As the adage goes: Prevention is better than cure. In medical practice, prevention of the disease before its onset is better than giving medication when it is already malignant or full-blown. Getting it right early is much better than subsequent expensive treatments. Furthermore, when you lose your health, the road to recovery gets longer and rougher. Prevention is the name of the game for individuals and companies.
Just like people, most companies get into trouble simply through sheer neglect. Through the lack of monitoring, the accumulation of toxins or disease causing pathogens are allowed to perpetuate till the full manifestation of the ailment before any action is taken to contain it. At the outset, a company should adopt prudent practices to prevent the onset of corporate ills or financial problems. The preliminary issue such as prevention requires the direction to be clear as well as good planning. Next, the hard issues need to be implemented which include diligent financial and other controls. Also, soft issues such as taking good care of your people and the wise management of the talent pool are also crucial.
Diagnosis is the identification of the disease based on its symptoms. However, the symptoms can sometimes mask the real disease. Also, many diseases share similar symptoms. Thus further probing is required in order to ensure that the disease is not misdiagnosed.
Just as a sick person may manifest early symptoms of the ailment, such as cough, running nose, fever and body aches, likewise, there are usually ample warning signs for a company. High staff attrition rate and the loss of brand equity are perhaps some of the symptoms that all is not well with the company. However, they are merely the symptoms rather than the real disease or root cause. Treating the symptoms is tantamount to upgrading a cancer-stricken patient to another ward in the hospital, the condition of the patient does not improve. Prescription without diagnosis is malpractice, and implementing the corporate restructuring without knowing the root cause of the problems can be disastrous.
The key is early diagnosis as it increases the chances of curing most diseases. Therefore, a company should put in place a detection system to facilitate this early diagnosis. How does a company get out of its trouble? A good way is to diagnose how it gets into trouble in the first place.
Diagnosis starts with acknowledgement of the problem, good detection system and identifying the root causes from the symptoms. Then one needs a comprehensive
diagnosis of the “hard issues" such as its pricing, process and communication. The company also needs to review the “soft issues" such as communication and leadership functions which may have got the company into trouble.
There are panaceas that can turn a critically ill organisation around into a healthy one and proper treatment is necessary as the remedies can sometimes be worse than the disease. For instance, some cancer patients are killed by the chemotherapy rather than the disease itself. As they say, a stitch in time saves nine. Usually an ailing company needs critical attention probably in the form of ‘surgery’ with the primary focus of restructuring the organisation and improving its cash flow. Most troubled companies need to engage outside help and change to come in and take drastic action to steer them out of the woods. Efforts are also needed to restore the company’s top line and profits.
Treatment starts with the execution in appointing the appropriate corporate doctor or turnaround manager and a team. Next, the distressed company needs to focus and understand some of the techniques to remedy its ailment. Hard issues take precedence during this stage with restructuring, right sizing and cost cutting. In some cases, the rescue endeavour may come in too late then the exit strategy may be necessary. After dealing with the hard issues, the company needs to deal with the soft issues of dysfunctional personnel and bureaucracy.
Dr Mike Teng (DBA, MBA, BEng, FIMechE, FIEE, CEng, PEng, FCMI, FCIM, SMCS) is the author of the best-selling business book “Corporate Turnaround: Nursing a sick company back to health", in 2002. In 2006, he authored another book entitled, “Corporate Wellness: 101 Principles in Turnaround and Transformation. " Dr Teng is widely recognized as a turnaround CEO in Asia by the news media. He has 27 years of experience in corporate responsibilities in the Asia Pacific region. Of these, he held Chief Executive Officer’s positions for 17 years in multi-national, local and publicly listed companies. He led in the successful turnaround of several troubled companies. He is currently the Managing Director of a business advisory firm, Corporate Turnaround Centre Pte Ltd, which assists companies on a fast track to financial performance. Dr Teng was the President of the Marketing Institute of Singapore (2000 – 2004), the national body representing some 5000 individual and corporate marketing professionals in Singapore