How do you get started in your Turnaround Strategy?

The last few months, some of the biggest headlines have been about corporate failure. In the airline industry, Kenya Airways posts record $252m loss, nearly $700,000 every day.  In the insurance sector, Medical claims paid out by insurance companies shot up by nearly 45 per cent last year, resulting in underwriting losses, Sh620 million. CIC collected premium of Sh3 billion under the medical business and incurred claims of Sh2.9 billion with the other expenses being administrative. In the banking sector, Dubai Bank Kenya is experiencing serious liquidity and capital deficiencies. In retail, Uchumi is in trouble again. What has been the response from these companies? CIC Last year hired Edward Rukwaro, a doctor, to help it turn around from a Sh294 million loss made by the medical division and this year CIC hired medics to probe claims after flat profit growth. KQ is seeking $200m loan and sell off aircraft to stay afloat, as stock slides on worse-than-expected news. Uchumi has hired a new CEO to turn it around. Dubai bank has been put under receivership. Are these the right moves?

Cute little white Simplified man pointing and giving direction to the top.

Cute little white Simplified man pointing and giving direction to the top.

In fact a more interesting question is where should you start in fixing these firms’ when you don’t know which way to look!   It’s obvious that these companies are receiving several ideas from academics, consultants, and other corporate leaders, regulators among other columnist. Lets say, where is Julias Kipngetich going to start when he starts to execute his mandate at Uchumi? To understand his challenge, Imagine, You’ve just been appointed CEO! Congratulations but brace yourself. The bottom-line is that when CEO is brought on-board from an external company, oftentimes, something is amiss. Your role is to tend to sick departments, turnaround a failing company, or pull teams and employees from some of the darkest corners. Your CEO job description is just a sugarcoated document for the role of ghost-buster + miracle worker!

Before diving into the actual roadmap, know first of all that somewhere in the cubes of the 10th floor, someone knows what really is working well in product and what is madly out of sync with the market, someone sitting in sales knows what contract you are likely to lose.

If that is the case, Start with your biggest assets, 
your People.  You need to know whether you have people in the right jobs or the wrong jobs. Its almost sure the people are not in the right jobs – if they were, you wouldn’t have been brought in in the first place! You are here to clean up this mess, get the right people in the right jobs, and then align them. In order to do this, you will need to understand your current Market– who is buying your product or service, what is your value proposition and whether your market understands it. Know what needs to be done to “recapture” the market.

Next take stock of your company’s finances. Generally, assess the viability of your current financial model. Move on to processes.
Now that you have identified markets, have the right people, and are getting your finances in order – you need to put the right Strategy in place. Ask yourself, “How do I make the best use of my assets in order to meet my goals for this turnaround strategy?” This step is all about resetting, revamping, and rethinking. You need to map your assets to the right strategy. This leads to the question, “How do you design your Operations and processes to make your new strategy come to life?”. 
When you are done with measuring KPIs and feel that things are on track, shift your attention tostructures. Communicate effectively with all your stakeholders. Oversee Governance – this may relate to ethical aspects or compliance to rules and regulations within the industry. Finally study the entire organization as an Entity. Are your intellectual property rights in place? Are you clear with regard to all legal matters? When you manage structures, you are looking to clean things up and to tie up any loose ends. So, welcome the turnaround CEO, Start with people, markets, finance, strategy, Operations and processes, structures, governance and finally Entity. Good luck

Written by:

Dr. Fredrick Onyango Ogola ,
Senior Lecturer- Strategy and Competitiveness
Strathmore University


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