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Seriously ill companies need to be placed in intensive care unit. As with grave medical crisis, dealing with the business failure quickly becomes extremely exhausting and requiring special care and medical attention. You need a team of specialists to intervene and take the swift control of events. This is akin to the manner that doctors, counsellors and insurance companies step in to sort out the problems in the life of a gravely ill patient.
As in a medical crisis, a companys initial ill health may suddenly deteriorate into life threatening mode. The ailment appears mild initially and may have already established a foothold in the patient much earlier. Sometimes, it can be a case of bad DNA in its business model or a genetic flaw in its corporate culture. These weaknesses predispose the firm to failure. As with very sick patients, the companys health may spiral quickly downward and eventually become irreversible. It is at this stage that these symptoms of failure become apparent. By the time the management and all the other interested parties are aware of the problem, the crisis has already escalated beyond redemption.
Many companies are falling sick due to corporate diseases such as global economic recession, competition brought forth by globalization, terrorist attacks and diseases such as SARS and bird flu. When a company falls ill, it needs to undergo the three phases of corporate turnaround, namely:
Phase 1: Surgery: This is to restructure the troubled organisation to face the harsh and new reality and quickly improve its cash flow. During this phase, the company may need to downsize, right size, re-engineer or delayer in order to turn the ailing company around. The use of financial control is critical in this phase.
Phase 2: Resuscitation: This is to revitalise the business so as to increase its sales revenues and profits. After obtaining a brief reprieve from cash flow collapse, the company has to grow its business quickly. The use of marketing strategy is important during this phase.
Phase 3: Nursing: This is to nurture and establish a strong and healthy corporate immune system in order to sustain long-term growth. After growing the business, the company needs to be strengthened to prevent a recurrence of the problems while equipping itself to handle future changes in the marketplace. The emphasis here is on innovation.
For complete corporate recovery, it is important to finish the full course of antibiotics prescribed in all the three phases. Some companies may need heavier dosages of surgery while others may require more of resuscitation and nursing. Mere restructuring through surgery alone is not good enough. As a doctor once said: The surgery was good but the patient died. Without the resuscitation and nursing phases, it is akin to not completing your antibiotics and the bacteria are not completely eradicated from the system. During the next attack, the bacteria may become more virulent as they have built up resistance against the antibiotics. Then, you may need a stronger spectrum of antibiotics to treat the mutated bacteria.
Building a strong and healthy company takes a long time in Phase 3 “ it is not a one-time inoculation. It is like taking vitamin pills every day for the rest of your life in order to build a strong corporate culture, which can embrace changes.
There is another medical parallel in the deployment of techniques used in the three phases. Phases 1 and 2 can be compared to the use of Western medical system with its invasive, scientific and chemical approaches. The Western medical approach is very suitable for acute and life threatening situations where time is of essence. Phase 1 and 2 are the science of the corporate turnaround process. In phase 3, the use of traditional Chinese medicine (TCM) is more applicable, natural, holistic and philosophical. This renders it suitable for chronic and comprehensive cures. Phase 3 is the art of the corporate turnaround process.
To ensure full recovery, remember to finish the full course of antibiotics of surgery, resuscitation and nursing by the turnaround doctor.
As in a medical crisis, a companys initial ill health may suddenly deteriorate into life threatening mode. The ailment appears mild initially and may have already established a foothold in the patient much earlier. Sometimes, it can be a case of bad DNA in its business model or a genetic flaw in its corporate culture. These weaknesses predispose the firm to failure. As with very sick patients, the companys health may spiral quickly downward and eventually become irreversible. It is at this stage that these symptoms of failure become apparent. By the time the management and all the other interested parties are aware of the problem, the crisis has already escalated beyond redemption.
Many companies are falling sick due to corporate diseases such as global economic recession, competition brought forth by globalization, terrorist attacks and diseases such as SARS and bird flu. When a company falls ill, it needs to undergo the three phases of corporate turnaround, namely:
Phase 1: Surgery: This is to restructure the troubled organisation to face the harsh and new reality and quickly improve its cash flow. During this phase, the company may need to downsize, right size, re-engineer or delayer in order to turn the ailing company around. The use of financial control is critical in this phase.
Phase 2: Resuscitation: This is to revitalise the business so as to increase its sales revenues and profits. After obtaining a brief reprieve from cash flow collapse, the company has to grow its business quickly. The use of marketing strategy is important during this phase.
Phase 3: Nursing: This is to nurture and establish a strong and healthy corporate immune system in order to sustain long-term growth. After growing the business, the company needs to be strengthened to prevent a recurrence of the problems while equipping itself to handle future changes in the marketplace. The emphasis here is on innovation.
For complete corporate recovery, it is important to finish the full course of antibiotics prescribed in all the three phases. Some companies may need heavier dosages of surgery while others may require more of resuscitation and nursing. Mere restructuring through surgery alone is not good enough. As a doctor once said: The surgery was good but the patient died. Without the resuscitation and nursing phases, it is akin to not completing your antibiotics and the bacteria are not completely eradicated from the system. During the next attack, the bacteria may become more virulent as they have built up resistance against the antibiotics. Then, you may need a stronger spectrum of antibiotics to treat the mutated bacteria.
Building a strong and healthy company takes a long time in Phase 3 “ it is not a one-time inoculation. It is like taking vitamin pills every day for the rest of your life in order to build a strong corporate culture, which can embrace changes.
There is another medical parallel in the deployment of techniques used in the three phases. Phases 1 and 2 can be compared to the use of Western medical system with its invasive, scientific and chemical approaches. The Western medical approach is very suitable for acute and life threatening situations where time is of essence. Phase 1 and 2 are the science of the corporate turnaround process. In phase 3, the use of traditional Chinese medicine (TCM) is more applicable, natural, holistic and philosophical. This renders it suitable for chronic and comprehensive cures. Phase 3 is the art of the corporate turnaround process.
To ensure full recovery, remember to finish the full course of antibiotics of surgery, resuscitation and nursing by the turnaround doctor.