Reflecting on my experiences in turnarounds, I can see common threads in the causes behind corporate decline. This spans diverse sectors from business support services to engineering. Shifting the focus away from external factors – like changes in environmental conditions – to the internal dynamics, here are my Slippery Six:

Inadequate Controls: Without robust controls, especially over cash flow, a company faces heightened vulnerability. Successful businesses prioritise cash generation, it’s pivotal in sustaining operations.

Lack of Transactional Data: Clean and reliable data is the lifeblood of effective turnaround. Operating without it is like driving blindfolded. Without transactional data, deciphering true costs becomes a challenge – leaders then need to make assumptions, refining them regularly. In my experience, even a small improvement in visibility in data can make a marked difference in performance and – crucially – morale.

Lack of Sales: Obvious but critical issue. A dearth of new opportunities may stem from a lack of understanding of customer needs, outdated products, or an underperforming sales team. Go back to basics early – closely monitor sales activity; this addresses the issue at hand and also allows new leaders to start understanding customer-related activity early on.

Over-reliance on Big Projects: Beware the allure of a game-changing project just around the corner. Qualifying these properly is key, they are often non-existent or further away than anticipated. Responsible resource allocation is vital for pursuing these potentially transformative ventures, without betting the house on them.

Poor Management: Distinct from poor leadership, this is about the ability of managers to manage people. Recent research from the UK’s CIPD indicates that 26% of managers lack any formal management training (it will be higher than this in smaller businesses). Investing in management skills is unfashionable but critical –  especially for distressed businesses.

Inertia: at the core of most issues lies poor leadership which paralyses businesses. This permeates all aspects of an organisation. Identifying and addressing this issue is often the starting point for a new leadership appointment.

In the turnaround scenarios I’ve seen, all of these internal factors have coexisted to some degree, presenting a challenge. Successfully leading a turnaround involves diagnosing the underlying issues as effectively as possible within a quick timeframe (think ‘good enough’ rather than ‘perfect’) and then deciding which are the most urgent matters to address. Achieving quick wins in those initial weeks and months is critical, to set up the turnaround for success.

Which of these categories have you encountered, and which do you believe should be the top priority for a newly appointed leader? Please feel free to share any thoughts.