Description
There are many factors which drive an Organizations success. Leadership, organization design and structure, people, change management, organization culture, innovation and technology focus.
ASIAN JOURNAL OF MANAGEMENT RESEARCH
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Research Article ISSN 2229 – 3795
ASIAN JOURNAL OF MANAGEMENT RESEARCH 497
Volume 5 Issue 4, 2015
Implementing a turnaround strategy: A case study in services industry
Niraj Vyas
niraj.vyas@ gmail.com
ABSTRACT
There are many factors which drive an Organizations success. Leadership, organization
design and structure, people, change management, organization culture, innovation and
technology focus, flexibility and ability to adapt to changing market trends are some of the
factors. As the organization passes through its stages of lifecycle of rapid growth and
maturity it faces many challenges which threaten its survival in a competitive market
landscape. The ability of the organization to respond to these challenges determines whether
it goes into the phase of decline and oblivion or charges ahead to a phase of rebirth and fuels
further growth. An organization often faces delivery issues in the rapid growth phase when its
systems, processes and structure are not designed to handle the growth. Picking up signs of
ailing health of the company and a proactive approach in handling these issues early in the
process is key to a turnaround. Implementation of a structured turnaround strategy will be
vital to the revival of service delivery issues faced during this period. This paper is a case
study of a successful turnaround strategy implemented in the services industry. This case
study examines the various stages of implementation of a structured turnaround strategy and
action plans implemented in each stage. The paper also considers the importance of
considering a multi-dimensional approach towards handling quality issues with
categorization of focus areas into customer, process and people categories. Applying best
practices from the manufacturing industry in the services industry is also evaluated.
Key words: Turnaround Strategy, Quality Management, Human Resource Management,
Problem Structuring, Root Cause Analysis.
1. Introduction
An organization passes through various stages in its lifecycle. These include the Birth,
Growth, Maturity, Decline and Death. In each of these stages the organization faces various
challenges and crisis.
An organization in startup phase (Birth) will have challenges of having limited resources,
recruiting and training high performance team and building a strategy, structure and systems
without a clear framework. A rapidly growing organization (Growth) will have challenges of
putting structure and systems for scaling and integrating new team to handle the expanding
scale of growth. Organizations which need to sustain the success achieved so far (Maturity)
will have challenges of creating a path for taking unit to next level, justifying need for new
initiatives and leading in shadow of existing leader and managing the team he created. Units
which need realignment will need to convince the team that change is essential with a careful
restructure of leadership and org structure (Watkins M, 2003)
Units which see a decline (Decline and Death) and a need to turnaround need to reenergizing
demoralized team make effective decision under pressure and make tough calls. An
Implementing a turnaround strategy: a case study in services industry
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organization is prone to death and decline if the challenges faced in each of these stages in
not dealt with effectively.
2. Review of literature/theatrical background of the study
Companies like Kodak, Fiat, Motorola, Xerox, and Sun Microsystems have seen failure due
to Premature Ageing Syndrome with issues of stagnating growth, tentative change, weak
leadership and lack of a success culture. On the other hand companies like AT&T, British
telecom, Daimler Chrysler, Swiss Air, Time Warner have faced Burnout Syndrome due to
excessive growth, uncontrolled change, autocratic leadership and prevalence of excessive
success culture as its characteristic (Siehe G et al.,)
Organizational sickness has been defined as a gradual or sudden ‘existence-threatening
decline’ in performance
(3),
This can be precipitated by internal actions or inactions or by
external circumstances and environmental factors. This sickness in delivery calls for a
turnaround situation. A turnaround situation is one where a company suffers declining
economic performance for an extended period of time, such that the performance level is so
low that the survival of the company is threatened unless serious efforts are made to improve
its performance. Achieving turnaround calls for a totally different set of skills to probe into
the causes of decline and to formulate appropriate strategies to transform the company for a
fresh lease of life (Sunita Panciker, 2011)
,
Studies have shown that successful turnarounds were accomplished through progressive
building up of organizational competencies, as suggested by the stage theory (through
strategies such as employee engagement, cost rationalization, lean management, image
building, and focusing on core business) before taking up aggressive growth and expansion
strategies
.
A turnaround is a doubly entrepreneurial act involving ‘negative-to breakeven’
and ‘breakeven-to-positive’ phases (Manimala, M. J, 2005), which also may have several
sub-stages within the two broad phases.
There are many approaches for driving a turnaround strategy. According to Wheelen and
Hunger turnaround strategies are a form of retrenchment that emphasizes the improvement of
operational efficiency. The two principal types of turnaround strategies, contraction and
consolidation, are used when a corporation’s problems are not pervasive. However,
researchers have largely ignored the possibility that firms may choose a growth strategy or
stability strategy when experiencing declining performance. The most common growth
strategies are diversification at the corporate level and concentration at the business level
phases (Wheelen, T. & Hunger, J 2011).
2.1 Research objectives/research questions/hypotheses
This paper is a case study of a business unit which was facing delivery issues due to
challenges faced in the rapidly growth stage. The unit applied a successful turnaround
strategy by focusing on a growth and stability strategy. This case study highlights the various
stages of implementation of a turnaround strategy with a multi-dimensional approach towards
handling quality issues. Although this case study is from an operational unit in the services
industry, utilizing best practices from the manufacturing industry is also evaluated. The
structured approach demonstrated in this case study can be utilized towards application of
turnaround strategies for operational units and ensure a prompt and proactive approach is
adapted for managing delivery challenges.
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2.2 Overview of organization and turnaround scenario
This case study is from a unit within the healthcare industry, a knowledge process
outsourcing (KPO) group responsible for providing safety services for global studies
conducted for biopharmaceutical companies. This IT enabled service unit had established a
reputation for providing quality services at par with global providers and was looking at a
consistent year on year growth. After managing the stages of initial growth it was moving
into a phase of maturity with a challenge to sustain the success achieved so far. This stage of
maturity required the unit to cater to a larger pool of global customers and provide flexibility
in its standard delivery model.
To ensure focus on quality and productivity, the unit invested on upgrading the technology.
System upgrades were launched with a new module aimed to increased efficiencies and to
improve customer experience. An investment was made in terms of adding new headcount
and a new team was developed to manage specific part of the operations.
However within a span of a few months of implementing this strategy, there was an increase
in number of customer complaints. There were dissatisfied internal project teams who started
spending most of their times managing customer calls. The systems testing team reported
major defects in the system post release. The turnaround time lines for delivery of services to
the customers started dropping. Higher employee attrition was reported within one of the key
functional unit within the operations. One customer pulled out of their large programme and
more customers were threatening to quit.
The unit implemented a transformational strategy with a focus towards establishing stability
within the operations and identification and resolution of issues driving customer
dissatisfaction. The issues and action plans were structured around 3 key areas viz Customer,
Processes and People. Within a span of 4 months, customer grievance calls died down,
escalations dropped dramatically; and delivery metrics improved. Within 6 months customer
grievance turned to appreciation. This case study identifies the approach towards
implementation of the turnaround strategy within the operations center.
3. Analysis and interpretation
For this case study, the stages of implementation of a Turnaround strategy are classified into
following:
1. Stage of Evaluation and Assessment
2. Acute Needs Stage
3. Stage of Restructuring
4. Stage of Stabilization
5. Stage of Revitalization
3.1 Stage 1: Evaluation and assessment
3.1.1 Identification and Segregation of Focus Areas (Customer, Process and People
approach)
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It is important to stay focused and understand the problem areas and filter them from the
noise received in these situations. The best way to know the ground realities is to get the
feedback with the team on the floor. The employees involved in the process are the best
source of feedback as they know the challenges and give the best indicators of what should be
changed. An anonymous survey sent to key internal stakeholders is another way to seek
feedback objectively by asking specific questions to get a structured “noise free” response.
Data and metrics give a good indication of what is going wrong within the operations. A
breakdown of the process into sub processes and measurement at each sub stage of the
operations will help identify bottlenecks and failure points in the assembly line. In this case
study, the following problem areas were identified which were then segregated into 3
buckets; customer, process and people:
3.1.2 Customer
Missing turnaround timelines for sending reports to the customer
Figure 1: Metrics of Customer Reporting Timeline
Poor quality of query data sent to customer sites
Figure 2: Customer Complaints Trend
Customer Queries not answered on time
3.1.3 Process/ systems
1. System defects leading to poor quality data sent to customers
2. Inadequate testing of the system during testing phase, with no end to end review
of the upgrade on the delivery process.
