| Step 3: Proper Treatment | | | | further. |
| Do you know why companies fall sick and die; that | | | | PRINCIPLE 16: JUST AS THE SURGEON OPERATES |
| there are panaceas that can turn a critically ill | | | | ON ONLY ONE PATIENT AT A TIME, SO A SICK |
| organisation around into a healthy one and proper | | | | COMPANY NEEDS TO CONCENTRATE ON ITS CORE |
| treatment is necessary as the remedies can | | | | COMPETENCE |
| sometimes be worse than the disease? | | | | During the turnaround phase when the company is on |
| PRINCIPLE 13: TO TREAT THE SYMPTOMS, KNOW | | | | the brink of bankruptcy, there are time and resource |
| YOUR COMPETITORS AND CUSTOMERS. TO | | | | constraints. The company needs to concentrate all its |
| ELIMINATE THE ROOT CAUSE, KNOW THE | | | | resources on doing a few major things right. You |
| MARKET | | | | should have a laser-sharp focus just as a surgeon |
| Sun Tzu, the strategist in The Art of War said: "If | | | | focuses on only one operative field during surgery. If |
| you know yourself and the enemy, you need not | | | | you are a patient, you will be worried if your surgeon |
| fear the result of a hundred battles." Though it is | | | | operates on you and another patient simultaneously. |
| important to know your competition, one should not | | | | Similarly, an ailing company needs to concentrate only |
| do so at the expense of neglecting one's customers. | | | | on its core competence and try to rid itself of |
| Merely knowing the competitor is equivalent to a | | | | businesses that do not help the bottom line or |
| person driving a car and constantly looking out for | | | | immediately improve its cash flow. In such a critical |
| the competitor's car at his side. He is so pre-occupied | | | | situation, you often can succeed at a far lower cost |
| with the competitor that he fails to look at the road | | | | by ensuring that you do a better job with the |
| ahead and may run into hazards. | | | | businesses and skills you already have. |
| Knowing only the customer's present needs is also | | | | In order to release resources for its core business, |
| merely treating the symptom and not the ailment. | | | | die ailing company has to divest any unprofitable or |
| Today's customers are more demanding - they want | | | | non-related businesses. Quite often, in their bid to |
| more of those things they value. If they value | | | | bolster sales performance, troubled companies clinch |
| cheaper prices, they want even lower ones. If they | | | | lots of sales contracts that have poor profit margins. |
| value convenience or speed at the time of purchase, | | | | This is tantamount to buying sales which often turn |
| they want it even easier or faster. Hence, companies' | | | | into subsequent financial losses. Such a scenario is |
| efforts may yield temporary results if they only | | | | equivalent to having a lot of sizzle but no steak. |
| deliver what the customers want now. These | | | | It is better to amputate all loss-making ventures and |
| attempts may not sustain the company's long-term | | | | unprofitable sales whenever possible. According to |
| growth, as they are unable to optimise on | | | | the standard surgical procedure, if there is pus, get it |
| profitability, resource allocation and opportunities. | | | | out. In fact, the famous Chinese military strategist |
| To ensure vibrant business and continued long-term | | | | Sun Tzu believed in the principle of concentration to |
| growth, companies must strive to drive the market. | | | | fight a war. He said: "The strength of an army does |
| They need to pre-empt both the customers' and | | | | not depend on large forces. Do not advance relying |
| competitors' present and future developments. 3M's | | | | on sheer numbers. Rather, one must concentrate |
| Post It notes, which nobody had asked for | | | | one's forces and anticipate correctly the movement |
| previously, are now one of the most commonly used | | | | of the enemy in order to capture him." |
| office products. Microsoft's operating software | | | | PRINCIPLE 17: COST CONTROL IS AN IMPORTANT |
| Windows came not from responding to customers' | | | | ANTIDOTE OR EFFECTIVE REMEDY TO |
| demands or competitors' threat, but from anticipating | | | | ADMINISTER IN DESPERATE TURNAROUND |
| them. The 1980 launch of CNN by Ted Turner was | | | | SITUATIONS |
| ridiculed by TV veterans CBS, NEC and ABC. They | | | | Unnecessary cost is always your number one enemy. |
| failed to tap a niche that no one had yet asked for: a | | | | You must attack it, and justify and challenge every |
| 24-hour news service. Other great innovations of our | | | | expense that you incur. Whether your company is in |
| time including the personal computer, jetliner and | | | | trouble or not, cost will kill you even if you come up |
| Internet were created without any customers or | | | | with better products. If your cost to make |
| competitors in sight. Therefore, one has to | | | | something is your competitor's selling price, you |
| understand the market, otherwise it may destroy | | | | cannot stay in business for long. |
| you. | | | | Any first-year business student will know how to cut |
| PRINCIPLE 14: A SICK COMPANY NEEDS TO | | | | costs. The key here is how the costs can be cut to |
| UNDERGO SURGERY, RESUSCITATION AND | | | | restore financial health in the short term without |
| NURSING | | | | hurting the ailing company in the long term. The |
| There are many companies falling sick due to | | | | turnaround manager should discuss the relevant |
| corporate diseases such as global economic recession, | | | | details with the respective department managers, |
| rapid changes brought about by globalisation, terror | | | | soliciting their advice as this can improve remarkably |
| attacks and incompetent management. When a | | | | the chances for full co-operation and success. |
