Leading Effective Business Turnarounds

By Steven LHeureuxTurnarounds:Envisioning the Possible

- Steven LHeureux, Leadership key to sustainable growthCopyright 2010 and Updated 2015, Steven L'Heureux

Turnarounds require a methodical triage of the business situation and decisive action; but most importantly, a vision of what is possible.

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Copyright 2010 and Updated 2015, Steven L'HeureuxBuilding the Leadership Team

AgendaHouston,...We Have a Problem!

Turnaround Framework

Making Organizational Changes

Delivering Double-Digit Growth and Profitability

Wrap-up and Questions

The Principal Reasons for Corporate DeclinePercentageSheer Bad Luck1%External Factors Beyond Managements Control8%Internal Problems Triggered by External Factors15%Balance of External and Internal Factors24%Internally Generated Problems Within Managements Control52%

Copyright 2010 and Updated 2015, Steven L'Heureux4How Do Firms Get in Trouble?Source: Donald B. Bibeault, Corporate Turnaround

In Most Cases, Business Problems are Internally Generated.

Management Trying to do the Same Things Harder or FasterLack of Focus on Key Financial MetricsNo Clarity Within the Company of Objectives or Business GoalsInternal Rivalries and Intergroup ConflictsCulture of Contentment or Blame and Sense of EntitlementSloppy Business Processes, Quality and Cost Control ProgramsAbsence of Market and Competitive Landscape KnowledgeManagement is Self-Indulgent Rather than Self-CriticalPoor CommunicationsLow Aspirations, Negativity and No Accountability

Copyright 2010 and Updated 2015, Steven L'Heureux5

Top Ten Turnaround Symptoms

- Stanley J. Goodman, author of How to Manage a TurnaroundCopyright 2010 and Updated 2015, Steven L'Heureux6

Durable turnarounds are rarely accomplished as quickly as expected. The more deep-seated the companys underlying problems, the longer it takes for a cure. Even in the best managed turnarounds, things will often get worse before they get better.

Vet and Mentally Prepare the Leadership TeamBenchmark the Companys Performance and Quantify the Gap Against Industry LeadersIdentify the Underlying Causes of the ShortfallEstablish the Turnaround Plan ObjectivesGain Buy-in from Key Stakeholders on New Performance Metrics and Timetable for AchievementCommunicate the Plan - Infuse the Entire Company with a Sense of Urgency, Accountability and Passion for Winning

Copyright 2010 and Updated 2015, Steven L'Heureux7Turnaround Prerequisites

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Copyright 2010 and Updated 2015, Steven L'Heureux8First 90 Day Plan

Crisis StabilizationTake controlCash managementInitial cost reductionsCraft Strategic Vision and Identify 3 to 5 Priority Growth InitiativesAssess companys strengths and opportunitiesConduct product and market segment analysisBuild Go Forward Leadership TeamLaunch Stakeholder CommunicationsInstall Organizational ChangesStructure change: right-size the companyCulture change: build corp. resilience and commitment to winningImplement Critical Process ImprovementFinancial systems and controlsSales and marketingQuality and customer supportInformation technology systems

Radical, Not Incremental Changes are RequiredCopyright 2010 and Updated 2015, Steven L'Heureux9Turnaround Framework

Bias Toward Action Extraordinarily decisive individuals that operate with a high sense of urgency.

Outstanding Communicators Inspirational leaders that build confidence within the firms key stakeholder groups.

Highly Focused Able to quickly identify the important issues from non-essential and properly prioritize the necessary actions to be taken.Copyright 2010 and Updated 2015, Steven L'Heureux10Key Qualities of Turnaround Leaders

Key Leadership Team MembersHead of HR Strong people/team development skillsCFO Strategic, system process savvySales & Marketing Chief Highly competitive/winnerKey Department Head ContributorsProduct Marketing ManagerCustomer Support ManagerMarketing Communications/Brand ManagerCopyright 2010 and Updated 2015, Steven L'Heureux11Guiding Team Critical Players

Quickly Assess Key ManagersBenchmark against industry bestUse outside sources such as customers, search firmsCreate a management questionnaireLeverage testing toolsKouzes Posner Leadership Practices Inventory (LPI)Harrison or Hogan AssessmentStrengths Finder 2.0 (Rath)Meyers BriggsDISCEmotional Intelligence 2.0 (Bradberry & Greaves)Conduct an Employee Survey 360 review of managementFollow-up with the resultsHire a Team Leadership CoachCopyright 2010 and Updated 2015, Steven L'Heureux12Building The Team

Seriously Consider Hiring a Search Firm with Industry ExpertiseLeverage Testing and a Leadership Coachs InsightGive More Weight to Cultural Fit over ExperienceConduct Multiple Interviews Include Dinner with Significant OthersCopyright 2010 and Updated 2015, Steven L'Heureux13The InterviewDont Be Humble, Youre Not That Great- Golda MeirMeasure Along These Three Dimensions:

Authored by: Steven A. L'Heureux

Top Priority is Someone that Understands HR is about Supporting the Business ObjectivesExceptional People/Team Development Expertise Must Have Solid Business Knowledge Beyond HRExcellent Judgment Must Be Able to Value InputStrong Self-Confidence, Enthusiasm and TactA Developed Sense of Urgency, Action OrientedCapable of Being a Trusted ConfidantCreative Leader of Compensation and Motivational ProgramsHighly Skilled at Conflict Resolution Key Hiring Factors You Must Get This One Right!Copyright 2010 and Updated 2015, Steven L'Heureux14Strengthen the HR Function

