(Thommes is a director at Beane Associates, Inc., a turnaround and crisis management consulting firm based in Wilmington)
By Jeffrey Thommes
We often talk about the “conventional wisdom,” the term often attributed to economist John Kenneth Galbraith to neatly describe widely accepted truths held without proof that become unnecessary obstacles to success. And we often hear trusted “experts” confidently espousing the conventional wisdom, making it even harder for us to determine what is and what is not. As a turnaround professional who once worked for a company that needed turning around, I’ve heard – and observed – many conventional wisdom barriers expressed from both sides of the table.
Most people connect quickly with the phrase that “it’s not what you don’t know that can hurt you; it’s what you know that isn’t so.” In fact, those involved in turnaround management long enough realize that you can just as easily be hurt by both.
For most challenged businesses, the first awareness of turnaround firms occurs during better economic times. I know because I was there. Like most everyone else I felt that this was help I would never want or need. I believed that experienced leadership and talent avoided big problems and delivered results — but that’s not always true. I’ve found from experience that some of the conventional wisdom I held to can lead to resistance to expertise that really can help. Here are some examples I have witnessed.
We can’t afford any “help.” We’ll wait until we emerge or have no choice. Time is not on your side. Nearly all distressed businesses enter a realm that is beyond in-house expertise and requires immediate attention. Waiting too long usually results in more costly outcomes with fewer opportunities than preemptive action can deliver.
“We can do this on our own.” Any purposefully practiced skill combined with extensive training can become expertise. In nearly all cases, however, a management team’s excellence lies in moving its operations forward, not in turnaround. The skills that make the team excellent in good times become detriments when things go bad. It’s human nature. We just fall back to the things we are good at to resolve problems. This results in statements like “we just need a little more ______.” Fill in the blank. Relief? Sales? Time? Money? Trying to figure out what you really need sucks up time and puts you in a deeper hole. It’s far better to get help.
A turnaround firm – especially if promoted by a lender – does not have my best interest in mind. Few businesses recognize how to prioritize properly in a distressed situation. Inappropriate interpretation at this stage can be devastating. Your creditors don’t want to lose you as a customer any more than you want to lose customers. Losing you hurts them too. Good turnaround firms define and guide realistic priorities. Good leadership confronts the challenge of accepting the path to change and supporting the cultural shifts needed to put it into effect.
“We can’t afford any “help. We’ll wait until we emerge or have no choice.” Don’t believe anyone who suggests there are tricks to getting out of a bad scenario or in dealing with your creditors. Success in distress comes through direct and open development of facts that result in realistic plans executed with discipline and hard work. That may not be the answer you wanted to hear, but it is what a reputable turnaround firm will tell you.
The firm with the most experience in my industry is the best firm to choose. This is comforting but not necessarily a good beacon. The best firm is the experienced and accredited consultant that you can trust and work with. Even if your turnaround consultant isn’t familiar with your industry, you should be able to explain enough about your business to give your consultant a good understanding of the issues you’re facing. At Beane Associates, we worked a few years ago to turn around a specialty pen manufacturer. When we got started, we knew a lot about using pens, but very little about making them. Yet our effort was successful. It’s not how much you know about the industry but how well you can develop a sustainable working plan.
“All I need is the good counsel from associates who have turned their businesses around. “Most business people have dealt with difficult situations and have well developed areas of competence. There is a big difference between accomplished management in a positive business environment and the expert whose profession is dedicated to turnaround. The best turnaround specialists belong to professional groups such as the Turnaround Management Association (TMA). Use your associates as sounding boards and for support, but rely on the experts to get the job done well.