| company falls sick, it needs to undergo the three | | | | Sometimes, staff can offer valuable suggestions to |
| phases of corporate turnaround, namely: | | | | save time or money or both for the company. |
| Phase 1: | | | | Remember, this is not the time to create |
| Surgery: To restructure the troubled organisation to | | | | unnecessary stress by finger pointing. The key is to |
| face the harsh new reality and quickly improve its | | | | foster a conducive environment for problem-solving, |
| cash flow. | | | | establish solidarity and put everybody's self-interest |
| Phase 2: | | | | to work for future gains. |
| Resuscitation: To revitalise the business so as to | | | | Sometimes, cost reduction can be achieved through |
| increase its sales revenue and profits. | | | | streamlining procedures and operations. Through this, |
| Phase 3: | | | | duplication and inefficient methodologies can be pared |
| Nursing: To rehabilitate a strong and healthy | | | | down to a minimum. In some instances, similar or |
| corporate immune system or culture in order to | | | | more superior results are achieved through |
| sustain long-term growth. | | | | outsourcing. Outsourcing provides you with the |
| For complete corporate recovery, it is important to | | | | advantage of being able to focus on those areas |
| finish the full course of antibiotics prescribed in all the | | | | that are vital to the company's operations, instead of |
| three phases. Restructuring alone is not good enough. | | | | being distracted by things that have little impact on |
| As a doctor once said: "The surgery was good, but | | | | the company's success. People-related expenses can |
| the patient died." Without the resuscitation and | | | | be reduced remarkably through cross-fertilisation of |
| nursing phases, it is like merely upgrading a | | | | multi-disciplinary skills. Productivity can be improved by |
| cancer-stricken patient to another ward in the | | | | deploying staff to perform high value-added duties. |
| hospital - it does not cure the disease. Building a | | | | Remember, every cent of cost saved ot cut goes |
| strong and healthy company takes a long time -- it is | | | | right into the bottom line. |
| not a one-time inoculation. It is like taking vitamin pills | | | | PRINCIPLE 18: DOWNSIZING IS LIKE AMPUTATING |
| every day for the rest of your life in order to build a | | | | A PART OF ONE'S BODY, CREATING SIDE EFFECTS |
| strong corporate culture which can manage changes. | | | | Downsizing is like an amputation which removes part |
| PRINCIPLE 15: RESTRUCTURING EXERCISE | | | | of one's body but creates side effects such as low |
| REQUIRES THE SURGEON'S SKILLS AND CALLS FOR | | | | staff morale and bad reputation. It is not the only |
| THE 4Cs: COMMUNICATION, CONCENTRATION, | | | | remedy available to managers to improve a |
| COST CONTROL AND CASH FLOW IMPROVEMENT | | | | company's performance. Other remedies include |
| Restructuring is not a slash-and-burn exercise, but | | | | increasing sales revenue and other cost control |
| one that calls for the surgeon's skills. It does not | | | | measures. |
| require the use of a parang or long sword but the | | | | There is no problem in removing the corporate fats, |
| surgeon's knife. During a restructuring exercise, | | | | dysfunctional personnel or cancerous tumours in the |
| remember the 4Cs. | | | | company. The problem with one-size-fits-all |
| Communication: The manager needs to personally | | | | downsizing is that good people also get fired in the |
| communicate with the staff. Just as a doctor does | | | | process. In some instances, 'corporate genocide' or |
| not delegate to a nurse the task of briefing the | | | | the deliberate extermination of a healthy business is |
| patient about his ailment and treatment. You need to | | | | often committed in the name of maximising |
| communicate the restructuring plans truthfully. People | | | | shareholders' returns. However, in some instances, |
| are not against bad news per se but they want to | | | | downsizing is inevitable. But one has to carefully |
| see quick results. | | | | manage the aftermath of the downsizing exercise. |
| Concentration: The surgeon operates on only one | | | | As the saying goes: "Even rats will desert a sinking |
| patient at a time. Similarly, the sick company needs | | | | ship". Haemorrhage or the exodus of good calibre |
| to concentrate on its core competence. In bad times, | | | | staff may take place and deal quick and severe |
| you need to concentrate even more as resources | | | | blows to the company's vital organs. The ailing |
| are scarce. If possible, sell away all non-core | | | | company is unable to attract good calibre staff to |
| businesses. | | | | replace those who have left since its reputation in |
| Cost control: Cut costs to the bone without injuring | | | | the marketplace is tarnished. |
| the muscles and organs. If circumstances permit, | | | | You must try to win over the trust of the existing |
| amputate non-profitable businesses rather than try to | | | | staff after a downsizing exercise. Silence is not |
| bandage and apply stitches. | | | | golden. Communicate to the staff the reasons for |
| Cash flow improvement: Cash flow is your life blood. | | | | this exercise and the plans to resuscitate and turn |
| Slipping into losses may give you a headache, but a | | | | the company around. Be humane in treating the |
| sudden shortfall in cash flow will cause an immediate | | | | people to be fired. The golden rule in a downsizing |
| massive migraine. Try to cut your inventory, | | | | exercise is: "Do not do unto others what you do not |
| purchases, perks, credit to customers, outstanding | | | | want done to yourself". For one day, you may be |
| debts and related items without hurting the company | | | | the person to be fired too. |