Description
Executive Education Executive Action Learning Seminars
International Institute of Management iim-usa.org
International
Institute of
Management
Executive Education Courses
Med Jones
Restructuring and Turnaround
Executive Best Practices
Executive Education
Executive Action Learning Seminars
Executive Seminars
Executive Courses
International Institute of Management (IIM)
iim-edu.org
International Institute of Management (IIM)
iim-edu.org
Copyright International Institute of Management
This work is the intellectual property of the authors. Permission is granted for
this material to be shared for non commercial, personal and educational uses,
provided that a statement of the source referencing the author(s) and
“International Institute of Management” appears on the reproduced materials.
As courtesy, please provide us with a notice of use by contacting us at:
www.iim-edu.org
IIM Open Courseware (OCW)
International Institute of Management
10161 Park Run Dr. #150
Las Vegas, NV 89145
USA
IIM Open Courseware (OCW)
International Institute of Management
Strategy
iim-usa.org
International Institute of Management
Restructuring and
Turnaround
iim-usa.org
International Institute of Management (IIM)
Top Causes of Performance Decline
• External (Market Changes)
– New stronger competition
– Unforeseen market/demand shifts
– Diminished strategic advantages
• Internal (Organization Changes)
– Poor leadership – Misaligned authority/responsibility, lack of
ownership or lack of leadership skills.
– Organization inertia– Slow to respond to change e.g. new
competitive conditions
– Improper strategy- e.g. overexpansion (focus on market
share rather than profitability)
– Inadequate financial/cost controls
– High costs &/or low labor productivity
iim-edu.org
International Institute of Management (IIM)
IIM Turnaround Methodology
1. Re-Assess Market and Organization
2. Identify Performance Gaps and Causes
3. Establish New Performance Targets
4. Create the Plan to Achieve New Targets
5. Provide Incentives for Change
6. Create Buy-In (Board, Management, Staff)
– Communicate Plan & Win Support
7. Execute Plan and Monitor
8. Control, Align and Adapt
iim-edu.org
International Institute of Management (IIM)
Sample Turnaround Performance Metrics
iim-edu.org
Key Metrics Q3-03 Q3-04 Difference
Service Fee Revenue Per Customer $10.00 $15.00 +80% Improvement
Revenue $3.5M $4.5M +24% Improvement
Gross Margins -35% 65% 100 Point Improvement
Marketing Spend $22M $1.5M 94% Reduction
Customer Acquisition Cost $225 $55 75% Improvement
EBITDA ($40M) ($2M) 95% Reduction
International Institute of Management (IIM)
9 Key Turnaround Areas
iim-edu.org
Leadership
> Corporate
> Targets, KPI’s
> Plans
> Capital Expenditure
> Operating Budgets
Marketing
> Sales program and
force effectiveness
> Customer
satisfaction
People
> Performance system
> Training
> Skills
SCM Operations
> Production & PLC
> Operating procedures
> Maintenance/Support
Technology Monitoring & Reporting
Annual Results
> Automation & IS
> Productivity
> Access to new markets
> Reporting & Control
> Documentation &
records
> Vendor contracts
>Purchasing Procedures
> Quality and Grade
R&D
> Engineering
> Innovation
> Commercialization
Finance
International Institute of Management (IIM)
Turnaround Plan - Strategic Options
• Redefining strategic focus: diversify or focus on core
products/services or market
• Change non-cooperating management, strengthen
management team, revise employee performance/ownership
program, improve communication, training, and accountability
in all business units and functions
• Divestment: spinoffs of unprofitable or profitable SBUs to
investors; management buy outs (MBOs).
• Harvest: halting investment and maximizing cash flow.
• Liquidation: cease operations and write off assets.
• Outsource: non-core business to more cost effective suppliers
• Expense Control: reduce all non-revenue related spending, RIF
& re-organization, automate, consolidate and align
• Revise business model: marketing, brand and pricing
• Expand: through partnerships, JV and acquisitions
iim-edu.org
International Institute of Management (IIM)
Turnaround Lessons
• Turnaround is multi-dimensional
– Strategy, operations, organizational, legal
• Start with Quick-Wins but do not lose sight of long- term
objectives
• Leadership must embrace and commit to change.
• A unified management team is critical. Actively communicate
with the Board if management is not cooperating.
• Credibility will be questioned during the change
– Board, investors, employees, clients
– Can only be gained and strengthen with successful results
• Objective analysis of performance is key for success - Ability
to admit what’s working and what’s not
• Quick adaptation and corrective actions is a CSF
iim-edu.org
International Institute of Management (IIM)
Questions?
iim-edu.org
International Institute of Management (IIM)
iim-edu.org
See You Next Time!
