How to Turnaround a Failing Corporation.
What leadership skills do you need to turn around a failing business?
That’s precisely what Colin Iles, our Disruptive Innovation Practice lead asked Cell C‘s CFO, Zafar Mahomed.
We fully recommend you take the time to watch the full interview as the advice is surprisingly simple, incredibly compelling and applicable in all circumstances.
Here’s a quick summary of the key points that stood out to the Emergent team. Do comment back about the points that stood out for you.
Purpose is Key
If you don’t have a common understanding of what you are trying to achieve, you’ll never get there. It’s therefore incredibly important you are clear about your purpose and that it’s supported by all of your critical stakeholders.
Don’t be in denial
A lot of leaders in South Africa are in denial about the very real disruptive threats to their businesses. Denialism is very much a corporate disease, as leaders are cocooned from the real world. Leaders must believe their businesses will be disrupted and take definitive actions to mitigate this threat if they want to survive.
Always speak the truth
Speaking the truth, no matter how difficult, is the fastest way to build trust and support across your stakeholders. This is especially so when you are in a distressed scenario. At that point, you lack credibility. When you talk to banks or auditors, people don’t take you seriously. Being honest is incredibly important here. You can’t simply blame the last management team. Banks don’t want you to say everything is fine. If you want them to support you, give them the truth.
Keep it simple
I can explain Cell C’s 4-pillar strategy to our banks and shareholders in 30 seconds. If you want your stakeholders to support your vision, then it’s got to be compelling and easy to understand.
Manage your cash-flow, not your income statement
Income statements for turn-arounds are not relevant. All that matters is cash-flow. If you don’t know where your cash is, you don’t have a business.
Get the best advisors you can
You cannot do turn-arounds by yourself. You need advisors to help you and guide your thinking. They are expensive, but if you choose the right ones, they are vital.
Don’t be afraid to make mistakes
You are going to make mistakes. It’s guaranteed. If you are not making mistakes, you are doing something wrong. Just remember when they happen just make sure you fix them quickly.
Don’t rely on the people that got you in to trouble, to get you out of it
You have to bring in fresh thinkers to turn-around a business. They might be expensive. They might be temporary. But they are vital. This is why for example, everyone on Cell-C’s ExCo is brand new.
Be ruthless on cost cutting
For example, do you really need that business day subscription? Probably not. So be ruthless when cutting costs. The worst that can happen is someone will write you a nasty letter.
Governance is critical
Make sure there is oversight for the decisions you make as a CXO. If the governance structures don’t exist, create them. Taking tough decisions without appropriate governance makes you a cowboy. Tough decisions with good governance builds credibility quickly.
If you cannot keep yourself fit, you are not going to keep the company fit.
Be disciplined about what you eat. If your working in a stressful environment, what you eat becomes even more critical for maintaining your energy levels
Make time for your family
You have to spend time with your family and friends. These are the people that can revitalise you and keep you excited about the work you have to do.
Active Stakeholder Management
It’s absolutely critical to continually communicate with your key stakeholders. Roadshows, personal letters, calls. It’s amazing the goodwill you get when you communicate regularly and your communications are honest.
Forget about spreadsheets
You can’t trust a complex spreadsheet to run your business. Keep your forecasts simple. Focus on cash-flow. As a CFO you have to be in the business of understanding what’s really happening, not understanding excel.
Failure is an option
My generation had to be blemish-free. I’ve got lots of scars on my CV and this is important for leadership today. You need problem solvers and the best problem solvers are typically individuals who’ve failed often.
Watch the interview for more…
These are just some of the points that stood out to us from Colin’s and Zaf’s interview.
To keep it brief we also left out the war-stories, that really make these points come alive.