Working with our clients we have addressed these issues by introducing a value ladder methodology, that ties together the company’s strategy and overall value creation ambition, the strategic projects,  operative budgeting and financial follow-up processes. Leveraging this approach top-down in a holistic manner has proven to have multiple benefits: the overall strategy and value creation path for the company becomes clearer, the priority of various efforts is easier to set, and the goals and results of the projects are more transparent. Most importantly, discussions about strategy and value creation become more focused and to-the-point on all levels, from the Board and the management all the way to the operative frontline.

Working side-by-side with CEOs, CFOs and Board members of our clients, we have developed a practical and holistic approach for radical turnarounds where tweaking a single lever is not enough. The approach includes identifying, documenting and quantifying the tasks that allow cost and working capital reductions, prioritizing the alternatives into a clear action plan with the necessary buy-in, introducing the necessary financial control and follow-up processes, and finding sources for funding that sets the company on a new path. A turnaround puts a heavy emotional toll on all parties involved with the company, and thus the approach needs to include all stakeholders and ensure communication is open and immediate. This is also accounted for in the approach we have used.

Using a systematic approach has clear benefits. While it is easy to fall into a vicious cycle when hit by a downturn, applying focused decision making and execution helps to turn the situation around and start a virtuous cycle to get back on track.

The practical approach to address these issues is applying iterations similar to those used in agile programming approaches, where each cycle produces a “complete and working unit”. Although more applicable to service based businesses, the overall mindset is a useful guideline no matter what the company does. The idea is to apply two basic concepts, financial boundary conditions and time-driven execution to the effort from the start. Time-driven execution simply means using a “roll-back” methodology in project planning, starting from the desired launch date. Applying financial boundary conditions implies focusing on getting revenue from the start, even if it implies a somewhat crooked path. Of course those lucky few who get major funding from the start may choose to disregard the latter concept, but in most cases it comes handy somewhere along the development path.

We frequently hear comments like “if only I could get this much money then I could do this”. Turn this into “I have this, and with that I can do this by this time” and you have the basics of what we are describing. Put a continuous iterative evolutionary development path on top of all this, and the main principles of speed to impact are there. In essence the approach tries to codify an approach where waiting times are minimized and progress is continuous.