When George Bernstein took over Nobel Learning Communities Inc. in 2003, the company was in trouble. Its stock had fallen nearly 60 percent in the year before Bernstein’s arrival, and no bank would give it a loan. He immediately saw two problems: The company had expanded its portfolio so much that it was starving its core business, and there was a tremendous lack of talent in the organization. Bernstein orchestrated a huge turnaround at Nobel a provider of private pay and education services for students in preschool through 12th grade and in three years, the company’s stock rose from $4 per share to $15 per share, with 2006 revenue of $168 million. Smart Business spoke with Bernstein about how to engineer a turnaround.
Get a team that speaks the same business language. The first thing we had to do was go out and build an executive team. Some of the executives had left, and some were still here, but I was looking for a very different skill set.
So we went out and built the management team of people who had been through these challenges before but were very hands-on and liked challenges. You knew they were going to dig in and hit the ground running.
You can’t do all that on Day One; it took awhile. But the first thing we focused on was putting a senior team in place.
We all had similar backgrounds. We all came from larger companies, had a hands-on management style and all were intensely focused on customers. We all walked and talked the same language. We may have had different skill sets, but we had similar backgrounds.
But what helped us get buy-in at the senior level was that we all learned this business together. None of us had experience in this industry. We were all retailers. We developed a strategy together, which assured that we all bought in to the vision together.
Focus on the best, ditch the rest. The second thing we had to do was determine the most viable business models the company had and then allocate all our resources to those business models. Then, we needed to determine which businesses we were going to get out of and not waste any resources on them.
Third, once we figured out what the right business models were, was to create measurements and accountabilities and celebrate small successes along the way. As we put the measurements in place and began to hit them, we could celebrate the success people were having in getting there.
We also had to put forth a short-term viability, stability and growth plan. The focus was on creating a viable company and stabilizing what we had.
Once we got the team in place, figured out what the right business model was, figuring out how we were going to measure and who was accountable for what, and putting the short-term plan in place, was to focus on the financial health and capital structure of the company. That way, the people who we brought in to fix the business could focus on the business, while a much smaller team was focused on making sure we were getting financing and the capital structure of the company in place.
Take small steps before big leaps. We needed to create credibility in the management team so we could go out and find a bank. The biggest issue we had from a capital structure point of view was finding a bank to come in and take over the financing of the company. We had very little history of being successful.
When we spoke externally to the bank we had to talk about the vision or we wouldn’t get a bank to sign on to finance the company in the long term. Internally, we did not discuss that because we wanted people very focused on the day-to-day tactics to get the company healthy, and not worrying about the long-term strategy.
Hold departments accountable. There were some shared measurements that everyone on the team had that were related to their specific accountabilities. For instance, operations folks were accountable for enrollment, but they were also accountable with the rest of us for the profitability of the schools.
A lot of us could have an impact on the expense structure of the schools, the marketing of the schools, but the operations people alone were really focused on the enrollment.
Human resources people had a measurement on turnover. The lower the turnover, the happier the parents were. The happier the parents were, the higher our enrollment. They were all linked, but there were some specific measurements that people had to work in conjunction with one another.
Keep communications simple. We used consistent language and phrases to reinforce the plan every time we talked about the company, our vision and the plan. Whether it was internally to our teams, or externally to Wall Street or to investors, we used the exact same phrasing, the exact same terms.
We use them over and over again, and make it as simple as possible. Get the strategy into its simplest components. Those are the components we talk about.
We make it easy for people to understand the parts of the strategy and how they fit in together. And we create visual representations of the strategy components. Not only do you hear how they fit together, but you can see how they fit together.
Connect the dots. We connect every single thing we do back to the strategic plan. When we talk about how we opened X number of schools this year, we compare that to the strategic plan, which said we would be opening Y number of schools so we are either ahead or behind.
By doing that at every meeting, the strategic plan becomes part of the culture of the company. As long as you keep connecting it, not only is everyone working on their projects, but they understand why.
That’s the biggest and most important thing is for your first-line management team to understand not only the strategy, but why are they doing the projects? Why are they doing the initiatives we want them to do? How does it fit into the strategy? How are they a part of moving the company forward?
Not only does it help them understand why, but it gives them great internal reward to know they are a significant part of implementing this strategy. It makes them really feel like they are a part of the success of the company.
HOW TO REACH: Nobel Learning Communities Inc., (484) 947-2000 or www.nobellearning.com