From crisis to success: a guide to business turnaround
The balance sheet says it is a "crisis", bankers and shareholders say "no fund", but some motivational speaker insists it's all "part of the journey". The journey to what, exactly? A suicide note, a resignation letter, or a bonus cheque?
I undertook the role of CEO of Robi in 2016 when its business hit rock bottom while a merger with Airtel was taking place. And above all, the ROIC (return on invested capital) was double-digit negative.
The group was uncertain about the competency of a newcomer CEO to handle such a complex situation. And hence I was given a one and a half years contract and not the traditional three-year one, along with a massive target despite the operational merger-related challenges.
While I was given a big welcome by the nation as the first local CEO of a multinational telecom, I was battling an internal situation that was far worse than it looked from the outside.
Cost cutting was at the top of my predecessor's agenda in clearing up the existing crisis, and within hours of my first day, I found myself mentally crossing out the abundant supply of tea and biscuits in the office. It reminded me of Hodja's donkey story.
Once, Hodja was going through a severe financial crisis, which forced him to ration his donkey's food. Despite the cut on food, the donkey continued to work as hard as before.
Encouraged, Hodja decided to reduce it further in the second month. This time, the donkey got weaker but could still work half a day. Happy with the result, he rationed further in the third month, and it turned out the donkey got so weak that he remained sitting all day.
Hodja reasoned that at least the donkey was still alive and continued with his rationing in the fourth month. But this time, the donkey perished. When I took over as CEO, the company was in the early stages of the fourth month.
Strategising helps identify business strengths, weaknesses, opportunities, and threats and formulate policies to address them. A clear strategy enables a company to create value for its customers, stakeholders, and society and achieve competitive advantage and sustainable growth.
In any business turnaround journey, the first focus should be on hard parametres like revenue and profit. In my case, I had to focus on both the hard and soft (people) parts, for the team was already deflated in the absence of incentive bonuses, cost-cutting, and deteriorating company performance.
In every crisis, choose the path of compassion, courage, understanding and love. Sometimes, we need a crisis to help us realise our potential to face a bigger crisis. No crisis is similar. Hence, never try to replicate past formulas to address today's crisis.
My approach to strategising in that crisis was no different, notwithstanding my experience with the company's failure during my role as chief financial officer and chief operating officer, which helped tremendously.
Retrospectively, we made several mistakes, like not being ready for 3G (the basic requirement was transmission readiness). Even a week before the auction, the group and the board were debating on whether to go on or not with 3G, rolling out almost a thousand 2G sites in the north and south of Bangladesh when 3G had already been launched by the competition.
Overdependence on Chattogram, Cumilla and Noakhali made the business vulnerable and susceptible to the competition attack. The other disaster was the poor handling of mandatory SIM registration in early 2016.
To make a good turnaround, a company needs to excel in both strategy and execution and corporate people need to learn better how to turn around a business in a crisis. We can expect more such crises in the coming days, considering the local and global challenges.
The author is founder and managing director of BuildCon Consultancies Ltd