For More Information
You Can Visit
www.iim-edu.org
doc_700104873.pdf
Executive Education Executive Action Learning Seminars
International Institute of Management iim-usa.org
International
Institute of
Management
Executive Education Courses
Med Jones
Restructuring and Turnaround
Executive Best Practices
Executive Education
Executive Action Learning Seminars
Executive Seminars
Executive Courses
International Institute of Management (IIM)
iim-edu.org
International Institute of Management (IIM)
iim-edu.org
Copyright International Institute of Management
This work is the intellectual property of the authors. Permission is granted for
this material to be shared for non commercial, personal and educational uses,
provided that a statement of the source referencing the author(s) and
“International Institute of Management” appears on the reproduced materials.
As courtesy, please provide us with a notice of use by contacting us at:
www.iim-edu.org
IIM Open Courseware (OCW)
International Institute of Management
10161 Park Run Dr. #150
Las Vegas, NV 89145
USA
IIM Open Courseware (OCW)
International Institute of Management
Strategy
iim-usa.org
International Institute of Management
Restructuring and
Turnaround
iim-usa.org
International Institute of Management (IIM)
Top Causes of Performance Decline
• External (Market Changes)
– New stronger competition
– Unforeseen market/demand shifts
– Diminished strategic advantages
• Internal (Organization Changes)
– Poor leadership – Misaligned authority/responsibility, lack of
ownership or lack of leadership skills.
– Organization inertia– Slow to respond to change e.g. new
competitive conditions
– Improper strategy- e.g. overexpansion (focus on market
share rather than profitability)
– Inadequate financial/cost controls
– High costs &/or low labor productivity
iim-edu.org
International Institute of Management (IIM)
IIM Turnaround Methodology
1. Re-Assess Market and Organization
2. Identify Performance Gaps and Causes
3. Establish New Performance Targets
4. Create the Plan to Achieve New Targets
5. Provide Incentives for Change
6. Create Buy-In (Board, Management, Staff)
– Communicate Plan & Win Support
7. Execute Plan and Monitor
8. Control, Align and Adapt
iim-edu.org
International Institute of Management (IIM)
Sample Turnaround Performance Metrics
iim-edu.org
Key Metrics Q3-03 Q3-04 Difference
Service Fee Revenue Per Customer $10.00 $15.00 +80% Improvement
Revenue $3.5M $4.5M +24% Improvement
Gross Margins -35% 65% 100 Point Improvement
Marketing Spend $22M $1.5M 94% Reduction
Customer Acquisition Cost $225 $55 75% Improvement
EBITDA ($40M) ($2M) 95% Reduction
International Institute of Management (IIM)
9 Key Turnaround Areas
iim-edu.org
Leadership
> Corporate
> Targets, KPI’s
> Plans
> Capital Expenditure
> Operating Budgets
Marketing
> Sales program and
force effectiveness
> Customer
satisfaction
People
> Performance system
> Training
> Skills
SCM Operations
> Production & PLC
> Operating procedures
> Maintenance/Support
Technology Monitoring & Reporting
Annual Results
> Automation & IS
> Productivity
> Access to new markets
> Reporting & Control
> Documentation &
records
> Vendor contracts
>Purchasing Procedures
> Quality and Grade
R&D
> Engineering
> Innovation
> Commercialization
Finance
International Institute of Management (IIM)
Turnaround Plan - Strategic Options
• Redefining strategic focus: diversify or focus on core
products/services or market
• Change non-cooperating management, strengthen
management team, revise employee performance/ownership
program, improve communication, training, and accountability
in all business units and functions
• Divestment: spinoffs of unprofitable or profitable SBUs to
investors; management buy outs (MBOs).
• Harvest: halting investment and maximizing cash flow.
• Liquidation: cease operations and write off assets.
• Outsource: non-core business to more cost effective suppliers
• Expense Control: reduce all non-revenue related spending, RIF
& re-organization, automate, consolidate and align
• Revise business model: marketing, brand and pricing
• Expand: through partnerships, JV and acquisitions
iim-edu.org
International Institute of Management (IIM)
Turnaround Lessons
• Turnaround is multi-dimensional
– Strategy, operations, organizational, legal
• Start with Quick-Wins but do not lose sight of long- term
objectives
• Leadership must embrace and commit to change.
• A unified management team is critical. Actively communicate
with the Board if management is not cooperating.
• Credibility will be questioned during the change
– Board, investors, employees, clients
– Can only be gained and strengthen with successful results
• Objective analysis of performance is key for success - Ability
to admit what’s working and what’s not
• Quick adaptation and corrective actions is a CSF
iim-edu.org
International Institute of Management (IIM)
Questions?
iim-edu.org
International Institute of Management (IIM)
iim-edu.org
See You Next Time!
For More Information
You Can Visit
www.iim-edu.org
doc_700104873.pdf