Many experienced leaders have failed to avert their business contractions, and critics believe that applying the wrong strategies is the primary reason for their recovery failures.
Can stuttered business rejuvenation excursions be dissected to reveal why the faltered resurrection strategies had stumbled? Can their lessons be synthesized into a set of distinct attributes that successful revival strategies must align to?
Here are four attributes of successful business resurgences:
Enriching a wealthy brother does not solve the destitution of oneself
Having been dealt yet another horrible year in 2014, J. Crew’s CEO embarked on a recovery journey. In early 2015, he opened stores in new international locales and expanded its profitable branches — its outlets, and its Madewell stores — in existing cities. (http://fortune.com/2015/03/19/jcrew-madewell-outlets-overseas/).
By late 2015, results showed that the gambits had not worked (http://www.businessinsider.com/j-crews-parent-company-downgraded-by-moodys-2015-9).
Does launching the brand in a new market constitute an upside strategy? Hardly. Whatever results in a new region would never have solved the predicament in existing districts. Could expanding profitable units reverse the downtrend of others? No, it could only benefit the money-making units themselves; it does not help to resolve the revenue-shrinking problem of the troubled product lines.
Fixing all faults is scarcely a sage recipe
American novelist Edna Ferber once wrote, “Perhaps too much of everything is as bad as too little.”
Here is a testament. Having revenue declined for six consecutive quarters, McDonald’s CEO inaugurated in June 2015 a turnaround design that had since been negatively perceived (http://www.businessinsider.com/former-mcdonalds-executives-question-turnaround-strategy-2015-6). Not only did the company’s previous CEO discounted it, but franchisees also increasingly deserted the chain.
Unsurprisingly, results of two succeeding quarters sided with the dissenters. For the turnabout, the new CEO made over a dozen changes. Maybe each alteration had merit for its own right, but a much smaller and focused set of changes would have served the firm’s U-turn attempt better.
The innumerable new acts inundated both the employees and the customers, and some otherwise attainable upswing effects had partially canceled each other out. Besides, it’s hard enough for any struggling company to institute one major change properly, let alone get a whole slate of them to work in unison.
Businesses must know which problems to fix first
Lee Iacocca said, “To succeed today, you have to set priorities.” As well, Bill Gates famously remarked, “Knowing your numbers is a fundamental precept of business.”
When CEOs try to upsurge their struggling businesses, they need to quantify the impacts of the identified disorders, rank them, and then attack the foremost damaging afflictions first. Businesses can only tackle so many tasks at once; it’s better to do the few most crucial ones well than many of them poorly.
It may be more beneficial to reinvent than to repair
Greek philosopher Socrates discovered long ago that the secret of change is to focus all your energy, not on fighting the old, but on building the new.
An innovation rather than an amendment may do more to appeal to disgruntled customers and attract new fans, and it may be more cost effective too. This is a proven approach to upturn a business, and has been vindicated by name brands like LEGO, AT&T, GM, and many others.
Recently retailer Kohl’s CEO has taken note. He has fixated a multi-year re-invention flight anchored by leading-edge e-commerce technology, improved merchandise mix and a novel customer loyalty program as their principle comeback strategy (http://fortune.com/kohls-turnaround/).
Coda
Strategies to restore a brand can be honed and architected. To redeem their businesses, business moguls simply need to abide their strategies by four central principles.
- The first is to administer the right remedy. J Crew floundered miserably on its volte-face because it confused expanding a profitable unit with repairing a laggard.
- The second is to focus the rebuilding efforts to a manageable number. When there are multiple factors contributing to the decline, work on as many of them as when their surgeries do not destructively cross-interfere.
- The third is to solve the worst problems first. Quantify the ill-effects of their identified maladies and pick the cardinal flaws to revamp first.
- The fourth is to consider reinvention as an alternative because it may accomplish more than restoration can do at times. Heeding these four fundamentals, rehabilitation strategies are golden.
Chi-Pong Wong is a seasoned professional proficient in customer experience, vendor and partner relations, marketing and branding, supply-chain strategy, and program and project management. He has published articles in leading online magazines. He can be reached at http://www.linkedin.com/in/chipong.