3. Process gaps where there was no handover from team 1 to team 2 for managing
queries
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4. Inadequate placement of resources in the process with no coverage in certain time
slots leading to delays
5. No metrics to track delivery of team and no ongoing monitoring
6. Issue log to track issues and implementation of preventive actions
3.1.4 People
1. Team lead not thoroughly involved in development of process and not engaged
2. Inexperienced functional lead identified for managing day to day operations
3. Resignation of some members
4. Employee selected on contract for key role in the operations with no clarity on
career ladder
5. Capacity calculation for anticipated growth required to handle workload
6. Talent review and preparation of career ladder to align
7. Motivation and involvement of staff required for overall strategy
3.1.5 Prioritization of focus areas
It is not possible to address all the issue at once and prioritizing issues which need action will
be key to a successful implementation of the turnaround strategy.
Following is the table with priority rating assigned to each focus area:
Table 1: Segregation of Issues and Priority Key for Classification of Issues
Area
Priority
Rating
Customer
1. Missing turnaround timelines 2
2. Poor quality of query data sent to customer sites leading to confusion
at sites 1
3. Customer Queries not answered on time 1
Process/ Systems
4. System defects leading to poor quality data sent to customers 1
5. Inadequate testing of the system during testing phase, with no end to
end review of the upgrade on the delivery process. 2
6. Process gaps where there was no handover from team 1 to team 2 for
managing queries 2
7. Inadequate placement of resources in the process with no coverage in
certain time slots leading to delays 1
8. No metrics to track delivery of team and no ongoing monitoring 3
9. Issue log to track issues and implementation of preventive actions 2
People
10. Team lead not thoroughly involved in development of process and not
engaged 4
11. Functional lead identified for managing day to day operations 4
12. Resignation of some members 2
13. Employee selected on contract for key role in the operations with no
clarity on career ladder 3
14. Capacity calculation for anticipated growth required to handle 4
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workload
15. Talent review and preparation of career ladder to align 3
16. Motivation and involvement of staff required for overall strategy 2
Category Key Expected Change
1 Immediate Action Required 2-3 days
2 High priority 2 weeks
3 Medium Priority 1 month
4
Important for Long term
Implementation 2-3 months
The identification of the research problem is the most difficult and important part of the
whole research process
(7),
Likewise in handling a turnaround situation, identification and
articulation of a problem statement and listing areas of concerns creates the platform to build
actions plans to drive change. Assigning priorities for action plans helps focus on immediate
needs and drive damage control initiatives.
3.2 Stage 2: Acute needs stage
In this stage it is critical to address the areas which need immediate actions. These are areas
which require an aggressive approach towards implementing corrective actions, since the
focus areas identified threaten to impact safety, data integrity, risk assessment and decision
making at the customer end, if not addressed immediately. These issues eventually threaten
to harm the company’s reputation if not addressed with a very high priority.
1. Poor quality of query data sent to customer sites: In the services industry delivering low
quality product will be catastrophic. There can be harm safety, data integrity and decision
making. This needs to be immediately addressed to avoid any further damage.
Actions Implemented: A 100% manual check on data sent to the customer was
implemented and automated delivery reports were stopped immediately.
2. Customer Queries not answered on time. This can be frustrating for the customer who is
expecting an immediate response from a service provider. The customer can escalate this
issue to the outsourcing team who in turn will escalate it to the Board
Actions Implemented: All customer queries were routed to the functional lead who was
assigned the responsibility of addressing the queries. A timeline for response was defined
and communicated to the customer facing team. A tracking sheet was developed to ensure
all queries were tracked and responded within timelines.
3. System defects leading to poor quality data sent to customers: For an IT enabled service
with thousands of transactions per day, a system defect with automated data delivery can
send inaccurate data to the customer and the delivery unit may be completely blinded to
the extent of damage.
Actions Implemented: All automated faxes and emails from the system were stopped and
a manual override was implemented to ensure reports with systems defects did not reach
the customer. A very high priority ticket was raised to development team with a list of all
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identified defects which needed immediate action. Against each of the defects a
mitigation plan was implemented considering the timeline required for fixing the defects.
4. Inadequate placement of resources in the process with no coverage in certain time slots
leading to delays: Having a resource but not placing this resource where there is
requirement is as good as not having someone at all. This needs to be immediately
corrected.
Actions Implemented: Placements of resources was changed with immediate effect to cover a
timeslot which was not covered.
Review of Actions in Stage 2: This is a stage which needs maximum intervention from the
functional lead with a daily monitoring of all action plans implemented with review of related
metrics. Implementation of labor intensive manual oversight is required with a need to
extend beyond job roles and working overtime to cover delivery issues.
The nature of the top management team in a company is of greater significance for success or
failure than any of the company’s products, skills or physical assets
(8),
A standing meeting
by the functional lead explaining the current situation, enlisting the focus areas and
explaining the impact if these are not addressed will engage the team to provide their fullest
cooperation. Working beyond the hours, beyond job roles is the need of the hour. The
functional lead needs to be involved in every action plan and showcase the commitment,
positive attitude to the team. Showcasing the positive intent, willingness to change the
situation and demonstration of an action plan will provide direction to the team.
3.3 Stage 3 restructuring stage
In this stage all high Priority items need to be addressed as soon as the damage control
through the category 1 items has been addressed. These are the key items which need to be
addressed tactically to ensure the keys gaps in the operations are taken care off.
Identification of a root cause for each of the issues identified and implementing appropriate
corrective and preventive actions for the root cause identified needs to be the theme of
restructuring stage.
From the current action plan, there are following focus areas with the corrective actions
which were implemented:
3.4 Missing turnaround timelines
Like in the manufacturing sector, the service sector too has processes which can be linked to
the assembly chain with similar issues, bottlenecks and dependencies. Once services “in the
field” receive the same attention as products in the factory, a lot of new opportunities become
possible
(9),
To identify the root cause of delays, it is important to break down the assembly line into
individual processes, usually available through process flow charts and monitor each
individual process in terms of stress levels, time taken for each step, % utilization of resource
at each stage to pin down the root cause. Below is the breakdown of the process as an
assembly line and supporting data which helped identify the root cause.
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Figure 3: Assembly Line Structure in the Service Delivery Operations
Using the Pareto principle, 20% of areas cause 80% of delays, it was confirmed that the root
cause of delays was at Team 1 and Team 2.
To further drill down the reasons of delays at this step, the “5 whys” technique was
implemented. This technique was developed by Sakichi Toyoda for the Toyota Industries
Corporation. When looking to solve a problem, it helps to begin at the end result, reflect on
what caused that, and question the answer five times. Most obviously and directly, the Five
Whys technique relates to the principle of systematic problem-solving: without the intent of
the principle, the technique can only be a shell of the process
(10),
A thorough process approach towards root cause analysis is key to detection of focus areas
within operations which need attention. Fishbone diagrams or Ishikawa diagrams is another
tool which can be used for the detection of root cause of failure within the operations. A
Ishikawa are causal diagrams created by Kaoru Ishikawa (1968) that show the causes of a
specific event.
[11].
Ishikawa are causal diagrams that show the causes of problems with
factors related to Equipment, Process, People, Management, Environment and Materials
listed as probable causes of errors.
Figure 4: Ishikawa Fishbone Diagram
In this case study the 5 why technique was utilized for root cause analysis
3.5 Delays in product delivery was linked to delayed handover by Team 1 to Team 3
o Why 1: Why were there delays in handover from team 1 to team 3?
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Team 1 could not identify the prioritization of items since the new system did
not adequately provide the pool with timelines. Also placement of available
resources was not matching as per influx
o Why 2: Why could the team not prioritize tasks in the system and why were
these requirements not provided and tested before system rollout?
This was due to fact that the system requirements were conflicting and were
not tested before rollout
o Why 3: Why were these requirements conflicting and why were these not
tested before rollout?
The team leads which provided the requirements did not participate in testing
and the member who tested were not fully aware of the requirements
o Why 4: Why did the team lead not participate in testing or train resources for
systems testing?
The team lead did not put in a plan to allocate and prepare a delegation task
sheet to identify the best resources for testing and did not communicate all the
risks, testing plans etc
o Why 5: Why did the team lead develop risk mitigation and testing plan?
