Internationally rated business turnaround expert Michael Dorn, owner and CEO of the multinational turnaround firm RTgroup, has been involved in some of the biggest business rescues in corporate history. His experience has taught him a few crucial life and business lessons for survival. He believes business success comes down to three key focus areas: People, Proactivity and Preservation. Here he shares his insights.
1. Businesses are made of people
Business failure is not just a matter of numbers. Numbers are created by humans. Businesses get into difficulty for all sorts of reasons, and most often it is related to people and their behaviour. This in turn affects efficiencies, accountability, productivity, growth and numbers. People are fallible and driven by emotion but they are also full of incredible potential. As a leader, it’s important to understand what motivates your people.
It is important to balance the financial and cultural health of a company. Creating a culture of fairness and transparency takes courage and firmness because it demands of every person in the business to be a team player with a sense of shared responsibility. Successful businesses foster a culture of mutual respect, accountability and discipline in meeting cultural, strategic and financial goals. Treating everyone from the doorman and the interns to the executive team with the same levels of fairness and respect, and encouraging diversity and empowerment in your teams, are part of creating a healthy culture.
The goal is always to shift businesses from crisis to prosperity by effectively connecting people and numbers. I do not believe in dismantling failing companies just for financial reasons. But neither do I believe in letting the numbers slip just to let people off the hook. In successful businesses, people take ownership of the numbers as well as the culture.
2. Proactivity is the key to preventing and tackling business crises
The best time for businesses to bring in business restructuring experts is when the writing is on the wall but the business is not quite in freefall yet. If business managers are able to muster the courage to admit that there is a problem, they can – with expert support – take very effective proactive steps to identify where their real problems lie and how to fix it. Sometimes the true reasons why things are falling apart are not what anyone expected. Analysing various data points about the business and reflecting it back to management by means of data visualisation, is a very powerful way to see what is wrong. But so is making astute people observations. Speak to people at various levels of the business to gauge where problems may lie.
Being proactive also means identifying what the true potential of the business is and how one can invest in this potential. This may entail managing many different stakeholders’ interests. The key to business success is to proactively and holistically harness strong leadership, innovation and a culture of accountability. It is almost always possible to avoid insolvency and liquidation if the proactive, introspective work is done to save a business.
3. Preservation means building something for the future
Environmental, social, and governance (ESG) criteria are widely used these days to determine how responsibly a business is acting and how sustainable its business model is. Committing to ESG is however not enough to ensure the preservation of a business into the future. ESG can all too often become just another box-ticking exercise, the same as Broad-Based Black Economic Empowerment (BBBEE). If businesses truly embrace the generous spirit of ESG and BBBEE – without making it a paint-by-numbers exercise – they will create a healthy culture and growth path. We need to reject one-size-fits-all, legalistic turnaround approaches and put our energy into understanding the very long-term purpose of a business. If you bring purpose, long-term strategy and the importance of people together, then you get to preservation. This means tapping into what drives people and galvanising them to take ownership of the goals and targets of the business. It also means creating a culture of respect for people over processes. Preservation is about inspiring the people who make up a business to act with integrity and commitment for the long-term benefit of the business. Cut loose those team members who lack integrity – even if you need the staff. Teams that come together with integrity (even very lean ones) have a much greater chance of surviving adversity together.