1. Background
The world has been on a standstill for about 3 months now, due to the Covid-19 pandemic. Prior to that, let us recall that a strong Global Recession had already slowed down Businesses for more than a year. Business downside is therefore a very serious issue, in current times.
As we gradually move forward, & try to unlock ourselves, India is staring at a collapsed Business climate, that may take years to recover from.
It is therefore the right time to support each other, and help turnaround Companies, that have lost significant Business potential in the last 1-2 yrs.
But the bright side of such a pandemic is that, everyone is equally affected and we are all in the same boat. Hence it is easier to understand the other side, and take steps to help Businesses and Customers gain lost ground.
It is also the right opportunity for Corp-orates to reboot themselves, and chart out a slightly different and better journey, and align their services to the greater good of humanity, as well as to a larger goal.
In this context, Turnaround Management Strategy is a good topic to discuss now.
Towards that, we would like to discuss that in 2 steps
· Crisis Management
· Turnaround Management
2. Crisis Management
Today, many companies are staring at a very bleak future. While Essential Services and FMCG goods are showing signs of movement through online Channels, there are many industries that seems to have changed forever. Hospitality, Commercial Transport, Aviation, Tourism, Real Estate and several other sectors have all dried up, and don’t seem to get their customers back, any time soon. Healthcare too, is grappling in its search for a remedial vaccine of Covid-19.
It is therefore contextual to talk about the immediate steps to manage crisis, and focus on survival. It is utmost urgent to bring the house in order, and concentrate on further growth thereafter.
While there can be several approaches to handle business crisis, we felt it worthwhile to lay down a simple 3 Step Process, to handle the immediate problems.
We can use a simple acronym for that - VEC
· Value for Money
· Focus on Essentials
· Rely on the Existing Customer
· Value for Money - As a company, the products (or services) need to evolve, and offer higher value to customers. Food and Healthcare products may increase their safety and immunity index, Hotels may increase their hygiene index, all the time focusing on contact less delivery.
Adding higher value to the customer is an absolute necessity, to win him back at the earliest.
· Focus on Essentials – As of now, customer purchases are centering around essential services. Groceries are the fastest running business, followed by IT & Telecom/Data services etc. It is therefore important to study the customers’ frame of mind, and focus on his essential requirements. A wise rejig of Products (or Services) may help reach the customer faster. Long term products may always be marketed at a more opportune time.
· Rely on the Existing Customer – As of now, reaching out to the existing customer is the easiest approach. Selling products to an already satisfied customer will help manage immediate crisis, vis a vis the acquisition costs of a new Customer. Also showcasing an already Satisfied Customer to the outside world (through videos etc) will help at marketing at no extra cost.
As of now, marketing through social media is a wise option.
Crisis Management Phase
As explained above, focusing on the above small steps (& more), companies can gradually get customers back in the system. Working around a tight time schedule, a typical 3-6 month Work Plan will help companies tied over the immediate crisis.
A company can consider it to have crossed the stage, when its monthly revenues cover its expenses.
We recommend companies do not go for Extra Loan, during this phase.
On the other hand, Products that are slightly higher priced, may well be made available through an EMI Option, to make the purchase easier for the Customer.
3. Turnaround Management
As we handle the immediate crisis, a Company needs to look beyond. Turning around the company to pre- Covid levels, should be the next logical step.
In the turnaround phase, the Company can look into a slightly larger horizon. This phase allows the company to think over and reset its Business Roadmap, that may take it to a higher performance pedestal. This is the time when the company can, indeed, look at acquiring new customers, and launch some new products & services.
In this phase, company can look beyond social media marketing, and step into the multiple avenues of ads & campaigns, keeping it strictly controlled to play within its own means.
In this phase, we lay down a simple 3 Step Process, for turnaround.