The team lead did not have prior experience in managing change and
implementing major process changes.
3.6 Delays were also due to delayed delivery by Team 2 to Team 3
o Why 1: Why were there delays in handover from team 2 to team 3?
Team 2 could not prioritize the tasks as the system and process did not assist
them in assigning priorities
o Why 2: Why could Team 2 not prioritize the tasks?
Team 2 was split into 2 teams 2 A and 2B with no link or handover process
between the 2 sub teams
o Why 3 Why were these 2 team split and why was there no handover process in
place?
These teams were made and allocated tasks based on a process split (2A
responsible for downloading the customer query resolution and 2B for
entering the query in the system), but the team lead did not identify that a
process flow with handover from team 2A and 2B was critical
o Why 4: Why did the team lead not develop the process?
The team lead was managing other operations and did not have expertise to
develop process workflows and manage a new complex workflow with the
system upgrade
o Why 5: Why was the team lead assigned additional responsibilities with no
prior experience and why was there no training plan implemented?
The additional responsibilities were assigned to team lead based on prior
performance and not on talent. A talent gap analysis was not performed with
no training plan in place.
From this 5 why analysis, the following areas were identified as root cause
i. Inadequate involvement of team lead in driving change
ii. Inadequate system requirements
iii. Incomplete system testing
iv. Inadequate placement of Team 1 resources
v. No handover of process from team 2A to team 2B
Corrective Actions:
Implementing a turnaround strategy: a case study in services industry
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• The functional lead was replaced
• High priority system upgrade requirements were collated and approvals
obtained for an urgent system upgrade
• A new requirement was added in the system to allocate a timeline for
completion of tasks for team 1 and team 2 which can ensure adequate time
is available for the rest of the teams
• A cross functional team was put in place with members having past
experience in handling change, process expertise and domain knowledge
to plan the upgrade, system testing and training
• Team 1 resources were realigned to have maximum coverage based on
influx trend
• Team 2A and Team 2B were merged as one team to eliminate and
handover and related delays
After rollout of the system upgrade teams 1 and 2 were allocated a module in the
system where all the queries were assigned priorities in terms of timeline for delivery.
These timelines were allocated for teams 1 and 2 and were programmed in the system.
As a result of this, the time taken for actions at team 1 and 2 reduced significantly.
Table 2: Data showing Improvement in timelines for handling queries at Team 1 and Team 2
after system upgrade
Final
Product
Delivery
Timeline
Expected
Time for
handling
query
(Hrs)
Actual Time for
handling query
(Average Hrs)
Prior to system
upgrade
Actual Time for
handling query
(Average Hrs)
Post System
Upgrade
24 hrs 4 10 3.3
48 hrs 8 9.5 6
72 hrs 12 9.5 5.05
Total Events
2654 2502
3.7 Tracking quality issues
Occurrence of quality issues in delivery operations is expected. However it is important to
track issues in terms of number of occurrences, type of issues (major or minor, reoccurrence)
and source of issues. A systematic tracking of issues as and when they occur and monitoring
these over a period of time provide useful information about the trend of the issues and
effectiveness of the corrective and preventive issues implemented.
Actions Implemented for driving quality improvements:
• Establishment of a quality goal for the functional team
• Linking of quality goal to each employees performance evaluation
• Rewards and recognition for the best performers
• Developing detailed standard operating procedures where required
• Process training
• Monthly review of quality metrics
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Table 3: Template for Tracking Issues
No
Date of
issue
Logged
Functional
Unit
Process
(area of
delivery)
Type
(Critical,
Major,
Minor)
Root
Cause
Corrective
Action
Preventive
Action
1
2
Figure 5: Issue Trend
Figure 6: Root Cause analysis
3.8 Handling team attrition and team motivation
Employees who perceive that leadership practices emphasize quality, customer service, and
employee development tend to be more satisfied with their jobs and the organization overall.
As a result, customers are more satisfied and will maintain a long-term relationship with the
company. Whether employees are supported and enabled to manifest value for the customer
ultimately depends on leadership (The Ken Blanchard Companies, 2009)
During a period of consolidation where customer issues are peaking, the internal team,
especially the team facing the customer will be under immense pressure. The customer is
expecting immediate turnaround and does not want any compromise in quality. The customer
facing team requires a concrete corrective and preventive action plans with specific dates
which can be communicated to the customer to assure a revival. This pressure is then passed
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on the delivery team. This pressure mounted on the delivery team on the floor adds on to the
already existing pressure of the need to improve with emphasis laid down by the functional
team lead to ensure zero quality issues and on time delivery. This is bound to cause attrition.
Apart from ensuring that the replacements are made with appropriate training and on-
boarding it is important to maintain motivation of the team and equip the team to handle the
pressure. It is important that the team leads maintains communication with all the members
and demonstrate a positive attitude towards the situation. Celebrating small wins with
achievements of smaller milestones provides a good perspective to the team that there is
steady improvement.
Applying job enrichment strategies with the team helps a stronger team involvement in the
execution of team objectives and goals. Job enrichment is directed at improving the essential
nature of the work performed. The idea behind job enrichment is that motivation can be
enhanced by making the job so interesting and the worker so responsible that he or she is
motivated simply by performing the job (Fred C. Lunenburg, 2011),
Five "implementing concepts" for job enrichment are identified. Each one is a specific action
step aimed at improving both the quality of the working experience for the individual and his
work productivity. They are: (1) forming natural work units; (2) combining tasks; (3)
establishing client relationships; (4) vertical loading; (5) opening feedback channels
(14),
3.9 Testing of system upgrades
A software system is usually governed through standard procedure of identification of user
requirements, validation plans, functional qualification plans and user testing plans. It is
important however that the business users identify specific areas of the modules which need
to be rigorously tested. Apply best practices like regressions testing and a complete end to
end testing where testing is just not restricted to the specific module which is upgraded, but
the entire workflow is tested end to end to assess impact f that module change on the entire
delivery line. The intent of regression testing is to ensure that a change such as those
mentioned above has not introduced new faults (Myers, Glenford, 2004), A lot of defects not
picked up in module testing are picked up in an end to end testing. Apart from identification
of a testing strategy, it is important to let the testers trained and prepared for the testing.
3.10 Stage 4: The Stabilization Stage
In this stage it is important to capitalize on the improvement driven through stage 3 on quality
and on time delivery. This is the stage of implementation of long term preventive actions
which will ensure a stable and consistent delivery.
Following areas were handled in stage 4:
1. Delivery Monitoring plan through Metrics:
2. Aligning team goals with unit goals and career mapping
4. Monitoring delivery through metrics
To survive and prosper competing in the information age, companies must use measurement
systems derived from their strategies and capabilities (Kaplan, R.S, 1996),
The Balanced
score card method employs performance metrics from financial, customer, business process,
and technology perspectives. Adding metrics related to employee satisfaction, employee
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turnover and talent reviews to the balanced score card complete all the monitoring elements.
The balanced scorecard seeks to include nonfinancial metrics that are strategically important
for a firm’s long-term performance (Rajiv D Banker et al., 2004),
It is important for the functional lead to carefully select the appropriate metrics which
measure and provide relevant process points within the operations. The following set of
metrics was selected for monitoring and evaluation based on root cause analysis performed in
Stage 2.
Note: These metrics were monitored for the functional team under focus and were in addition
to the business unit performance metrics.
4.1 Business process Timeline/ delivery Compliance
a. % Timeline compliance for team 1 (actual vs expected compliance of >95%), This
compliance includes the number of cases processed within timelines after receipt of data
from customer sites.
b. % Timeline compliance for team 2 (actual vs expected compliance of >95%), This
compliance includes the number of cases processed within timelines and allocated to
Team 3 after receipt of data from Team 1
c. % Queries sent to customer by team 1
d. % Queries resolved by customer and entered in system by team 2
4.2 Business process outlier analysis
e. Breakup of reasons for delays by the team 1 and team 2
4.3 Business process quality
f. Trend of quality issues by team 1 and 2 with breakup of root cause analysis
g. Trend of system bugs and defects post rollout
4.4 Business process Productivity
h. Throughput per employee in team 1 and team 2
i. % Utilization at team 1 and team 2
4.5 Employee
j. Employee engagement
k. Employee turnover
4.6 Customer
l. Average age of all outstanding queries not resolved by the customer
m. Time taken by customer to resolve queries (actual vs expected within 24hours)
n. Customer satisfaction scores related to delivery by team 1 and team 2
A regular review of these metrics helped identify specific areas within the operations which
needed focus or bottlenecks which need additional resourcing. A cross functional review of
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all parameters which include delivery, quality, productivity, customer satisfaction and
employee engagement ensures a holistic monitoring of the operations.
