© Copyright 2004 a.r.herrington
High Tech Turnaround Specialists are a relatively new breed. The High Tech Turnaround Specialist focuses on recovering crisis situations in the R and D Area of the business. These situations can be technical, schedule, cost, market or personality driven. (See "R&D Challenge Resolution" for examples.) The client - usually a President or VP - knows there is a crisis but has neither the time nor the specific experience needed to recover the situation. His internal resources may be unavailable, unsuitable, inadequate or discredited. He may be unable to find a long term leadership-management candidate or maybe unwilling to pass on an existing crisis to a newly hired senior manager who has medium or long term circumstances to manage. In well established businesses downsizing may have eliminated back-up managers.
The Turnaround Specialist, operating as either an interim manager or consultant, temporarily takes over a new or existing or troubled project's technical leadership and decision-making processes to guide it on to a new path that meets the businesses objectives.
This article answers the following questions: What can a High Tech Turnaround Specialist achieve and in what circumstances ? What steps does the Specialist take ? (Including a link to Article 4: Solving Critical Problems with Communications. ) What should a business expect ? Selecting a Specialist.
The turnaround specialist enters a company with a fresh eye and enjoys objectivity - he has not been involved in previous situations or relationships or decisions within the business. This professional is able to spot problems and create new solutions that may not be visible to company insiders simply because the latter are too close to the subject.
The specialist has no political agenda or other obligations to colour the decision-making process, allowing him to take the sometimes unpopular yet necessary steps to achieve the clients objectives. When the task is completed the turnaround specialist leaves the company giving a new or existing manager clear operating room un-encumbered by the consequences of tough decisions.
The company may be facing a critical product non-availability or deficiency and the loss of millions in revenue. A turnaround specialist brings experience in crisis situations. Like a paramedic, his talent lies in discovering the often hidden technical information already existing within the business by communicating effectively and sympathetically with everybody within the business and then making critical decisions quickly in order for the patient to have the best chance at recovery. His skills are broad; he does not bring a narrow specialization but rather a breadth of experience with a range of high tech businesses, situations, technologies, products, markets and people.
Operating in the eye of the storm, the turnaround specialist must deal effectively with critical technical people, worried executives, wary customers, a worried president and perhaps a nervous board of directors. The specialist must sift a solution from a sea of inconsistent data and arrive at a coherent technical, business (market, customer, resource), personnel and schedule strategy to recover the situation.
With the highest stakes on the table, clearly this is no assignment for the faint-hearted.
A company may require the services of a turnaround specialist for many reasons. Here are the most common signs of trouble. In most cases a business will display more than one of these signs:
Market Lag
Changes in the marketplace have bypassed a company, leaving it with sagging sales and lost market share. For some, the deficiency is with product technology. For others, the problem lies with the definition of new products reflecting the businesses failure to keep up with market needs.Lack of Leadership and Management Systems
Some technical businesses get into severe problems because of unrealistic scheduling and poor project management. Others fail to measure technical risks and account for them in managing the project portfolio and the structure of the product development projects they undertake.Over-Diversification
Some businesses try to increase margins or reduce risk by vertically or horizontally integrating or taking on unfamiliar technology outside of their core specialization. This leads to lack of technical focus, inadequate technical resources and lack of technical depth.Explosive Growth
High tech companies drive very hard for fast growth, often without adequately planning for its consequences. This can lead to burn-out amongst technical personnel, high personnel turnover rates and unacceptable levels of product failure or performance, or the inability to support the product in the field.
Operating Without A Business and/or Operating Plan
Surprisingly, a number of growing companies operate without a business and/or operating plan. Managements sometimes consider that their skills and market knowledge make such plans unnecessary and limit their flexibility excessively. Their plan may change overnight because it is based on their own "feel" for the market. In other cases the business plan exists in everyone's head rather than in writing. The result is that plans are carried out according to individual interpretation leading to overload of existing R and D resources and 'thrashing' (rapid switches in direction) wasting and defocusing the business most critical resource, its technical specialists.
Ineffective Management Style
The president and founder of a company - often a technical specialist - may be unable to delegate authority. No decision, big or small, can be made without his blessing. As a result, the rest of the management staff is without solid experience or any feeling of ownership. As the business grows it becomes too large for the founder's style to handle; a style that has prevented to the development senior managers to a level where they can handle their parts of the business. Another defective management style is an excessive focus on being market-led, resulting in suffocation of internal initiative and defection of critical technical specialists.
Precarious Customer Base
Few businesses have the luxury of determining the exact proportions of their customer base. Nonetheless, some companies do put too many eggs in one basket, with the result that they may need to execute a very rapid change in technical direction in order to survive. Sometimes they cannot achieve this change in direction with existing leaders and managers.
Overrunning People Capacity
Businesses require significant changes in management style at each doubling in size - and unless they have put in place a plan to train and/or hire people ahead of their growth they run out of the capacity to meet customer expectations efficiently.
Major Product Deficiency
Sometimes a major technical error on the part of a key individual may result in a significant product performance or reliability deficiency. This leads to senior technical managers becoming discredited and to poor morale in technical staff as well as poor business performance. This is also a management style defect; an effective style would sufficiently encourage junior technical people to question key technical decisions.
