that works, a commodity that won't jeopardize the client's business, at a bargain, if not a steal.

Understand Your Value: Stop Acting as if You are a Commodity 
If what you provide does offer value and isn't a commodity, like a set of pencils, as a professional you had better come into the negotiation understanding that the client needs you and your services. But only understanding isn't enough. You need to understand why the client needs you and your services.

This is not arrogance--this is confidence. This kind of confidence is based on competence. Confidence based on anything other than competence is lacking in character; it's a sham. People smell shams. This is one place you cannot "fake it until you make it."

Extreme Position 2: Hostage Taking
Way over on the opposite side of the spectrum is the "offensive player." This person takes a tough stand--this person is "hostage taking." They are ready to not concede anything. They take an all or nothing position. They act as if they are ready to walk away.

In reality, professionals with this attitude are usually hiding their fears, and the offensive stance these professionals take, is really a defensive stance. Instead of giving anything away, these professionals think they are going to be "screwed." These defensive professionals cloak themselves in a shroud of offensive behaviors that sound tough. They say things like, "Why do they want this? They are asking for too much. No! Tell them, no."

Often these are the people who are sitting in corporate offices or are not on the frontline doing the negotiating. I've seen this scene play out a million times. Alright, not a million times, but a lot. It's sad, if not outright comical, because the person from headquarters who is acting tough, refuses to give in to anything the client wants, is not in front of the client, uses this approach to "coach" the local team who is actually doing the negotiating. The person at headquarters is "coaching" the local team to be "tough." This person is taking a "hard line" and is telling the local team, "They either want us or they don't--we should walk away" all in the name of a point or two in margin.

By the way, I am not decrying points of margin. I like margin as much as the next P&L manager does.

Sooner or later, someone on the local team realizes he is negotiating with two sets of people: headquarters and the client. He realizes that he is caught in a bind. The local team cannot win with the client or the "tough people" at headquarters. The local team is caught in the middle--"the damned if you do and damned if you don't" position.

The local person who is smart, says to the person at headquarters, "Can you come here and help us?" Of course, the person on the other side of the planet says absolutely--as this person has a chance to come in and show everyone how negotiating is done. When the person comes to "save the day" and meet with the client, this savior sits in front of the client and capitulates everything away. The savior now sees the light of day. They too, don't want to lose the client's business. This is crazy--and if you have been in business long enough--you recognize this as a true pattern.

In any negotiation, you have to do some ground work. Here are seven key points to any effective negotiation.

1. Key to Any Negotiation: Understand What the Other Party Wants and Why
What happens in both cases is the professionals involved don't take the initial step in understanding what is of value and establishing the value with the client. These professionals don't try to see things from the client's point of view, and then sell (persuade, cajole, coax whatever word suites you) the client on why this (what the client wants that cannot be given) hurts the client, hurts the professional's ability to deliver, and how "it" (what the client wants in the manner the client wants it) hurts the client, the client's objective, and ultimately the client-professional relationship.

2. It's All About Value
So establishing value is first step to effective negotiating. Understanding what the client wants and why is critical to successful discussions. Being able to explain to the client the ramification of why something can't be done a certain way is another critical step. But it's hard to this confidently, without having established the first step. This doesn't mean taking a hard line. In fact just the opposite. You as a skilled negotiator has to be able to finesse not giving the client something that damages you and your firm and your firm's ability to deliver, and find a gray corner, where no one is looking and be able to say, this might give you what you are looking for. This presupposes you understand why the client wants this certain thing.

3. Find Alternatives, Have Options, Offer Solutions
By finding alternative solutions to getting the client what the client asked for may be the next most important thing you can do. It demonstrates your ability to find a solution--and be creative--and most importantly--if you are dealing with the person responsible for the project--create a relationship based on value, competence, confidence and mutual goals. Remember I said, no client wants to deal with a professional or a firm that is desperate? The opposite is also true: clients--all of them--want to work with professionals who are collaborative in nature--looking out for the clients' interests and be willing to say no and here is why, but here is a way, a better way, to get you what you need.

4. Clients Have Enough Friends--They Need Strong Partners
I am telling you that if you get this--this one little point--everyone who says "The client likes me" will no longer ever have to say that. Because "liking" is weak. Good people find something to like in almost everyone. However, being able to know (not have to say to others) that you add value to the client and the client respects your opinion and advice, is way more valuable.

Providers of services need to be a partner of clients in the solution of the client's problem or fulfilling their needs. This ties back to your value. What is your value? Not from your perspective, but the client's perspective.

5. Don't Sell Yellow Lead Pencils
Remember this point because it's a big one, No Value. No Negotiation. No Deal. If you have't established value, or are not on a firm foundation. You are a commodity and the client will take you to the cleaners. If your client thinks you are selling yellow lead pencils, your client is going to seek the lowest price. Fast shipping and quality service won't even be a part of the negotiation equation.