4.7 Establishing direction for the team
4.7.1 “Level 5” strategy cascade
Quite often large organizations make a lot of effort in establishing the company’s vision,
mission, strategy, goals and objectives. These are quite effective at the corporate level and
help drive the goals necessary for growth of the organization. In a multinational company,
individual business unit/product groups/ geographies derive their own strategies based on
corporate level strategies and goals.
Figure 7: Level 5 Strategy cascade
However it is important to establish a similar cascade of strategic action plans within a
business unit and encourage each functional unit to establish their own goals and objectives
which are aligned to the business unit strategy. This “level 4” cascade of the strategy creates
a platform for each employee within the unit to identify his/ her role towards achieving the
Business Unit strategy and ultimately the Company Strategy. This functional unit strategy
then needs to be a part of each employee goals, completing the “level 5” cascade.
This cascade of the company goals into employee goals is described by Peter Drucker as the
concept of Management by Objectives (MBO), MBO also known as management by results
(MBR), is a process of defining objectives within an organization so that management and
employees agree to the objectives and understand what they need to do in the organization in
order to achieve them (Drucker, Peter F, 1954),
4.7.2 Engaging each employee to drive the strategy
After completing the mapping of the company goals to each team member, it is vital to
ensure an effective and assertive communication of these goals. Instead of a top down
aggressive approach of communicating only the level 5 goals, a more effective way is to start
with the company goals and engage each team member on how their performance will help
the company achieve its goals.
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Figure 8: MBO Process
Below is the example in the case study describing how the Level 5 cascade was completed:
4.7.3 Linking of company goals to the employee
Table 4: Linking Company Strategy to Employee Goals
Level Area Goal
1 Company Contribute to developing a healthier world
2 Geography Focus on establishing and delivering integrated
healthcare services in a growing region
3 Business Unit Achieve >10% growth YoY to become a leader in
providing data service in 3 years
4 Functional Unit
within the
Business Unit
Above par performance for delivery and quality for data
queries and establishing a stable and sustainable
operation to deliver growth with a proactive approach
towards managing risk
5 Employee >95% on time delivery with >99% compliance to quality
of data queries
It is important to encourage participation from each employee towards solving challenges
faced by the functional unit. This will create a sense of engagement within the team and an
opportunity for them to contribute. Simply giving employee a sense of agency, a feeling that
they are in control, that they have genuine decision making authority can radically increase
how much energy and focus they bring to their jobs
(19),
4.8 Stage 5: The revitalization stage
The outcomes of the turnaround strategies can result in
5 Rapid Decline: This is possible for situations where a bad strategy was chosen for
implementation in the acute needs stage (Stage 2) or a good strategy was put in place but
these were not implemented as required. A retrenchment strategy will need to be
considered. The Retrenchment strategy of the turnaround management describes wide-
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ranging short-term actions, to reduce financial losses, to stabilize the company and to
work against the problems, that caused the poor performance
(20),
6 Continued failure: This is possible when the Acute needs stage (Stage 2) was handled
well avoiding a rapid decline in delivery but failure at the Restructuring stage (Stage 3),
The loops holes have been temporarily plugged but the root cause of failures have not
been dealt with, causing the temporary corrective action starting to fail, over a period of
time. The action plans implemented in Stage 1 are labor intensive and will not sustain in
the long term.
However if the leadership team still believes, a repositioning is possible, action plans
need to be restructured as described in stage 3 aggressively to move from an acute needs
stage to stabilization stage (Stage 1 to 3), Failure to do so will need a decision for
retrenchment.
• Success: If the outcome of the new strategy turns out to be good with progress from stage
1 to stage 4, evident through the key delivery metrics, a turnaround is called successful.
At stage 5, Revitalization Stage, the company needs to leverage on the consistent delivery
demonstrated to the customer and focus on creating new delivery benchmarks and
creating differentiators which can be offered based on the scalability introduced in the
operations. This focus will fuel in the desired growth and motivate the team to expand
market share, enter new markets or add on new products.
Figure 9: Stages of Turnaround Strategy
The following focus areas were identified in Stage 5
1. Assessment of scalability of existing operation with respect to headcount, team lead
talent, system performance and productivity
2. Process reengineering in terms of handling queries where sending queries to customers
via fax was followed up by phone calls to ensure timely query resolution.
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3. Upgrade of customer portal which gave customers a view of project status with listing an
graphs along with all outstanding queries and an option to solve the query online
4. Training and coaching of the team leads to handle growth
5. Recommendations/ suggestions/ findings
5.1 Implication for leadership and management
The purpose of sharing this case study is to develop a perspective of strategic choice for firms
in decline phase especially for fast growing units which have shown the market potential,
established a reputation in its entrepreneurial growth stage but are unable to cope up with the
growth. A fast growing unit showing good response in its birth and growth stage is likely to
choose Growth as a strategy instead of retrenchment and push towards establishing stability
and strive to move towards maturity phase. The confidence showcased through high levels of
past financial performance and availability of required resources will support their strategic
plan. However choosing growth as a turnaround strategy requires a structured approach
towards the implementation of the operational action plan.
5.2 Implication for managers
This case study also highlighted the role and application of management best practices in the
successful implementation of the turnaround strategy. These include viz planning and
organization, prioritization, root cause analysis, quality management, decision making under
certainty, employee engagement, leadership, role of metrics, balanced score card, operational
control and management by objective .In the services industry utilization of best practices
applied in the manufacturing industry with an assembly line approach may be applied
successfully. This case study has shown that a manager plays a crucial role in
implementation of the growth strategy crafted by the leadership team.
5.3 Limitations of the study
The scope of this case study is limited to a growing unit facing a turnaround scenario with
delivery issues in the growth phase and the leadership focusing on growth as a strategy
instead of retrenchment.
5.4 Conclusions
This case study demonstrates that the implementation of a transformational strategy requires
a multi-dimensional focus across all areas of the operations. Identification and
implementation of action plans across focus areas of process, technology, people and
customer requirements ensured that all areas of the operations were addressed. A
prioritization of action plans identified in each focus area and staging the implementation
through different phases with checkpoints at each stage helps in a structured approach
towards tracking progress. The role of leadership in driving action plans is vital to ensure a
successful transformation is achieved.
5.5 Future Work:
A study of a structured strategy to handle growth with a proactive approach towards handling
challenges which growth brings across leadership/ management, technology and process
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investments, continued focus on quality and ability to handle growing customer base should
be conducted which could include case studies and best practices across various industries.
6. References
1. Watkins M, (2003),The First 90 Days: Critical Success Strategies for New Leaders at All
Levels. Boston, Mass: Harvard Business School Press; 2003.
2. Siehe G. Probst und S. Raisch, „Organizational Crisis: The Logic of Failure. “ Academy
of Management Executive 19 (1), 90–105.
3. Pandit, N. (2000), “Some recommendations for improved research on corporate
turnaround”, Academy of Management Review, 3(2), pp 25–37.
4. Prasad, V. (2006), “Role of HR in corporate turnaround”, HRM Review, pp 11-29.
5. Sunita Panciker, Mathew, (2011) 10th International Entrepreneurship Forum, Tamkeen,
Bahrain, pp 9-11.
6. Manimala, M. J. (2005), “Entrepreneurship in established Indian firms: Strategies for
coping with large-scale changes in the business environment”, Chapter 16 of Manimala
M.J., Entrepreneurship Theory at the Crossroads: Paradigms and Praxis, in B.L.
Maheswari (ed.), Innovations in Management for Development, Wiley-dreamtech India
Pvt. Ltd., New Delhi, pp 365-390.
7. Wheelen, T. & Hunger, J. (2001), Strategic Management and Business Policy. Addison-
Wesley. Reading Massachusetts.
8. Murphy, J. (2008), “The place of leadership in turnaround schools Insights from
organizational recovery in the public and private sectors”, Journal of Educational
Administration, 46(1), pp 74-98
9. Kerlinger, F. N., & Lee, H. B. (2000), Foundations of behavioral research (4th ed.), Holt,
NY: Harcourt College Publishers.