Market Disconnect
Sometimes R and D departments become so isolated from their companies markets that they lack understanding of how their products are used. Sometimes this isolation is a deliberate policy of other parts of the business, usually the result of fears of customer misunderstanding. Often there is a growing inadequacy of customer understanding in the whole business. The result is a product crisis when customers feel unable to communicate with any part of the business.
Information InconsistencyA common situation is one in which the various functions (R and D, Production, Sales and Marketing, Finance, Field Support) of a business are relatively isolated from each other (i.e. there is a lack of horizontal teaming) with the result that nobody grasps all the issues to related to a particular product. This situation shows up as an ongoing inconsistency in understanding of objectives, performance, cost, schedules etc, with chaotic product introductions and unsatisfactory products the predictable result.
Often the situation in a business is complex, with there being uncertainty as to the real cause of a what is usually seen as a business performance problem. A common situation is a fog of finger pointing between various parts of an organization, most commonly between R and D, and Sales and Marketing.
Eventually a crisis occurs, leading to a problem description. A search for a solution is started. Often existing resources are considered unsuitable - yet the problem is considered very urgent and the possibility of bringing in an outside specialist considered. Sometimes the business may decide to hire a new senior person, displacing or re-vectoring an existing manager. Often suitable new permanent employees cannot be quickly found - or it is seen that the task for the new manager consists of (1) solving the existing problem and (2) plotting new medium term direction. Often the requirements for these tasks conflict, leading to a splitting of responsibility for their achievement.
The specialists first tasks are: (1) Learn, explore and develop the clients brief and (2) Explore and scope-out the problem with the companies staff.
Sometimes the turnaround specialist may realize that there is an impossible situation - that there is a significant and irreconcilable inconsistency in the brief. This may lead to a re-appraisal of
the issues at hand and the refocusing of the clients brief, by negotiation.
If the client and the turnaround specialist are in agreement then it is usually necessary for the specialist to identify and explore the businesses available freedoms. What must be achieved, what
can be delayed, what the survival priorities are, what can be expected from key personnel etc. Often this will be the first point when senior managers face up to the 'size' of their crisis
situation.
For a detailed description of an approach to this step read Article 4: Solving Critical Problems with Communications.
Often the specialist's work will identify sharp edged and difficult options. This can lead significant conflict within the business; this conflict is usually best handled by considering the alternatives and looking at the clock. The fast moving pace of high tech business markets usually forces 'fish or cut bait' decision making, without many soft options. Naturally the client makes such critical decisions, often leading to a discussion decision parameters and the need for further refinement of possible options, a process readily facilitated by the turnaround specialist.
The solution identified in Step 3 is unlikely to be neat and tidy. There will be a need for consolidation and normalization. Resources may have been diverted; some products may have been delayed; customers may have been upset. There may be a need for significant re-structuring of the product line. Usually the business will need to re-appraise aspects of its business plan. Often there will be a need to rebuild staff morale and have a period of analysis to determine the underlying cause for the problems experienced. This may lead to changes in the business structure. Often the turnaround specialist will be able to make a significant contribution to the planning of these changes.
This final step cannot be successful without a psychological shift as well. Rebuilding momentum and morale are important for future success. There may need to be a rebirth of the corporate R and D culture and transformation the negative attitudes to positive, confident ones as the company maps out a pathway for the future.
This can be difficult; and there are always those with 20:20 hindsight to contend with. The best measures are:
Are the new products successful ?
Has the company retained its critical technology and the people associated with it ?
Has the company retained a good level of customer confidence ?
Is there the possibility of continuing to be successful in the market ?
Has the company maintained a strong presence in critical markets ?
In a troubled situation no decision may be more critical than hiring a turnaround manager. Yet, with all the pressures and distractions taking place within the company, this decision comes at the worst possible time.
Questions To Consider: What length of time is expected for the services of a turnaround specialist ? Clearly an engagement should be staged; are there clear stages ?
How are you going to introduce the turnaround specialist into the problem situation ? As interim manager, consultant, mentor, facilitator, turnaround specialist ?
Can the specialist communicate effectively and empathetically with your people. Can he do this whilst retaining their goodwill ? Can the problem project be effectively partitioned and contained ?
Will the rest of the management team be able to work with the specialist ?
What exactly is expected of the turnaround specialist ?
Are the goals in writing ? Can business and technical proprietary information be effectively guarded ?
What are the chances of success in turning around the situation ?
Background
Experience is the most important credential; specific experience and technical knowledge count for little if the turnaround manager has not been proved in the heat of battle. It is critical that the specialist be able to communicate effectively with all levels of technical staff - even when he lacks expertise in that staff members specialization. Technical breadth, high tech familiarity and people skills are more important than an precisely appropriate technical background. In all probability there is a solution to the problems at hand in the brains of the people you already employ. Extracting that solution is a major part of the specialists skills. Ask for a proven track record. The candidate should be able to produce a portfolio of success stories.
Fee Structure
Make sure the fee structure of the turnaround specialist is clear and fair. Fees should be paid promptly in stages, reflecting the often controversial nature of the specialists task and the dangers to the business of an early pullout. Incentive or performance arrangements may be appropriate.
© Copyright 1999-2004 Andrew Herrington Pateo Consulting