We can use a simple acronym for that - IWP
· Ideas for growth
· World Class Product/Service
· Partner with the Customer
· Ideas for growth – We believe, there is real power in innovative ideas. Ideas around Product, Service, Systems & Processes, and above everything else, Customer Satisfaction, do make a difference in the medium to long term. An ideating company will come out of its difficulties, sooner or later.
The power to succeed is, therefore, in the hands of the Customer.
· World Class Product/Service – Bringing the above thought forward, a company has to imagine itself to be World Class, and its Products/Service should compete with the best in the world. This is the right time to start afresh, and work towards setting up a World Benchmark. A Car, a Bike, a TV, a Health Drink can build themselves, slowly but surely as World Class products.
Indian companies have the potential to be World Leaders, in the coming years. Let us choose this time, as the most opportune time.
· Partner with the Customer – Understanding a customer’s requirements cannot be done by just selling a Product. A close relationship with the Customer can bring out several small details & pain areas, that, if worked upon, can add great value to his Business. This would, eventually, add great finesse to Product Development
A close partnership, therefore, is key to significant Business growth.
Turnaround Management Phase
Slightly different from the first Phase, a Turnaround Phase enables a Company to regain lost ground, in the earliest possible time.
As a Thumb rule, the company may consider itself in the turnaround phase if its revenues & profitability reaches its pre Covid Levels + 20% improvement.
A typical time plan of 6-12 months is a reasonable time to get back its own ground.
4. The Role of a Strategy Consultancy Firm
In times of crisis, when Corporates face a huge Business uncertainty and flight of customers, Consultancy Firms may play a strong role in bringing back the confidence & order in the system. Coming with diverse business experiences, Consultants enable a fresh perspective and course-correction to Corporates, in the minimum possible time
Towards that, the role of the Consultancy Firm may be laid down on a simple 4 Step Process, for superlative growth.
We can use a simple acronym for that - IKMG
· Ideas for growth
· Time bound Plans, with KRA’s
· Tweak & evolve the Business Model
· Monitor & analyze the Growth Curve
· Ideas for growth – A Consultancy Firm has a huge power to have innovative ideas, that may be of great use to Corporates. ‘Out of the Box’ thinking often gives pleasant surprises, and some ideas may have transformational powers, in taking the company to the next level. Consultants also bring out meaningful discussions, and enable the Company stretch beyond conventional thinking.
Ideas & timely execution are, therefore, the secret sauce of Organizational success.
· Time bound Plans, with KRA’s – New Ideas need special attention in terms of management time & resources. Hence, they need to be built into time bound Projects with defined KRA’s. A Consultant’s role in monitoring 3-6 mth Projects, is to convert dreams into reality. A collaborative effort, with tight schedules, indeed provides a strong focus on the implementation of interesting ideas.
Projects are also a test bed for experimenting with a small set of Customers, and, if completed successfully, can be scaled up, on an operational model.
· Tweak & evolve the Business Model – In difficult times, Do More with Less is the new management mantra. Today companies are saddled with fewer manpower, fund shortage, high inventory, coupled with fewer customers. Consultant’s presence give the much needed boost to increase the productivity, while slowly increasing the customer base. The evolved Business Model, therefore, results into higher Profitability.
We recommend Companies to chart out a Debt Free Business Model, and move towards Equity Participation of Stakeholders. Reliance Group is already taking the first step in this direction.
· Monitor & analyze the Growth Curve – A Consultant’s perspective is different from that of the Company. The great insight helps them to analyze the Growth curves, in a different way. Revenue, Profitability and Customer Growth curves, give deep insight into the growth potential of the company. Business Assumptions may be tweaked to embark on an aggressive Growth Trajectory
Overall, the Consultancy Firm has a strong role to play in providing the initial thrust, and stay as a guiding force to companies till they get a grip on their own Business Activities.
Helping the company to cross the river, also help give credibility to the ideas & suggestions of a Consultancy Firm.
It is indeed a Win Win combination for both.
5. A Case Example
The above can be elaborated with a case in point.