10. Theodore Levitt (2000), Production Line approach to service, Harvard Business Review.
11. Serrat, O. (2010), the five ways technique. Washington, DC: Asian Development Bank.
12. Ishikawa, Kaoru (1976), Guide to Quality Control. Asian Productivity Organization.
ISBN 92-833-1036-5.
13. The Ken Blanchard Companies (2009), Leadership Profit Chain: Volume 1 Drucker,
Peter F., "The Practice of Management", 1954. ISBN 0-06-011095-3.
14. Fred C. Lunenburg, Motivating by Enriching Jobs to Make Them More Interesting and
Challenging, International Journal Of Management, Business, And
Administration,15(1), 2011
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15. R. W. Walters and Associates, Job Enrichment for Results (Cambridge, Mass.:
Addpson-Wesley, 1975),
16. Myers, Glenford (2004), the Art of Software Testing. Wiley. ISBN 978-0-471-46912-4.
17. Kaplan, R.S., Norton, D.P., (1996), the Balanced Scorecard: Translating Strategy into
Action. Harvard Business School Press, Boston.
18. Rajiv D Banker et al., (2004), A balanced scorecard analysis of performance metrics,
European Journal of Operational Research, 154, pp 423–436.
19. Drucker, Peter F., "The Practice of Management", 1954. ISBN 0-06-011095-3.
20. Charles Duhigg , “The Power of Habit, why we do what we do and How to change”
(151) 2013, b Randon House Books ISBN-10: 1400069289.
21. Walshe, K. / Harvey, G./ Hyde, P./ Pandit, N. (2004): Organizational Failure and
Turnaround: Lessons for Public Services from the For-Profit Sector, in Public Money &
Management, Vol. 24, No. 4 (August, 2004), pp 201–208, p.204.
doc_520296073.pdf
There are many factors which drive an Organizations success. Leadership, organization design and structure, people, change management, organization culture, innovation and technology focus.
ASIAN JOURNAL OF MANAGEMENT RESEARCH
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© Copyright by the authors - Licensee IPA- Under Creative Commons license 3.0
Research Article ISSN 2229 – 3795
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Implementing a turnaround strategy: A case study in services industry
Niraj Vyas
niraj.vyas@ gmail.com
ABSTRACT
There are many factors which drive an Organizations success. Leadership, organization
design and structure, people, change management, organization culture, innovation and
technology focus, flexibility and ability to adapt to changing market trends are some of the
factors. As the organization passes through its stages of lifecycle of rapid growth and
maturity it faces many challenges which threaten its survival in a competitive market
landscape. The ability of the organization to respond to these challenges determines whether
it goes into the phase of decline and oblivion or charges ahead to a phase of rebirth and fuels
further growth. An organization often faces delivery issues in the rapid growth phase when its
systems, processes and structure are not designed to handle the growth. Picking up signs of
ailing health of the company and a proactive approach in handling these issues early in the
process is key to a turnaround. Implementation of a structured turnaround strategy will be
vital to the revival of service delivery issues faced during this period. This paper is a case
study of a successful turnaround strategy implemented in the services industry. This case
study examines the various stages of implementation of a structured turnaround strategy and
action plans implemented in each stage. The paper also considers the importance of
considering a multi-dimensional approach towards handling quality issues with
categorization of focus areas into customer, process and people categories. Applying best
practices from the manufacturing industry in the services industry is also evaluated.
Key words: Turnaround Strategy, Quality Management, Human Resource Management,
Problem Structuring, Root Cause Analysis.
1. Introduction
An organization passes through various stages in its lifecycle. These include the Birth,
Growth, Maturity, Decline and Death. In each of these stages the organization faces various
challenges and crisis.
An organization in startup phase (Birth) will have challenges of having limited resources,
recruiting and training high performance team and building a strategy, structure and systems
without a clear framework. A rapidly growing organization (Growth) will have challenges of
putting structure and systems for scaling and integrating new team to handle the expanding
scale of growth. Organizations which need to sustain the success achieved so far (Maturity)
will have challenges of creating a path for taking unit to next level, justifying need for new
initiatives and leading in shadow of existing leader and managing the team he created. Units
which need realignment will need to convince the team that change is essential with a careful
restructure of leadership and org structure (Watkins M, 2003)
Units which see a decline (Decline and Death) and a need to turnaround need to reenergizing
demoralized team make effective decision under pressure and make tough calls. An
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organization is prone to death and decline if the challenges faced in each of these stages in
not dealt with effectively.
2. Review of literature/theatrical background of the study
Companies like Kodak, Fiat, Motorola, Xerox, and Sun Microsystems have seen failure due
to Premature Ageing Syndrome with issues of stagnating growth, tentative change, weak
leadership and lack of a success culture. On the other hand companies like AT&T, British
telecom, Daimler Chrysler, Swiss Air, Time Warner have faced Burnout Syndrome due to
excessive growth, uncontrolled change, autocratic leadership and prevalence of excessive
success culture as its characteristic (Siehe G et al.,)
Organizational sickness has been defined as a gradual or sudden ‘existence-threatening
decline’ in performance
(3),
This can be precipitated by internal actions or inactions or by
external circumstances and environmental factors. This sickness in delivery calls for a
turnaround situation. A turnaround situation is one where a company suffers declining
economic performance for an extended period of time, such that the performance level is so
low that the survival of the company is threatened unless serious efforts are made to improve
its performance. Achieving turnaround calls for a totally different set of skills to probe into
the causes of decline and to formulate appropriate strategies to transform the company for a
fresh lease of life (Sunita Panciker, 2011)
,
Studies have shown that successful turnarounds were accomplished through progressive
building up of organizational competencies, as suggested by the stage theory (through
strategies such as employee engagement, cost rationalization, lean management, image
building, and focusing on core business) before taking up aggressive growth and expansion
strategies
.
A turnaround is a doubly entrepreneurial act involving ‘negative-to breakeven’
and ‘breakeven-to-positive’ phases (Manimala, M. J, 2005), which also may have several
sub-stages within the two broad phases.
There are many approaches for driving a turnaround strategy. According to Wheelen and
Hunger turnaround strategies are a form of retrenchment that emphasizes the improvement of
operational efficiency. The two principal types of turnaround strategies, contraction and
consolidation, are used when a corporation’s problems are not pervasive. However,
researchers have largely ignored the possibility that firms may choose a growth strategy or
stability strategy when experiencing declining performance. The most common growth
strategies are diversification at the corporate level and concentration at the business level
phases (Wheelen, T. & Hunger, J 2011).
2.1 Research objectives/research questions/hypotheses
This paper is a case study of a business unit which was facing delivery issues due to
challenges faced in the rapidly growth stage. The unit applied a successful turnaround
strategy by focusing on a growth and stability strategy. This case study highlights the various
stages of implementation of a turnaround strategy with a multi-dimensional approach towards
handling quality issues. Although this case study is from an operational unit in the services
industry, utilizing best practices from the manufacturing industry is also evaluated. The
structured approach demonstrated in this case study can be utilized towards application of
turnaround strategies for operational units and ensure a prompt and proactive approach is
adapted for managing delivery challenges.
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2.2 Overview of organization and turnaround scenario
This case study is from a unit within the healthcare industry, a knowledge process
outsourcing (KPO) group responsible for providing safety services for global studies
conducted for biopharmaceutical companies. This IT enabled service unit had established a
reputation for providing quality services at par with global providers and was looking at a
consistent year on year growth. After managing the stages of initial growth it was moving
into a phase of maturity with a challenge to sustain the success achieved so far. This stage of
maturity required the unit to cater to a larger pool of global customers and provide flexibility
in its standard delivery model.
To ensure focus on quality and productivity, the unit invested on upgrading the technology.
System upgrades were launched with a new module aimed to increased efficiencies and to
improve customer experience. An investment was made in terms of adding new headcount
and a new team was developed to manage specific part of the operations.
However within a span of a few months of implementing this strategy, there was an increase
in number of customer complaints. There were dissatisfied internal project teams who started
spending most of their times managing customer calls. The systems testing team reported
major defects in the system post release. The turnaround time lines for delivery of services to
the customers started dropping. Higher employee attrition was reported within one of the key
functional unit within the operations. One customer pulled out of their large programme and
more customers were threatening to quit.
