Processes, Technology, and a Positive, Partnership-based Approach

Restructuring is often considered a scary word. But it doesn’t have to be. There are many reasons why a company needs or chooses to undertake a turnaround process—and at root, they’re all about improvement, opportunity, and growth.

As Harvard Business Review points out, “Turnaround lessons aren’t limited to troubled companies. Turnaround opportunities exist everywhere…. In today’s world, you have to earn your right to compete every day…. And the basics that help you do that are the same ones that turnaround managers use to bring failing companies back to life.”

It’s true that enterprise leadership may decide to embark on a turnaround process because the company is facing overwhelming financial pressures (weak earnings, heavy debt, too much competition) and even crisis, or because the company is preparing for sale, merger, or acquisition; it can also be because it’s time for a fundamental change of overall mission and strategic direction, or due to rapidly evolving market conditions and consumer demands, a paradigm shift or major industry disruption. 

Turnaround is a way to grease the wheels, minimize inertia, relieve major pain points, eliminate bottlenecks and silos. It can help a business reduce or consolidate debt, cut costs, reap the benefits of new technology, boost innovation, attract and retain talent, maximize competitive advantage, enhance financial performance—and of course, in the most dire circumstances, restructuring is an essential mechanism for avoiding liquidation.

So what are we really talking about when we use these terms? 

Turnaround and restructuring both fall under the larger umbrella of reorganization of a business for the purpose of rescuing it from stress and making it thrive again. This general category also includes reconfiguration and repositioning, as well as various methods and tools for how reorganization processes are handled, such as change management.

CEO Magazine provides a useful metaphor, likening turnaround to nursing a wilting plant back to health with water, mulch, fertilizer etc., and restructuring to a hard pruning that removes dead or diseased material to revive the plant and generate new growth. 

There are many useful definitions of these terms, and significant areas of overlap, but we can think about it like this:

Turnaround is a general term, but typically refers to a more informal reversal process, sometimes management-led, that improves the performance of a struggling company and brings it back to profitability, preventing insolvency. 
Restructuring is the formal process of making comprehensive changes in organizational structure, significantly modifying both financial and operational systems to improve business and limit harm from severe circumstances. 
Reconfiguring refers to smaller, internal changes in an organization to improve business; it’s often confined to certain departments, without a complete overhaul of the company’s entire structure.
Repositioning is a transition to a new business model, for example when a company that was selling technology products becomes a service provider.
Change management provides a systematic approach to handling a major transformation within an organization. It is necessary on the technology side, as well as the “people” side of a major transition, which is often the most challenging—and crucial—aspect of any reorganization.

Successful turnaround relies on careful preparation, key steps, essential tools, fair and positive messaging, and finding the right partner to help you manage the transformation:

• Take the 360º view. Start with big picture business objectives, and look at your company holistically. What do you need to achieve your goals?
• Identify the big problem as well as major pain points.
• Consider what systems need to change: management processes, leadership styles, technology systems, company culture, leadership styles, etc. 
• Ask, what transformation does this business need? Don’t rely on the restructuring models of other companies.
• Build on your strengths and leverage interdependencies.
• Understand the new rules. Consumer protection and data privacy laws are evolving constantly—compliance is crucial.
• Choose the best tools. Forbes reports, “Technology can help manage all the moving parts, including coordinating advisors, stabilizing operations, building an information base and mapping out a rigorous restructuring framework. Not only can technology help organize and automate tasks, but it can also reduce the risk of errors and oversights.” AI and machine learning, for example, can automate and significantly expedite the organization of essential data and documents.
• Communicate. Reorganization is sensitive territory. It’s vital to have your team on board with the transformation—as active participants in it. It is possible to transform anxiety and resistance into engagement and enthusiasm. Lay out your plans openly and transparently to all stakeholders. How you frame the changes can make all the difference. Emphasize involvement, opportunity, new skill sets, career development and professional growth, as well as incentives such as promotions and raises. A change management professional can help.
• Seek out an expert transformation team. A turnaround consultant or restructuring adviser will assess your company’s distress level, then strategize and prioritize the operational and financial steps vital to your business’s recovery.

At Lukasa, partnership is at the heart of our business. Our veteran team of experts in business transformation, technology, reorganization, and change management work side-by-side with you to gain a three-dimensional understanding of your company’s goals, blocks, and restructuring needs. Analyzing your systems through a modern lens, we help you strategize and execute a custom, comprehensive turnaround plan, boosted by the most effective technology for your business, and streamlined to serve your objectives, support your corporate community, and optimize growth—now and into the future.

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Lukasa empowers small-to-medium-sized businesses by designing and implementing custom business and technology solutions that drive efficiency, productivity, and innovation, enabling them to stay ahead in today’s rapidly-changing competitive landscape.