Turnaround plan
When is the turnaround plan developed?
The turnaround plan is normally devised on a high level only during turnaround situation assessment, and then fine-tuned during turnaround plan refinement.
Characteristics of a successful turnaround plan
Stuart Slatter & David Lovett describe how executing the components of a turnaround plan form the basis of turnaround success.
Comprehensive
All the components of the turnaround plan are applied "right away and all at once". A common source of failure is to initiate a too narrow turnaround approach.
Non-linear
Key issues are addressed simultaneously rather than in sequence.
Wide-ranging
A turnaround plan should be broad in scope - dealing simultaneously with:
- Hard and soft issues.
- Tackling revenue enhancement and cost reduction.
- Launching strategic and operational initiatives.
- Addressing both short- and long-term priorities.
Why have a turnaround plan?
Focus
A turnaround plan focuses the attention on strategic direction and specific turnaround strategies and actions.
Process
A turnaround plan provides a process for mobilisation the organisation around the turnaround objective, and rebuilding support from all stakeholders.
Structure
A turnaround plan provides a roadmap with a turnaround agenda, initiatives and actions and achievement milestones.
Performance measures
A turnaround plan provides KPIs for the turnaround scorecard.
Format of the turnaround plan
- Executive summary.
- History.
- Internal assessment - strengths and weaknesses, historical financial analysis.
- External environment - industry drivers, competitive forces, threats and opportunities, segmentation, market share, market attractiveness.
- Causes of distress - internal and external.
- Approach to:
- Reverse causes of distress.
- Overcome internal and external constraints.
- Overcome the financial crisis.
- Rapidly improve bottom-line results.
- Stabilisation plan.
- Funding plan.
- Turnaround strategy to fix the business in terms of strategic repositioning, reorganisation, revenue enhancement, cost reduction and asset reduction.
- New organisational structure.
- Functional plans - sales & marketing, manufacturing, etc.
- Turnaround leadership.
- Turnaround stakeholder management.
- Turnaround project management.
- Financial projections.