The Institute for Turnaround is located on Mayfair’s Dover Street, and measures over 6, 000 sq ft. At a time of great upheaval in all consumer sectors, particularly retail, the store is an increasingly key body within the space. As such, it was a real honour for The MBS Group to host outgoing chairman Iain MacRitchie at a dinner event at The Delaunay in central London. He was accompanied by Richard Pennycook, chief executive of the Co-operative Group and Iain’s incoming replacement as PFT chair, himself boasting decades of experience in turnaround situations with different businesses.
Once Iain and Richard had kicked off proceedings, the discussion quickly centred on the essential qualities for leaders undergoing a turnaround. Interestingly, periods of crisis were cited as sometimes being the easiest part of the situation to deal with. The consensus from those around the table was that it is crucial to manage key stakeholders during the early stages of a turnaround; as one executive said, “panic kills a business.” Instead, companies must concentrate on their key qualities, getting staff at the top and bottom of the organisation on side at the same time.
Throughout, company values were mentioned as especially relevant to dealing with turnarounds. Often, an organisation’s identity is the glue that holds it together, and this is never as apparent as when a business is troubled. Again, establishing and reinforcing company culture often falls in the lap of the CEO and those immediately around him or her: only then will people throughout the organisation buy in to the leadership team’s strategies.
The character of the CEO was another factor held up as particularly important. To be capable of holding up an underperforming business requires particular characteristics, and a slightly masochistic temperament! It is also critical to act as a figurehead when the press gets hold of a story. Without a real leader at the head of a company, uncertainty and doubt can run wild. Qualities that were seen as vital to a CEO in a turnaround situation included decisiveness, intellectual capacity and the ability to reshape popular opinion of a particular situation. All of these are sure to stand any individual in good stead at the helm of a struggling business.
The triggers for this kind of strife within businesses were also debated. In a year that has seen several big companies embark on wide-scale transformative programmes, winning the hearts and minds of consumers has never been more important. It was suggested that when a firm’s market share becomes too large, the customer will automatically rebel against monopolistic behaviour. As well as this, disruptive influences (such as the rise of digital industry in the retail space) have forced many companies into big turnarounds in a short space of time. However, one attendee reminded the table that “businesses don’t go bad overnight; it’s usually a gradual thing.”
This pertinent thought is a good summary of the challenges that can confront executives facing a period of turnaround. Consolidating and embodying the company’s values are primary concerns, which can be a profound test of a CEO’s character.