The unit implemented a transformational strategy with a focus towards establishing stability
within the operations and identification and resolution of issues driving customer
dissatisfaction. The issues and action plans were structured around 3 key areas viz Customer,
Processes and People. Within a span of 4 months, customer grievance calls died down,
escalations dropped dramatically; and delivery metrics improved. Within 6 months customer
grievance turned to appreciation. This case study identifies the approach towards
implementation of the turnaround strategy within the operations center.
3. Analysis and interpretation
For this case study, the stages of implementation of a Turnaround strategy are classified into
following:
1. Stage of Evaluation and Assessment
2. Acute Needs Stage
3. Stage of Restructuring
4. Stage of Stabilization
5. Stage of Revitalization
3.1 Stage 1: Evaluation and assessment
3.1.1 Identification and Segregation of Focus Areas (Customer, Process and People
approach)
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It is important to stay focused and understand the problem areas and filter them from the
noise received in these situations. The best way to know the ground realities is to get the
feedback with the team on the floor. The employees involved in the process are the best
source of feedback as they know the challenges and give the best indicators of what should be
changed. An anonymous survey sent to key internal stakeholders is another way to seek
feedback objectively by asking specific questions to get a structured “noise free” response.
Data and metrics give a good indication of what is going wrong within the operations. A
breakdown of the process into sub processes and measurement at each sub stage of the
operations will help identify bottlenecks and failure points in the assembly line. In this case
study, the following problem areas were identified which were then segregated into 3
buckets; customer, process and people:
3.1.2 Customer
Missing turnaround timelines for sending reports to the customer
Figure 1: Metrics of Customer Reporting Timeline
Poor quality of query data sent to customer sites
Figure 2: Customer Complaints Trend
Customer Queries not answered on time
3.1.3 Process/ systems
1. System defects leading to poor quality data sent to customers
2. Inadequate testing of the system during testing phase, with no end to end review
of the upgrade on the delivery process.
3. Process gaps where there was no handover from team 1 to team 2 for managing
queries
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4. Inadequate placement of resources in the process with no coverage in certain time
slots leading to delays
5. No metrics to track delivery of team and no ongoing monitoring
6. Issue log to track issues and implementation of preventive actions
3.1.4 People
1. Team lead not thoroughly involved in development of process and not engaged
2. Inexperienced functional lead identified for managing day to day operations
3. Resignation of some members
4. Employee selected on contract for key role in the operations with no clarity on
career ladder
5. Capacity calculation for anticipated growth required to handle workload
6. Talent review and preparation of career ladder to align
7. Motivation and involvement of staff required for overall strategy
3.1.5 Prioritization of focus areas
It is not possible to address all the issue at once and prioritizing issues which need action will
be key to a successful implementation of the turnaround strategy.
Following is the table with priority rating assigned to each focus area:
Table 1: Segregation of Issues and Priority Key for Classification of Issues
Area
Priority
Rating
Customer
1. Missing turnaround timelines 2
2. Poor quality of query data sent to customer sites leading to confusion
at sites 1
3. Customer Queries not answered on time 1
Process/ Systems
4. System defects leading to poor quality data sent to customers 1
5. Inadequate testing of the system during testing phase, with no end to
end review of the upgrade on the delivery process. 2
6. Process gaps where there was no handover from team 1 to team 2 for
managing queries 2
7. Inadequate placement of resources in the process with no coverage in
certain time slots leading to delays 1
8. No metrics to track delivery of team and no ongoing monitoring 3
9. Issue log to track issues and implementation of preventive actions 2
People
10. Team lead not thoroughly involved in development of process and not
engaged 4
11. Functional lead identified for managing day to day operations 4
12. Resignation of some members 2
13. Employee selected on contract for key role in the operations with no
clarity on career ladder 3
14. Capacity calculation for anticipated growth required to handle 4
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workload
15. Talent review and preparation of career ladder to align 3
16. Motivation and involvement of staff required for overall strategy 2
Category Key Expected Change
1 Immediate Action Required 2-3 days
2 High priority 2 weeks
3 Medium Priority 1 month
4
Important for Long term
Implementation 2-3 months
The identification of the research problem is the most difficult and important part of the
whole research process
(7),
Likewise in handling a turnaround situation, identification and
articulation of a problem statement and listing areas of concerns creates the platform to build
actions plans to drive change. Assigning priorities for action plans helps focus on immediate
needs and drive damage control initiatives.
3.2 Stage 2: Acute needs stage
In this stage it is critical to address the areas which need immediate actions. These are areas
which require an aggressive approach towards implementing corrective actions, since the
focus areas identified threaten to impact safety, data integrity, risk assessment and decision
making at the customer end, if not addressed immediately. These issues eventually threaten
to harm the company’s reputation if not addressed with a very high priority.
1. Poor quality of query data sent to customer sites: In the services industry delivering low
quality product will be catastrophic. There can be harm safety, data integrity and decision
making. This needs to be immediately addressed to avoid any further damage.
Actions Implemented: A 100% manual check on data sent to the customer was
implemented and automated delivery reports were stopped immediately.
2. Customer Queries not answered on time. This can be frustrating for the customer who is
expecting an immediate response from a service provider. The customer can escalate this
issue to the outsourcing team who in turn will escalate it to the Board
Actions Implemented: All customer queries were routed to the functional lead who was
assigned the responsibility of addressing the queries. A timeline for response was defined
and communicated to the customer facing team. A tracking sheet was developed to ensure
all queries were tracked and responded within timelines.
3. System defects leading to poor quality data sent to customers: For an IT enabled service
with thousands of transactions per day, a system defect with automated data delivery can
send inaccurate data to the customer and the delivery unit may be completely blinded to
the extent of damage.
Actions Implemented: All automated faxes and emails from the system were stopped and
a manual override was implemented to ensure reports with systems defects did not reach
the customer. A very high priority ticket was raised to development team with a list of all
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identified defects which needed immediate action. Against each of the defects a
mitigation plan was implemented considering the timeline required for fixing the defects.
4. Inadequate placement of resources in the process with no coverage in certain time slots
leading to delays: Having a resource but not placing this resource where there is
requirement is as good as not having someone at all. This needs to be immediately
corrected.
Actions Implemented: Placements of resources was changed with immediate effect to cover a
timeslot which was not covered.
Review of Actions in Stage 2: This is a stage which needs maximum intervention from the
functional lead with a daily monitoring of all action plans implemented with review of related
metrics. Implementation of labor intensive manual oversight is required with a need to
extend beyond job roles and working overtime to cover delivery issues.
The nature of the top management team in a company is of greater significance for success or
failure than any of the company’s products, skills or physical assets
(8),
A standing meeting
by the functional lead explaining the current situation, enlisting the focus areas and
explaining the impact if these are not addressed will engage the team to provide their fullest
cooperation. Working beyond the hours, beyond job roles is the need of the hour. The
functional lead needs to be involved in every action plan and showcase the commitment,
positive attitude to the team. Showcasing the positive intent, willingness to change the
situation and demonstration of an action plan will provide direction to the team.
3.3 Stage 3 restructuring stage
In this stage all high Priority items need to be addressed as soon as the damage control
through the category 1 items has been addressed. These are the key items which need to be
addressed tactically to ensure the keys gaps in the operations are taken care off.
Identification of a root cause for each of the issues identified and implementing appropriate
corrective and preventive actions for the root cause identified needs to be the theme of
restructuring stage.
From the current action plan, there are following focus areas with the corrective actions
which were implemented:
3.4 Missing turnaround timelines
Like in the manufacturing sector, the service sector too has processes which can be linked to
the assembly chain with similar issues, bottlenecks and dependencies. Once services “in the
field” receive the same attention as products in the factory, a lot of new opportunities become
possible
(9),
To identify the root cause of delays, it is important to break down the assembly line into
individual processes, usually available through process flow charts and monitor each
individual process in terms of stress levels, time taken for each step, % utilization of resource
at each stage to pin down the root cause. Below is the breakdown of the process as an
assembly line and supporting data which helped identify the root cause.
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Figure 3: Assembly Line Structure in the Service Delivery Operations
Using the Pareto principle, 20% of areas cause 80% of delays, it was confirmed that the root
cause of delays was at Team 1 and Team 2.
