Blackstone note on risk minimization in uncertain business dynamics-Bankers roadmap

Kenyan terrain:

A. Challenges

A.1. Inorganic leveraged growth has not been backed up through operating efficiency, product quality and the cascading effects of training cycles of a high end resulting in the dearth of cutting edge talent across domains in almost all the sectors.

A.2. Attrition points in the business process are essentially discrete and rudimentary to the overall objectives and the fine linkages between the points that connect to amplify outcomes are never seen on a continuous mode for a comprehensive decision tree architecture thereby rendering fundamental decision-making processes redundant.

A.3. Returns on net worth have dipped substantially with inorganic growth resulting in the higher incidence of NPAs – non-performing assets and the chain of conversion of assets into the NPA class has almost been irreversible with very few recovery or revival stories in the horizon that have sustained weakening influences of the timelines.

B. Solutions

B.1. Liquidation of debt is the fundamental strategy that revives the business organically and is the primary take of the company – Blackstone Synergy Consulting Group Limited, Nairobi in Kenya.

B.2. The peoples’ processes in building the tenets of manufacturing excellence are founded on integrating the productivity, machine down time, the quality enhancements, skill-matrices and a credible HR strategy that leads to lasting meritocracy in the organization across the ranks and files.

B.3. Product engineering, innovations that get factored in the brand strategy real time and the lasting impact of improved product economy in the ecosystem would be the high impact solutions offered by the company.

Creating the turnaround algorithm

C. Methodology and road map

C.1. Sector intervention: SME would be the ideal launching pad and preferably a cluster of companies that are similarly placed in terms of the liability and generic business issues would be taken up on an experimental basis for revival and organic growth through the effective liquidation of the debt.

C.2. Management intervention steps:

C.2.1 Appoint Blackstone Synergy as the Receiver Manager on behalf of Barclays after a comprehensive study of the business process followed by a dated proposal to bring in organic growth through a) Operating fundamentals, b) Strategic product branding and finally c) Financial re-engineering through the CDR- corporate debt restructuring options of converting the liabilities, 40% of the asset value and finally the factoring in of the market rate of interests.

C.2.2 The ideal time line for a complete business process transformation could be around 12 successive financial quarters or effectively three years timeline. The parameters and the concomitant variables are showcased and graded herein to elicit the right vision on the execution.

C.2.3 The execution would have coordinating points in the form of associates who would be spearheading the implementation program of the turnaround elements with the site management on a day-in and day-out basis to make sense of the transformation process.

D. Performance review programs:

D.1.1. The quarterly review programs shall be on delivery points that would be mark up on the benchmarks – typically the best achieved values empirically at the given site. Please refer to the detailed excel sheet for further clarifications.

D.1.2. Each of the variables in the parametric grid would be having factor weights definitive of the impact on the business thereby yielding the cumulative graded average.

D.1.3. The performance index shall be online and evaluated real time to bring forth the progress in the right perspectives for managerial controls. Quarterly review programs would

Creating the turnaround algorithm

essentially be high-octane sessions of mapping the delivery points on a quantitative reference frame.

E. Conclusions for the leased model:

E.1.1. The organic growth shall be evident in the accounts of the SME.

E.1.2. The equity earnings would be substantial in the leaded period.

E.1.3. The knowledge capital formation within the enterprise shall help the future to be ridden on.

E.1.4. Management intervention by the Barclays - Blackstone shall progress into mentorship levels.

E.1.5. The ownership and stake transfers could also be thought through at the end of the tenure.

At hindsight, this is essentially to be treated as an initiative to make a difference in businesses and thus in the lives of the people and the nation’s economy.

Creating the turnaround algorithm