Managing Change Blog
Many turnaround efforts begin by firing people and bringing in a fresh team. It’s easy to understand: This is the group, after all, that’s presided over the downturn. Clearing the decks is not always an option, however. Company history may stand in the way. The external environment may make it impossible. Other limitations may be in place.
That’s not necessarily a problem: CEOs can turn around a failing business with the people they already have. It just requires a management approach that unlocks the full energy of the organization.
The recent experience of a venerable but struggling South African retailer illustrates this powerful lesson. The chain of 200 stores had lost sight of what it stood for, expanding too far beyond its original mission. Sales and profits had begun to drop fast.
To fully understand what the issues were, the incoming CEO started with a rapid but holistic review of business performance—something that any new leader can do as part of his or her “100-day plan”—assessing the strength of the team and the health of the business while at the same time working to set overall strategy. Once examined, the retailer’s data pointed to a solution that was quite straightforward and practical. The company needed to do what it used to be good at, and do it really well.
The CEO brought together people from across the organization to craft a vision for what their future stores should look like. Using a graphic artist, they were able to translate this into a visual image of the store of the future that they could all connect to. While unconventional, the approach was substantive and convincing. So much so that the illustration was used on its own to explain the strategy to key stakeholders, including staff from the head office and stores, the chain’s marketing agency and strategic suppliers. Another creative touch involved using role-play instead of a standard presentation when it came time to address the chain’s parent company executives. Top management bought in.
Setting out to execute on the vision, executives didn’t start handing out pink slips. Instead, they asked employees for their thoughts on what was not working and how to fix those problems. They established guardrails, including spending limits, around what teams could do, testing them in specified pilot stores, and set up a streamlined veto process for the CEO to use if necessary. Then the CEO stepped back and began to push the authority to make the fixes down to the operating teams.
Existing employees, expert in the systems in place, quickly identified key opportunities for improvement. They questioned the need for time-consuming bureaucratic processes such as filling out paperwork in triplicate and suggested a smart digital alternative. Marketing teams dropped once-obligatory annual print advertising campaigns and began to innovate with guerrilla marketing tactics, such as placing massive interactive versions of products in public areas of the mall for shoppers to explore, linked to a promotion of the products in stores. Store managers were given discretion over their budgets and began to stock what local customers wanted, based on sales data.
One key point in all this is that employees were not asked to step into roles foreign to them, but rather to engage in tasks they could already do quite well. One longtime buyer was initially skeptical. She’d become deeply frustrated by years of being told what to do from above. Once she was given the chance to make her own decisions, the product assortment improved, and sales went up. Equally important, she became a cheerleader for the change initiative, a marked reversal that brought a lot of credibility to the whole turnaround effort.
Enthused that this was “their” business, employees helped the retailer make rapid strides in a short time period. Pilot stores showed a 10% upswing in profit in just five weeks. And costs did not increase because knowledgeable team members were able to zero in on marginal spending, covering additional expenditures by smartly trimming maintenance and stock costs.
The staff didn’t change, but management’s approach certainly did.
Any CEO or senior executive looking to emulate these good results can start with three essential steps.
Frame the problem. Quickly get to the heart of the key issues facing the business.
Create a clear vision. Work with the organization to create a clear picture of where the company is heading.
Empower the team who will actually do the work. Explicitly communicate that the team is free to do things their way. Then back that up by backing off. Avoid interfering and undermining individuals on the team. Instead, work to remove any constraints that get in their way.
Companies that are good at empowering their people tend to share the four common priorities of Agile management.
Individuals and interactions over processes and tools: It’s people who respond to business needs and drive to meet them. They can be more flexible and effective when they are highly valued.
Working product over comprehensive documentation: Streamlining documentation frees employees to focus on the work at hand.
Customer collaboration over contract negotiation: Rather than exclusively negotiating with customers up front, make them an ongoing part of the process. That will greatly improve the odds that their needs will be met.
Responding to change over following a plan: Change is not something to be avoided or ignored. It improves a project, offering a chance to provide customers additional value.
If you are coming into a business that is underperforming, chances are you’re going to have to fix it with the people already in the trenches. So, what are you going to do with the team you have?
Rob Goodenough is a manager in Bain & Company’s Johannesburg office. Tim Hill, a partner in the Johannesburg office, leads the firm's Results Delivery® practice in Africa and is a leader in Bain's Global Organization practice.