The science was proven in 1872, by Heinzmann, that if you place a frog in a pan of water and heat it very slowly a frog will not attempt to escape. Lulled to sleep by the slowly warming waters the frog will perish in the eventual boiling water.
Over the years I have been approached to sit on many boards as a non executive director or to take the seat as chairman. My signature tune is to join boards where there is a clear plan and vision around achieving growth. I have helped companies grow consistently by 30% + year on year, when the team and the plan is focused on growth. I have also been asked to step in and help companies complete a turnaround. Before I make my decision whether or not to join a board for a turnaround I have to ascertain if we are dealing with a frog in a pan of water. A 'boiling frog' turnaround is hard work, the company, management, staff and vision is sitting comfortably in the bottom of pan, and everyone is enjoying the warm fuzzy feeling as the water heats up. When asked about the external environment and why the company is not busy, they often answer “Well we are down on last year and missing our targets but everybody is quiet at the moment, the market is dead”.
I have developed a simple check list to test whether or not we have a company with life left in its soul or if we are administering a frog slowly being boiled to a comfortable death.
Does the senior management acknowledge there is a problem or are they still in denial?
Are missed income targets described as a 'blip or a trend'?
Is the whole company aligned behind the need to do things differently?
Is the senior team bouncing with energy or are they lethargic, withdrawn, defeated?
Are they aware of the way the external market has changed - online, apps, technology, the movement of labor, record low interest rates, collapse of steel and oil prices, impending new legislation, Putin push for recognition, skills gaps, the grey pound, health agenda and the death of the high street.
Is the vision relevant for today’s market conditions or does it reflect the mood for last year?
Do the financing arrangements for the company reflect modern styles of financing or is the company still operating at the behest of the bank?
Is the chatter about new market niches to be chased or about protecting fiefdoms and sacred cows?
Are the accountants leading the agenda with cost control or is the agenda about the innovators driving new sales?
Have management engaged with the whole workforce urging them to hold hands and bring their full energies behind a single plan or is there a blame game culture at play to explain the poor performance?
Like recruitment interviews you can usually tell within 3 minutes if the person in front of you is honest, brutal and capable of driving change Or if the individual is sleep walking into a pan of water. Similarly I can tell very quickly by following the above list whether we are dealing with a company hungry for resurrection, bursting with energy to try new ways of delighting customers and singing from one hymn sheet, or they are all canoodling together in the warm jacuzzi of "its not my fault" as yet another frog is boiled alive with a smile on its face.
What do you look for in a turn around?