To further drill down the reasons of delays at this step, the “5 whys” technique was
implemented. This technique was developed by Sakichi Toyoda for the Toyota Industries
Corporation. When looking to solve a problem, it helps to begin at the end result, reflect on
what caused that, and question the answer five times. Most obviously and directly, the Five
Whys technique relates to the principle of systematic problem-solving: without the intent of
the principle, the technique can only be a shell of the process
(10),
A thorough process approach towards root cause analysis is key to detection of focus areas
within operations which need attention. Fishbone diagrams or Ishikawa diagrams is another
tool which can be used for the detection of root cause of failure within the operations. A
Ishikawa are causal diagrams created by Kaoru Ishikawa (1968) that show the causes of a
specific event.
[11].
Ishikawa are causal diagrams that show the causes of problems with
factors related to Equipment, Process, People, Management, Environment and Materials
listed as probable causes of errors.
Figure 4: Ishikawa Fishbone Diagram
In this case study the 5 why technique was utilized for root cause analysis
3.5 Delays in product delivery was linked to delayed handover by Team 1 to Team 3
o Why 1: Why were there delays in handover from team 1 to team 3?
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Team 1 could not identify the prioritization of items since the new system did
not adequately provide the pool with timelines. Also placement of available
resources was not matching as per influx
o Why 2: Why could the team not prioritize tasks in the system and why were
these requirements not provided and tested before system rollout?
This was due to fact that the system requirements were conflicting and were
not tested before rollout
o Why 3: Why were these requirements conflicting and why were these not
tested before rollout?
The team leads which provided the requirements did not participate in testing
and the member who tested were not fully aware of the requirements
o Why 4: Why did the team lead not participate in testing or train resources for
systems testing?
The team lead did not put in a plan to allocate and prepare a delegation task
sheet to identify the best resources for testing and did not communicate all the
risks, testing plans etc
o Why 5: Why did the team lead develop risk mitigation and testing plan?
The team lead did not have prior experience in managing change and
implementing major process changes.
3.6 Delays were also due to delayed delivery by Team 2 to Team 3
o Why 1: Why were there delays in handover from team 2 to team 3?
Team 2 could not prioritize the tasks as the system and process did not assist
them in assigning priorities
o Why 2: Why could Team 2 not prioritize the tasks?
Team 2 was split into 2 teams 2 A and 2B with no link or handover process
between the 2 sub teams
o Why 3 Why were these 2 team split and why was there no handover process in
place?
These teams were made and allocated tasks based on a process split (2A
responsible for downloading the customer query resolution and 2B for
entering the query in the system), but the team lead did not identify that a
process flow with handover from team 2A and 2B was critical
o Why 4: Why did the team lead not develop the process?
The team lead was managing other operations and did not have expertise to
develop process workflows and manage a new complex workflow with the
system upgrade
o Why 5: Why was the team lead assigned additional responsibilities with no
prior experience and why was there no training plan implemented?
The additional responsibilities were assigned to team lead based on prior
performance and not on talent. A talent gap analysis was not performed with
no training plan in place.
From this 5 why analysis, the following areas were identified as root cause
i. Inadequate involvement of team lead in driving change
ii. Inadequate system requirements
iii. Incomplete system testing
iv. Inadequate placement of Team 1 resources
v. No handover of process from team 2A to team 2B
Corrective Actions:
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• The functional lead was replaced
• High priority system upgrade requirements were collated and approvals
obtained for an urgent system upgrade
• A new requirement was added in the system to allocate a timeline for
completion of tasks for team 1 and team 2 which can ensure adequate time
is available for the rest of the teams
• A cross functional team was put in place with members having past
experience in handling change, process expertise and domain knowledge
to plan the upgrade, system testing and training
• Team 1 resources were realigned to have maximum coverage based on
influx trend
• Team 2A and Team 2B were merged as one team to eliminate and
handover and related delays
After rollout of the system upgrade teams 1 and 2 were allocated a module in the
system where all the queries were assigned priorities in terms of timeline for delivery.
These timelines were allocated for teams 1 and 2 and were programmed in the system.
As a result of this, the time taken for actions at team 1 and 2 reduced significantly.
Table 2: Data showing Improvement in timelines for handling queries at Team 1 and Team 2
after system upgrade
Final
Product
Delivery
Timeline
Expected
Time for
handling
query
(Hrs)
Actual Time for
handling query
(Average Hrs)
Prior to system
upgrade
Actual Time for
handling query
(Average Hrs)
Post System
Upgrade
24 hrs 4 10 3.3
48 hrs 8 9.5 6
72 hrs 12 9.5 5.05
Total Events
2654 2502
3.7 Tracking quality issues
Occurrence of quality issues in delivery operations is expected. However it is important to
track issues in terms of number of occurrences, type of issues (major or minor, reoccurrence)
and source of issues. A systematic tracking of issues as and when they occur and monitoring
these over a period of time provide useful information about the trend of the issues and
effectiveness of the corrective and preventive issues implemented.
Actions Implemented for driving quality improvements:
• Establishment of a quality goal for the functional team
• Linking of quality goal to each employees performance evaluation
• Rewards and recognition for the best performers
• Developing detailed standard operating procedures where required
• Process training
• Monthly review of quality metrics
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Table 3: Template for Tracking Issues
No
Date of
issue
Logged
Functional
Unit
Process
(area of
delivery)
Type
(Critical,
Major,
Minor)
Root
Cause
Corrective
Action
Preventive
Action
1
2
Figure 5: Issue Trend
Figure 6: Root Cause analysis
3.8 Handling team attrition and team motivation
Employees who perceive that leadership practices emphasize quality, customer service, and
employee development tend to be more satisfied with their jobs and the organization overall.
As a result, customers are more satisfied and will maintain a long-term relationship with the
company. Whether employees are supported and enabled to manifest value for the customer
ultimately depends on leadership (The Ken Blanchard Companies, 2009)
During a period of consolidation where customer issues are peaking, the internal team,
especially the team facing the customer will be under immense pressure. The customer is
expecting immediate turnaround and does not want any compromise in quality. The customer
facing team requires a concrete corrective and preventive action plans with specific dates
which can be communicated to the customer to assure a revival. This pressure is then passed
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on the delivery team. This pressure mounted on the delivery team on the floor adds on to the
already existing pressure of the need to improve with emphasis laid down by the functional
team lead to ensure zero quality issues and on time delivery. This is bound to cause attrition.
Apart from ensuring that the replacements are made with appropriate training and on-
boarding it is important to maintain motivation of the team and equip the team to handle the
pressure. It is important that the team leads maintains communication with all the members
and demonstrate a positive attitude towards the situation. Celebrating small wins with
achievements of smaller milestones provides a good perspective to the team that there is
steady improvement.
Applying job enrichment strategies with the team helps a stronger team involvement in the
execution of team objectives and goals. Job enrichment is directed at improving the essential
nature of the work performed. The idea behind job enrichment is that motivation can be
enhanced by making the job so interesting and the worker so responsible that he or she is
motivated simply by performing the job (Fred C. Lunenburg, 2011),
Five "implementing concepts" for job enrichment are identified. Each one is a specific action
step aimed at improving both the quality of the working experience for the individual and his
work productivity. They are: (1) forming natural work units; (2) combining tasks; (3)
establishing client relationships; (4) vertical loading; (5) opening feedback channels
(14),
3.9 Testing of system upgrades
A software system is usually governed through standard procedure of identification of user
requirements, validation plans, functional qualification plans and user testing plans. It is
important however that the business users identify specific areas of the modules which need
to be rigorously tested. Apply best practices like regressions testing and a complete end to
end testing where testing is just not restricted to the specific module which is upgraded, but
the entire workflow is tested end to end to assess impact f that module change on the entire
delivery line. The intent of regression testing is to ensure that a change such as those
mentioned above has not introduced new faults (Myers, Glenford, 2004), A lot of defects not
picked up in module testing are picked up in an end to end testing. Apart from identification
of a testing strategy, it is important to let the testers trained and prepared for the testing.
3.10 Stage 4: The Stabilization Stage
In this stage it is important to capitalize on the improvement driven through stage 3 on quality
and on time delivery. This is the stage of implementation of long term preventive actions
which will ensure a stable and consistent delivery.
Following areas were handled in stage 4:
1. Delivery Monitoring plan through Metrics:
2. Aligning team goals with unit goals and career mapping
4. Monitoring delivery through metrics
To survive and prosper competing in the information age, companies must use measurement
systems derived from their strategies and capabilities (Kaplan, R.S, 1996),
The Balanced
score card method employs performance metrics from financial, customer, business process,
and technology perspectives. Adding metrics related to employee satisfaction, employee
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turnover and talent reviews to the balanced score card complete all the monitoring elements.