6. Don't Be a Willy Loman
Professionals get caught up in this likability game. Sure, don't be a jerk. As one client I interviewed for my book Clientize said, "Be authentic. Unless you are a jerk. Then be someone else." No one wants to do business who are jerks. But likability isn't value. Your likability is nice--but if you think that matters, print up a new business card that states you are working for Willy Loman.

And if you are working for Willy Loman, you are basically a dinosaur and all dinosaurs are extinct. Except no one will care and no one will find you in the Museum of Natural History, because there are too many of you. You're not that rare a find.

7. See Negotiating as a Game of Strategy
Of course, when negotiating you have to think things through--it's like a big game of chess. And that's all negotiating is--a big game. If you can start there--seeing negotiating as a game and preparing for the game, and not see this negotiation as a matter of life and death, you are coming in from a position of strength not weakness. I said preparation and this means you have to establish value based on confidence that is rooted in competence. Never forget this--so be competent, and if you are, you are going to be much better off in the long run.

This is the foundation of negotiations--any and all.

Why Consultants Can't Run Meetings or Is It Me?

In almost all cases, it seems that consultants don't do a good job at running meetings. I am not sure why that is, but I have my guesses. I know, guessing is not a good word to use with some of you.

I am in a meeting. I am not sure where we are. I am not sure how we even got here. But here we are, in the middle of it. Worse, I am not sure where we are going. Worse still, if there is such a thing, these are people I work with, people who report to me.

"Wait. Where the heck are we? You. Stop talking while
I am trying to get a handle on things."

I can't call a timeout. That would be bad. I don't want to embarrass my staff. The truth is that isn't the real reason. The real reason is I don't want my staff going back to the office and telling everyone I am a control freak and took over the meeting. I can hear the voices now: We were doing great until he took over. He can't help himself; he just wants to run everything.

I am annoyed. I try to not show my feelings by remaining expressionless--so I sit still. The more I try to remain still, the more I am sure I am squirming. I can feel my mouth, my jaw, the words start to form--but I gain control of myself and not the meeting--I don't say anything.

"If only" I begin to think. If only we had an agenda and confirmed the items with the client before the meeting started. If only I forced everyone, no strike that, that's the control freak I am afraid of looking like being coming out; if only I persuaded, (that's close enough, I am a control freak and I have to get over that) the team to sit in the client's chair and think about what's on their minds before we created the so-called "agenda" that we didn't put together beforehand, and didn't confirm with the client.

The team, who haven't tried to become better (improved themselves) thinks running a meeting is natural, and it has to be "spontaneous." No rigidity here please--we are free thinkers and, oh, by the way, everyone thinks like us, because we think logically and we are rational. So who couldn't follow our thought process and our conversation? And besides, we have a lot to share with the client, we don't have time to think about how the client thinks and how the client receives and processes information. Why do we need to know what's a priority for them? We know what should be a priority for them: what we are about to tell them, that what should be the client's priority.

The client? They were fully engaged.
We captured their attention right away.
I am not clear why they aren't calling us back.

I am now watching to see if the client is squirming as much as I am squirming on the inside. I cannot tell. He is poker faced. I look to his right. His colleague is sitting there taking a note or two every few minutes--she looks--well--I think she looks unimpressed. I think she is creating the to-do list for the remainder of the day.

I listen to my team. We are droning on and on. No pause. Just a lot of words coming out. I couldn't interrupt if my life was depending on it. No space between the words. Not enough space without talking over someone and really making a bad show of it all. They'd be pissed: Control freak. Jerk. I am going to transfer out of his group--to the other group.

I am now waiting for the meeting to close. It does. The client says, "Let us think about it. We will get back to you." The two kisses of death. And stated in one sentence. I am right. The meeting was not a good one. I don't feel good or vindicated. My team doesn't know what those two words mean yet. I am doubtful they ever will.

We don't hear back from the client. The team doesn't call the client--they don't think it's good form to call the client--they don't want to "intrude" on the client. They want to give the client "space."

I call the client. I can't wait. I am not a waiter-type person. It's good and bad this not waiting thing. I think I am becoming better because now I can wait one more day before doing something. But I think that's more like procrastination sneaking in on my to-do list than it is becoming patient.

The client is still not calling us back.

I resolve to become a leader some day and resolve to find ways to coach my team into doing what I want the next time. I realize that's not leadership and thereby revise my thought: I resolve to help my staff become better at running meetings, but all them the space to learn on their own. I add: without placing a boat anchor around my neck and pushing me off the bow of the ship. Am I muttering? I think I am.

They (my team) are oblivious why the client isn't returning our calls. It must be a bad prior relationship with the firm. Yes, that's it. I remember someone said we did some work for the client ten years ago . . . And the team just rationalizes away the issue.

I am working on myself. Let's see what I can do to help them . . .