I’m so excited to release this post! In this article, you are going to discover that all my years of conducting business turnarounds can be boiled down into a simple matrix. I call this the Business Turnaround Matrix – the key to business turnaround success. What you are going to read in this post is the culmination of my years of getting things right and most importantly, getting it wrong. Progress comes from making mistakes (and I’ve made plenty!) I’m a simple guy; I’m not that clever. I’ve learned that by keeping things simple, there’s a better chance of success for a business to turnaround.
The Business Turnaround Success Mantra
In my years I have used the following mantra, which is the key foundation for business turnaround success…
"In a business turnaround, clarity is King and simplicity is Queen."
Let’s dive right in…
[OVERVIEW] The Business Turnaround Matrix
This is the Business Turnaround Matrix that I have created from years of experience. As you can see, the matrix has 4 segments:
- The King (Clarity)
- The Queen (Simplicity)
- The Jester (Ambiguity)
- The Village Idiot (Complexity)
The enemy to the King is the Jester i.e. the opposite of clarity is ambiguity.
The enemy to the Queen is the Village Idiot i.e. the opposite of simplicity is complexity.
The basis of the Business Turnaround Matrix is that in a turnaround, you need clarity and simplicity. Let’s look at these themes in more detail.
The Jester – Ambiguity
I’m sure we can all relate that when things are unclear it is frustrating, things go wrong and there is a potential for chaos to reign. From working with hundreds of people, I can tell you that people crave clarity. For the most part, your staff want to do a good job, but their biggest gripe is ambiguity.
Ambiguity can be any of the following (and more):
- Unclear about the strategy
- Don’t know what the plan is
- Don’t understand the financial picture (goals)
- They don’t know what their job is
- They don’t know what they’re responsible for
- They don’t know their targets or KPIs
- Who’s in charge?
- Who is responsible for [x]?
Do any of these sound familiar? Of course they do. We’ve all been there. When there’s a lack of clarity, people are frustrated and unhappy, productivity suffers, sales decline and ultimately the business suffers.
The other problem with a lack of clarity is the lack of accountability. There are some people who, unfortunately, ‘play in the greys’. I call these people, ‘Jesters’. The Jesters rely on things being unclear so that they can feign ignorance, not take responsibility and pass the blame. They are the ones who often play politics and it’s never their fault.
Now, does this sound like the kind of behaviour or culture you need in a business turnaround?
Bottom line – ambiguity kills businesses. It means your staff will wander around aimlessly not knowing what the plan is, who is responsible and ultimately it’s the business that suffers.
Does any of this sound familiar?
I think if we’re being honest with ourselves, most of us will relate to some of the above (if not all of it).
But stick with me. Wherever there is a villain, there is a hero. The Jester may be the villain, but like all villains, a hero must rise up to do battle with them.
There’s the King…
The King – Clarity
If ambiguity is one of the business-killers, then we must look at the opposite of ambiguity and that is clarity.
Clarity is King.
Clarity is the antidote to all of the problems outlined in the Jester section. Remember – your staff crave clarity.
In order to get control of the ship, eliminate the power of the Tricksters and turn a failing business around, you need clarity. Let’s dive in deeper…
What do we need clarity on?
Well, it starts at the very top. The CEO or the Executive needs to be clear themselves. It starts with the strategy for the business. If the top-level is not clear, then how the hell will anyone else be? Clarity has to flow down the chain of command.
CLARITY: How To Set Clear Goals
In their book, ‘The 4 Disciplines of Execution’ the Franklin Covey authors talk about an excellent goal-setting formula which, when followed, provide you with absolutely clear goals. For more detail on how to set clear goals, check this post out.
FORMULA: Setting Clear Goals
Move [X] to [Y] by [WHEN]
Let’s use an example. Let’s say you want to get more sales. Your strategy says that you need more customers, as your current ones are maxed out. So the plan is to increase sales and the goal is to increase customers.
This is where most people fall down.
“Increase customers” is very unclear.
We need to use the 4DX goal-setting formula to build clarity around this goal. Let’s see how this works…
The first word ‘move’ will be a verb. Most likely it will be either ‘increase’ or ‘decrease’. In this example, we want to increase our customer base.
GOAL: Increase customer base…
[X] is your starting point. You have to know your starting point. (You’d be surprised how many people don’t). By identifying your starting point, you are already providing clarity to the team as to your current state or position. Let’s say in this example you have 10 customers.
GOAL: Increase customer base from 10 customers to…
[Y] is the goal. This is the target number you want to achieve. By simply saying, “We need more customers” isn’t clear enough. In this example, you could get 1 more customer. But is that goal achieved? It might be, but we need to know. In this example, you’ve done the maths and have determined that you need 20 total customers. Therefore the goal looks like:
GOAL: Increase customer base from 10 customers to 20 customers by…
[WHEN] is the deadline. Goals without a deadline are doomed to never get done. Our human nature dictates that we need something to move towards. Deadlines are a great way for us to get our asses in gear and be productive. In this example, you have determined we need 10 more customers by November 2020. Now the goal looks like this:
GOAL: Increase customer base from 10 customers to 20 customers by 30th November, 2020
How clear does that look?! Is there any room for misinterpretation? I doubt it.
CLARITY: What Does ‘Good’ Look Like?
Now you’ve got a clear goal, but there’s still more clarity to be had! Any high-performing team worth their salt ask one fundamental question at all times…
What Does ‘Good’ Look Like?
‘Good’ is the quality of your execution, it’s the expectation and standard you expect. Let’s revisit the example:
GOAL: Increase customer base from 10 customers to 20 customers by 30th November, 2020
So if the goal is to acquire 10 new customers, then I would ask, “What does ‘good’ look like?”
