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.

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A successful turnaround requires all the constituent components of a turnaround plan to be applied simultaneously.