The balanced scorecard seeks to include nonfinancial metrics that are strategically important
for a firm’s long-term performance (Rajiv D Banker et al., 2004),
It is important for the functional lead to carefully select the appropriate metrics which
measure and provide relevant process points within the operations. The following set of
metrics was selected for monitoring and evaluation based on root cause analysis performed in
Stage 2.
Note: These metrics were monitored for the functional team under focus and were in addition
to the business unit performance metrics.
4.1 Business process Timeline/ delivery Compliance
a. % Timeline compliance for team 1 (actual vs expected compliance of >95%), This
compliance includes the number of cases processed within timelines after receipt of data
from customer sites.
b. % Timeline compliance for team 2 (actual vs expected compliance of >95%), This
compliance includes the number of cases processed within timelines and allocated to
Team 3 after receipt of data from Team 1
c. % Queries sent to customer by team 1
d. % Queries resolved by customer and entered in system by team 2
4.2 Business process outlier analysis
e. Breakup of reasons for delays by the team 1 and team 2
4.3 Business process quality
f. Trend of quality issues by team 1 and 2 with breakup of root cause analysis
g. Trend of system bugs and defects post rollout
4.4 Business process Productivity
h. Throughput per employee in team 1 and team 2
i. % Utilization at team 1 and team 2
4.5 Employee
j. Employee engagement
k. Employee turnover
4.6 Customer
l. Average age of all outstanding queries not resolved by the customer
m. Time taken by customer to resolve queries (actual vs expected within 24hours)
n. Customer satisfaction scores related to delivery by team 1 and team 2
A regular review of these metrics helped identify specific areas within the operations which
needed focus or bottlenecks which need additional resourcing. A cross functional review of
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all parameters which include delivery, quality, productivity, customer satisfaction and
employee engagement ensures a holistic monitoring of the operations.
4.7 Establishing direction for the team
4.7.1 “Level 5” strategy cascade
Quite often large organizations make a lot of effort in establishing the company’s vision,
mission, strategy, goals and objectives. These are quite effective at the corporate level and
help drive the goals necessary for growth of the organization. In a multinational company,
individual business unit/product groups/ geographies derive their own strategies based on
corporate level strategies and goals.
Figure 7: Level 5 Strategy cascade
However it is important to establish a similar cascade of strategic action plans within a
business unit and encourage each functional unit to establish their own goals and objectives
which are aligned to the business unit strategy. This “level 4” cascade of the strategy creates
a platform for each employee within the unit to identify his/ her role towards achieving the
Business Unit strategy and ultimately the Company Strategy. This functional unit strategy
then needs to be a part of each employee goals, completing the “level 5” cascade.
This cascade of the company goals into employee goals is described by Peter Drucker as the
concept of Management by Objectives (MBO), MBO also known as management by results
(MBR), is a process of defining objectives within an organization so that management and
employees agree to the objectives and understand what they need to do in the organization in
order to achieve them (Drucker, Peter F, 1954),
4.7.2 Engaging each employee to drive the strategy
After completing the mapping of the company goals to each team member, it is vital to
ensure an effective and assertive communication of these goals. Instead of a top down
aggressive approach of communicating only the level 5 goals, a more effective way is to start
with the company goals and engage each team member on how their performance will help
the company achieve its goals.
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Figure 8: MBO Process
Below is the example in the case study describing how the Level 5 cascade was completed:
4.7.3 Linking of company goals to the employee
Table 4: Linking Company Strategy to Employee Goals
Level Area Goal
1 Company Contribute to developing a healthier world
2 Geography Focus on establishing and delivering integrated
healthcare services in a growing region
3 Business Unit Achieve >10% growth YoY to become a leader in
providing data service in 3 years
4 Functional Unit
within the
Business Unit
Above par performance for delivery and quality for data
queries and establishing a stable and sustainable
operation to deliver growth with a proactive approach
towards managing risk
5 Employee >95% on time delivery with >99% compliance to quality
of data queries
It is important to encourage participation from each employee towards solving challenges
faced by the functional unit. This will create a sense of engagement within the team and an
opportunity for them to contribute. Simply giving employee a sense of agency, a feeling that
they are in control, that they have genuine decision making authority can radically increase
how much energy and focus they bring to their jobs
(19),
4.8 Stage 5: The revitalization stage
The outcomes of the turnaround strategies can result in
5 Rapid Decline: This is possible for situations where a bad strategy was chosen for
implementation in the acute needs stage (Stage 2) or a good strategy was put in place but
these were not implemented as required. A retrenchment strategy will need to be
considered. The Retrenchment strategy of the turnaround management describes wide-
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ranging short-term actions, to reduce financial losses, to stabilize the company and to
work against the problems, that caused the poor performance
(20),
6 Continued failure: This is possible when the Acute needs stage (Stage 2) was handled
well avoiding a rapid decline in delivery but failure at the Restructuring stage (Stage 3),
The loops holes have been temporarily plugged but the root cause of failures have not
been dealt with, causing the temporary corrective action starting to fail, over a period of
time. The action plans implemented in Stage 1 are labor intensive and will not sustain in
the long term.
However if the leadership team still believes, a repositioning is possible, action plans
need to be restructured as described in stage 3 aggressively to move from an acute needs
stage to stabilization stage (Stage 1 to 3), Failure to do so will need a decision for
retrenchment.
• Success: If the outcome of the new strategy turns out to be good with progress from stage
1 to stage 4, evident through the key delivery metrics, a turnaround is called successful.
At stage 5, Revitalization Stage, the company needs to leverage on the consistent delivery
demonstrated to the customer and focus on creating new delivery benchmarks and
creating differentiators which can be offered based on the scalability introduced in the
operations. This focus will fuel in the desired growth and motivate the team to expand
market share, enter new markets or add on new products.
Figure 9: Stages of Turnaround Strategy
The following focus areas were identified in Stage 5
1. Assessment of scalability of existing operation with respect to headcount, team lead
talent, system performance and productivity
2. Process reengineering in terms of handling queries where sending queries to customers
via fax was followed up by phone calls to ensure timely query resolution.
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3. Upgrade of customer portal which gave customers a view of project status with listing an
graphs along with all outstanding queries and an option to solve the query online
4. Training and coaching of the team leads to handle growth
5. Recommendations/ suggestions/ findings
5.1 Implication for leadership and management
The purpose of sharing this case study is to develop a perspective of strategic choice for firms
in decline phase especially for fast growing units which have shown the market potential,
established a reputation in its entrepreneurial growth stage but are unable to cope up with the
growth. A fast growing unit showing good response in its birth and growth stage is likely to
choose Growth as a strategy instead of retrenchment and push towards establishing stability
and strive to move towards maturity phase. The confidence showcased through high levels of
past financial performance and availability of required resources will support their strategic
plan. However choosing growth as a turnaround strategy requires a structured approach
towards the implementation of the operational action plan.
5.2 Implication for managers
This case study also highlighted the role and application of management best practices in the
successful implementation of the turnaround strategy. These include viz planning and
organization, prioritization, root cause analysis, quality management, decision making under
certainty, employee engagement, leadership, role of metrics, balanced score card, operational
control and management by objective .In the services industry utilization of best practices
applied in the manufacturing industry with an assembly line approach may be applied
successfully. This case study has shown that a manager plays a crucial role in
implementation of the growth strategy crafted by the leadership team.
5.3 Limitations of the study
The scope of this case study is limited to a growing unit facing a turnaround scenario with
delivery issues in the growth phase and the leadership focusing on growth as a strategy
instead of retrenchment.
5.4 Conclusions
This case study demonstrates that the implementation of a transformational strategy requires
a multi-dimensional focus across all areas of the operations. Identification and
implementation of action plans across focus areas of process, technology, people and
customer requirements ensured that all areas of the operations were addressed. A
prioritization of action plans identified in each focus area and staging the implementation
through different phases with checkpoints at each stage helps in a structured approach
towards tracking progress. The role of leadership in driving action plans is vital to ensure a
successful transformation is achieved.
5.5 Future Work:
A study of a structured strategy to handle growth with a proactive approach towards handling
challenges which growth brings across leadership/ management, technology and process
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investments, continued focus on quality and ability to handle growing customer base should
be conducted which could include case studies and best practices across various industries.
6. References
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