Let us examine a Baby Food Company, whose products are not selling in the Pandemic. Let us name the Company as Baby Love
While Baby Foods are an essential item for newborns, companies need to establish a good relation with such customers too, for long term Business gains.
In the crisis period, Baby Love can take some immediate steps to retain its existing Customers
· Value for Money - Baby Love can Increase the immunity ingredients of the Baby Food, over and above its regular nutritional ingredients. Immunity ingredients will enable the child to fight against the immediate diseases - Cough & Cold, Fever or Diarrhoea.
Baby Love should not overpromise an immunity from Covid 19, when there is no available cure yet.
Also, the price of the Product should preferably be kept unchanged
Baby Love should also highlight its Contactless Baby Food Manufacturing Process, taking full precaution to protect the Baby from any further infections.
Doorstep Delivery should also be the preferred option, through Amazon, Swiggy etc.
Such small steps (& more) will help Baby Love to regain its existing Customers.
In the turnaround phase, Baby Love can look at some long term aspects
· Ideas for Growth- Baby Love can try to answer a very Fundamental question – Can its Baby Food substitute Breastfeeding ?
While we all know that Babyfood is NO SUBSTITUTE for Breast feeding, yet the question is very relevant in today’s times, when many children may have to stay without their mothers due to divorces, separation, surrogacy, sudden death etc. Taking up this cause for concern, Baby Love can STRENGTHEN its Product, and rebrand itself as MOTHER’S BREASTFEEDING SUBSTITUTE.
In sync. with today’s times, Babyfood can also come up with its own SMART FEATURES, where an Automatic Alert may be sent to the parent after 50%, and to the company after 75% completion of the Baby Food, for re-order. Other Smart features may be similarly incorporated.
· Partner with the Customer - As companies are rebooting themselves after COVID 19 pandemic, it can give a unique opportunity to Baby love, to expand its product Portfolio.
Hence, we can see that Baby Love can expand its Portfolio to offer Health Drinks throughout the Lifespan of the Individual.
This will indeed do wonders to the fortunes of the company
In addition, the company can add suitable services around the Product.
Services can include
· Calorie Counter
· Diet Chart
· Health Check-up
· Medical Insurance
· Emergency Services
A combination of multiple Products & Services will enable the Company to stay attached to the Customer for several years & decades.
6. Business Trends
Around this time, significant changes are being felt in Business trends across the country. Some of the noticeable ones are as follows
· As India is developing its own campaign of Atmanirbhar Bharat, we will witness a National Rebound, where domestic brands are getting more attention & support vis a vis the MNC’s , by the Govt., as well as by Customers.
· As layoffs are becoming a norm during difficult times, Businesses will opt for Outsourced Services for their backend functions – IT, Network, HR & Admn, Finance etc., which give them the flexibility to increase or decrease headcount, depending upon the Business Volumes. Well defined SLA’s will ensuring round the clock service delivery standards
· A whole new world of Start-Ups will imagine new Products & Services, that address pain points of customers, thereby changing the Business landscape of the country.
· Think Tanks & Ideating Companies will slowly but surely, drive a silent Knowledge Revolution in the country, and hope to take them forward, to foreign shores.
The above is a Synopsis of a Panel Discussion titled ‘Turnaround Management Strategy’ participated by The Idea Factory, and conducted by Metaconnect Consulting,on June 26, 2020.
Abir Mozoomdar is a BE/PGDBA/CFA with more than 20 yrs of experience in Strategic Planning and is the Founder & CEO of The Idea Factory. He is a Business Author, as well
The Idea Factory is a Strategy Consulting Firm, and a frontrunner of the Knowledge Revolution in India. It specializes in Strategy Training, Advisory & Consulting Services, and Business Research.
Abir’s first Book ‘Thought Leadership in India’ offers medium/long term solutions to India & its Business landscape, and has started ‘Thought Leadership Movement’ , a Worldwide Knowledge Revolution from India
For more details, please write to us at theideafactory123@gmail.com
Comments