How can you measure and prioritize restructuring improvements?

In any restructuring process, a primary metric that can be considered is the duration required to address specific challenges. For example, a firm might prioritise improving liquidity in a set timeframe, ensuring financial stability. Following this, a subsequent focus could be on enhancing profitability over another defined period. Such goals should be Specific, targeting distinct financial aspects; Measurable, with defined timeframes; Achievable, based on typical industry benchmarks; Relevant to the overarching objectives of most organisations; and Time-bound, set to specific milestones. By aligning time with financial KPIs, an organisation ensures consistent monitoring and necessary adjustments.

We can never stop and look to learn and challenge situations. Resilience and continued learning is part of any constructive process. A team mindset is critical for improved performance. Finally, training an discipline always "makes things better".

Let's say a retail store is losing money and decides to restructure. Their goals could be to reduce operational costs by 20% and increase customer footfall by 15% within six months. The KPIs they might track could include monthly expenses, the number of customers entering the store each week, and sales revenue. They would use these KPIs to measure if they are on track to achieving their SMART goals. Importance of Alignment: For instance, if a business's long-term strategy is to be a premium brand, cutting costs should not compromise the quality of the products. Employee Involvement: Engaging employees in goal-setting can increase buy-in and make them more committed to restructuring.

I have learned over time that a great exercise is to conduct an exercise where you build an entirely new business to replace the one you have. The exercise then allows you to block from your mind the natural almost subconscious biases that arise when trying to make improvements to an existing business. Then you can take from that new business model new processes and efficiencies and make the sometimes difficult decisions about change in an existing business. Human nature is to often take into account the human element, the challenges of real change when executing such an exercise. It’s best to be honest with yourself in your bison and logic for change, and then consider the human element rather than the opposite approach.

In a situation wherein you are 'bold' enough to initiate a restructuring exercise, my experience has been that - 1. Good people have jumped ship 2. Those who remain are who could not find a fit elsewhere Hence, getting to being SMART as above, is a journey in itself as the organisation in crisis becomes dysfunctional in many ways. The change management exercise to look at a SMART approach needs internal buy in at the highest level to succeed.

Be careful not to become a victim of paralysis by analyst. Yes, metrics and KPIs drive change and growth, but be careful to read between the lines and understand that in that data exists a direction. A path forward. I learned a long time ago that logic and decision making often are the accumulation of experience and vision combined with data. One without the other is either misguided, or misunderstood.

Note that not all restructuring turns out to be an improvement. It may be a market dynamic has changed and the mirror to this pivot event in your business is a downturn in revenue or profitability. Shorttermist KPIs which encourage knee jerk immediate OPEX reductions such as removing FTE headcount often siphon away experienced (but optically expensive) personnel which may also impact the recovery post the event itself. Think hard and long whether restructuring is a mere panacea or a strategic new direction leading to re-growth of the business. It is often hard to decipher the path in this maelstrom.

Resource Allocation: It's crucial to understand that resources (time, money, manpower) are limited. Your action plan must be realistic about what's achievable with the resources you have. Communication: It is crucial to communicating these plans and priorities across the organization. This is vital for employee buy-in and successful implementation. Feedback Loops: It's not just about planning and executing. After implementing changes, you need to have mechanisms to gather data on their effectiveness. This allows you to make course corrections if needed.

In my experience, how do you prioritize is crucial to obtain results focused in core competences. Prioritize without team engagement don’t let things done.

Iterative Process: Improvement is often iterative; you make changes, measure, learn, and then make more changes. Quantitative vs Qualitative Data: One must distinguish between hard numbers and qualitative feedback, like customer or employee sentiments. Both are important. Time Frame: Immediate results may not always reflect the long-term impact of your improvements.

Timing is Key: Timing is crucial; sharing too early might create unrealistic expectations while sharing too late might miss the chance to boost morale. Two-Way Communication: It's also important to allow avenues for stakeholder feedback. This makes them feel heard and may provide valuable insights. Setting the Stage for Future Challenges: Celebrating successes also sets a positive precedent and can be referenced in future communications to illustrate that challenges can be overcome.

Results in restructuring need to be communicated after they are seen and felt by the business. No communication can preceed proven result, and result are not quick. Beware of celebrating quick wins: yes these are importan in ealry stages but contribute little to overall restructuring process success.

Imagine a tech startup that just went through a restructuring to pivot from a B2C to a B2B model. After successfully making the transition, they conduct a post-restructuring evaluation. They find that the early involvement of their sales team in the planning phase was a key success factor but realize that they failed to effectively communicate changes to their customer support team, leading to confusion. They document these insights and share them in a company-wide meeting. Knowledge Management Systems: Implementing a Knowledge Management System can be a structured way to store and share these insights. KPIs for Learning: Setting KPIs for post-restructuring evaluation can be useful.

"The day I will stop improving my game, that day I will stop playing basketball" Michael Jordan once said. Let's remember this while we turnaround businesses!

Perhaps the way in which an actionable knowledge base is created and related to tested contexts, in the era of AI, will be the greatest enhancer of competitive advantage.

In my experience restructuring is about creativity. Many of the great contributors to this article have laid out how data, processes and measurement instruments are key for a successful turnaround, and this is very true. However, restructuting a business or an operation is not only about data. It's about the ability to redesign, to rethink, to create something new, with craft, courage and determination. Early or slow success, measured by data, should not stop people from innovating and keep on fostering new business ideas. Change is driven by those of us with courage enough to rethink processes and imagine results with long term impact!