Here are some examples of what ‘good’ could look like in this example:
The 10 customers satisfy the following criteria:
- Have a good credit rating
- Have been trading for 3 years minimum
- Are based in the London and West Midlands region
- Have gone through our internal contracts process and been signed off by either the CFO or CEO
- Can buy the minimum order requirement of 100,000 units per month
Now let me ask you – how clear is that?! The Jesters definitely won’t like this level of clarity!
Get in the habit of always asking that crucial question. By asking the question you are providing absolute clarity around what you consider to be the successful execution of the goal.
CLARITY: Check Of Understanding
Suppose I roll out the above goal to you. What I’ve said and what you’ve interpreted can be worlds apart!
You need to make sure that people understand it. Therefore a very good way of ensuring the clarity has been understood is to do something called a ‘check of understanding’.
Quite often in my meetings, I will say any of the following to the responsible officer:
- “[NAME], please give me a check of understanding.”
- “[NAME], please explain that back to me.”
By doing this, you are ensuring your communication has landed. Communication is sending and receiving a signal. Just because you’ve said something and given clarity doesn’t mean that the responsible officer has heard it or understood it. Conduct a check of understanding.
We’ve battled one villain in the form of ambiguity. Now we must turn our attention to the next business-killer. This one is not so obvious which is why they are extremely dangerous.
This villain is…
The Village Idiot – Complexity
Raise your hand if you’ve ever been into a meeting where they have rolled out an extremely complicated plan, and you’ve come out more confused than ever? (I’m currently raising both arms and one leg. I’d raise both legs if I could!)
Let me approach this a different way than you may be expecting.
Humans don’t like complicated! We like simple!
Our brains naturally look for the least path of resistance. If something looks complicated, then a few things happen:
- We switch off
- We feel anxious because we don’t know what’s going on
- We don’t understand etc
If a plan is complicated then the chance of error goes up considerably. In a business turnaround, you don’t have a margin for error! Things need to happen correctly.
However, if a plan is very complex in nature, it will not be understood and your staff will make many mistakes. When they continually make mistakes they will get frustrated and start to feel demoralised.
You cannot let this happen.
Quite often when I have gone in to turn a business around one of the key root causes is an extremely complex plan with ambiguity. The Jester and the Village Idiot are having a field day! No wonder it’s not working!
Sometimes in business, we feel the need to overcomplicate things. We feel the temptation to make things complex because we are business people and we run a big organisation, and we operate globally etc. But I can tell you that this is rooted in insecurity.
The best businesses keep things simple. Sure, the inner mechanics of a product may be mind-blowing, but the strategy and plan are very simple. You only have to look at the great businesses in recent history and you will see a common trend amongst CEO – they don’t like complicated, they keep things simple.
Which brings us nicely to the hero to this particular villain…
The Queen – Simplicity
Let me tell you a secret…
Are you ready?…
I’m not that clever!
There, I said it! You got me! But seriously, I’m not a massively clever guy. I like to keep things simple.
In their book, ‘Extreme Ownership’ authors Leif Babin and Jocko Willink talk extensively about the importance of keeping things simple. When things get complicated, the chances of error go up considerably.
In anything you do, you must ensure that your strategy and plan are simple enough for the most junior staff member to understand. After all, they are part of the team who will be executing the plan.
The Big 3
In his book, ‘Free to Focus’, Michael Hyatt talks about something called the Big 3. The thinking is that there will always be more than you can do. You will never be able to do everything at once. If you try, you will drop a ball or you won’t execute to the required level.
The principle is to only tackle the few high-value things at any given time. You might have 100 things to do in your business turnaround, but they are not all equal in terms of importance or value.
Now it doesn’t have to be 3. The principle is to reduce things down to the most important things. It could be 3, 5, 10 or even 1. It doesn’t matter. What matters is you have the awareness to chunk things down. Which 3-5 things would make the biggest impact? What would make the biggest difference to the business if you got it right?
By narrowing your focus, you immediately remove a lot of complexity. It makes people feel more hopeful and in control of the situation, They feel like they can win.
You can adopt the Big 3 for a year, quarter, month, week or even day. I personally use the Big 3 for all of the aforementioned time frames. It forces me to think about high value and keep it simple.
Stick To What You Know
There is always a temptation to explore the greener grass on the other side during a business turnaround.
Do not fall for this temptation!
New products and markets come with lots of new challenges and mistakes. You don’t have the time (or possibly the money) to fund an expensive education in that regard.
Operate in your lane. Your business was made on doing something really well. Granted, some things have gone wrong but if you got back to doing that thing that only you can do, and do it exceptionally well then you will start to see progress.
Stay in your lane. Don’t deviate and chase dreams elsewhere. At least, not yet.
So there you have it – 2 heroes and 2 villains. Remember in every business situation (not just a turnaround) clarity is King and simplicity is Queen. At all times you must use the above matrix to do a sense check. Ask yourself some of the following questions to make sure you’re on track and not falling into the Jester or Village Idiot realms:
- Have we identified the few high-value things that will make the biggest impact?
- What are the 4DX goals for each initiative?
- What does ‘good’ look like for each goal?
- Who is the responsible officer for each goal?
- Do they know they are responsible for the goal?
- Have we done a check of understanding with each responsible officer on their goal and what ‘good’ looks like?
- Is the plan simple?
- Can the most junior staff member understand it?
- Does this fall in our lane?
Use the above as a checklist and I promise you’ll be in more control and ultimately be on the road to business recovery.