Six tips for executing a successful turnaround
05 May 2015 -
As disappointing McDonalds figures trigger a rethink at the brand’s HQ, we look at how floundering businesses can put themselves back on track
McDonald’s has vowed to streamline its “cumbersome” management structure and focus on providing greater customer choice, following a US sales dip of 1.7% for the first quarter of 2015. Starting with cutbacks in annual costs of up to $300 million (£198m), McDonald’s chief executive Steve Easterbrook has pledged to overhaul the multinational as it aims to fend off emerging threats from the “artisan food” approach of rivals Five Guys and Chipotle.
While McDonald’s is still some way short of the kind of system failure that has ensnared – say – Tesco, its latest chapter has highlighted the pressures that managers face to come up with creative solutions when a brand is faltering.
Here are some methods that may proven to revive a flagging enterprise…
1. Plug financial leaks
Check where the company is losing money. Before the losses can be reversed, it is vital for leaders to regain firm control of the finances. Cavendish business coach and managing partner Colin Thompson says there is a variety of ways to cut costs, such as stretching out payables, pulling in receivables, renegotiating contracts – and offering clients discounts if they make advance payments.
2. Refresh your brand
Already this year, tyre manufacturer Dayton has pulled in its brand for a re-spray by launching a range of eight new tyres together with a special “Tyres for Truckers” marketing campaign. The idea, according to marketing director Matt Loos, is to focus the products 100% on their users – workers who are “keeping their head down and doing what it takes to keep moving” to meet deadlines and earn money. It’s a world away from promoting the tyres as merely a line of vehicle accessories. However, James Heaton – president of marketing agency Tronvig Group – warns that bosses should not mistake a brand as tired just because they are fed up with looking at it.
3. Never underestimate small victories
Businesses sometimes need to stir up momentum in niche areas to revive their fortunes. Small wins are often overlooked in favour of big, lucrative contracts, but when your company is stuck in a rut, being more receptive to the potential of lower rewards could eventually lead to even greater successes than you hoped for. David Lewis, managing director of design and digital agency LEWIS, recalls how doing a small, ad hoc project opened up doors for his firm. “In 2002,” he explained, “we were asked, out of the blue, to design a small animation for Scottish Provident. It wasn’t a big job – we invoiced around £480 for that initial piece of work, but they have over time become one of our biggest clients. Our work with them opened doors to other brands such as Scottish Mutual, James Hay, Cater Allen Private Bank, Santander Wealth Management and Santander for Intermediaries.”
4. Keep it simple
By going back to basics, business leaders are often able to better to avoid the issues that are holding their company back, and it can be the most subtle of changes that put a firm back on the path to success. As well as boosting investment in staff and gear, Fitness First boss Andy Cosslett said that he began his turnaround of the gym chain by removing computerised turnstiles from the firm’s premises. “When I was being shown around the clubs, everyone wanted to show me the gym equipment,” he explained. “But I became obsessed with the big, ugly metal turnstiles in reception. I thought, ‘What are these here for? We’re not at a football stadium.’ But the people in the business didn’t even see the problem.”
5. Unite your business around a distinct set of goals
By sharing a future vision of the firm with employees and explaining the opportunities it will open up for them, leaders are able to gain the support of workers and allow them to become part of those ambitions. However, eCornell CEO Chris Proulx advises that this must be carried out with a degree of patience. “Accept that it may take time,” he told entrepreneur.com. “Things will not bounce back instantly. Don’t be fooled that an amazing opportunity will drop onto your lap. It’s going to take hard work and courage. Things will never be the same – and neither should they.”
6. Promote and recruit talented staff
A downturn in a company’s fortunes can present an ideal opportunity to recruit new and motivated staff, according to Doug Yakola, senior partner in McKinsey Recovery & Transformation. In a report published late last year, Yakola advised bosses to use turnaround as a means of developing new leaders: “I’ve been through multiple crises where the people who added the most value and impact weren’t the ones sitting around the table at the beginning. I have often found great leaders two and three levels down who are just waiting for an opportunity – and the fact that they can be part of something bigger than themselves, saving a company, is often enough to attract and retain them.”
For more thoughts on change management, check out CMI's special toolkit
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