There Are Five Essential Stages in Leading Successful Organizational Change:Raising a Feeling of Urgency - Reducing organizational complacency and fear of change. Building the Change Leadership Team - Identifying the right individuals and empowering the team. Communicating - Establishing genuine gut-level buy-in, overcoming confusion and distrust. Celebrating Wins - Diffusing cynicism, pessimism and skepticism by securing little wins early. Reshaping the Corporate Culture - Overcoming the pull of old ways of doing things by embedding new behaviors in the organization. Copyright 2010 and Updated 2015, Steven L'Heureux15Turnarounds = Change LeadershipSource: John Kotter, The Heart of Change

Authored by: Steven A. L'Heureux

Copyright 2010 and Updated 2015, Steven L'Heureux16Organizational Culture Change Four Key Steps

In Todays Dynamic Global Business Environment, the Ideal OrganizationalCulture is Based on Resilience Where it Anticipates and Proactively AdaptsQuickly to Market Shifts, Yet Remains Focused on and Aligned with the AgreedUpon Corporate Business Strategy.

Successful Turnarounds Typically Require a New Organizational Structure to:

Reflect a leaner operation Support rapid decision making Allow for flexible and cost effective resource allocation

Copyright 2010 and Updated 2015, Steven L'Heureux17Organizational Structure ChangeWhy Change? The New Structure Must Allow the Company to be Capable of Adapting Quickly and Successfully. It is Essential that the Company is Capable of More than Responding to Industry Trends, It Must Shape and Lead Them.

Authored by: Steven A. L'Heureux

The Organizational Design Imperatives are:Maximize ProductivityAchieve Competitive Market Advantage Evaluation of the New Structure Should be Along the Following Dimensions:

Efficiency of resource utilization Facilitation of sound & rapid decision making Responsiveness to the market Adaptability to change Ability to hold people accountable

18Organizational Structure ChangeGoal of ChangeCopyright 2010 and Updated 2015, Steven L'Heureux

Copyright 2010 and Updated 2015, Steven L'Heureux19Linking Strategy and SalesValue is created or destroyed in the marketplace with customersSource: Frank Cespedes, Aligning Strategy and Sales

Five Key Principles for Achieving Sustainable Double-Digit GrowthAccelerating Revenue Growth

Improve Customer BaseRetention

Focus on Market Share GainShow Up Where Growth is Going to HappenPenetrate Adjacent MarketsInvade New Lines of BusinessCopyright 2010 and Updated 2015, Steven L'Heureux

Source: Michael Treacy, Double-Digit Growth

Situation: Private Equity owned software and systems integration firm serving the broadcast and digital media industry. 5-years declining revenue and earnings.

Results: Within 17 Months, Revenue Jumped 145% and EBITDA Increased 240%...Company was Sold to Harris Corp., a direct competitor for 11x EBITDA.Revenue From Existing Customers Increased 84%Increased Market Share From 10% to 25% at Expense of Largest Competitor (Harris Corp., the acquirer of Encoda)New Customer Revenue Increased 10x by Targeting Emerging Global High Growth Market SegmentIncreased TAM (Total Addressable Market) by 4x via Expansion into Two New Adjacent Markets

Copyright 2010 and Updated 2015, Steven L'Heureux21Case Study #1: Encoda Systems, Inc.

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Situation: Private Equity owned industrial manufacturing and services firm serving the vehicle care industry. 5-years declining revenue and earnings.

Results: Within 4 years, Revenue nearly doubled to $115 Million and EBITDA Increased 380%. Distributed 1.7x of Invested Capital Dividend to Investors Within Second Year of Turnaround.Gross Margins Improved 5 pointsStreamlined Operations, Reducing Expenses by $4 Million Established Ryko as Unquestioned North American Market LeaderDiversified the Customer base (no single customer contributed greater than 8% of total revenue)

Copyright 2010 and Updated 2015, Steven L'Heureux22Case Study #2: Ryko Solutions, Inc.

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Strategy and Operational Decisions are Important, but the People Judgments are the Most CriticalInvest or DivestBuild an Empowered, Customer Centric Company Culture Always Ask Why Should the Customer Buy from Us?Champion Continuous Improvement, Actively Listen to Ideas and Be Open-MindedBe Flexible, but Remain Focused on the Agreed Upon Strategic and Financial GoalsMake Decisions and Act SwiftlyCommunicate Continuously and Honestly

Copyright 2010 and Updated 2015, Steven L'Heureux23Wrap-Up: Steves Seven Sayings

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- Abraham LincolnCopyright 2010 and Updated 2015, Steven L'Heureux24

Always bear in mind that your own resolution to success is more important than any other one thing.

Mr. Steven LHeureux is a catalyst for transformation and profitable growth; consistently delivering operational improvement and accelerated enterprise value creation. He has built enormously successful lower middle-market manufacturing and technology companies specializing in complex, highly engineered B2B solutions.

Steven possesses deep expertise in every facet of revitalizing under-performing businesses: strategic planning, global team building, market and financial analysis, multi-channel sales and marketing, leading multi-site global operations, continuous improvement programs and change leadership projects. He has led 16 M&A transactions, including nine accretive add-on deals, excelling at financial and functional post merger integration.

Copyright 2010, Steven L'Heureux25

Stevens C-level leadership experience is augmented by an extensive background in sales and marketing, ensuring a customer focus that translates to winning growth strategies and profitable revenue gains. An accomplished global leader, he has lived and worked overseas and conducted business in North America, Europe, Asia Pacific, Middle-East and Latin America.

Steven graduated magna cum laude with a degree in Economics from the University of Wisconsin-Whitewater.

Contact Information:C: +1 949-422-1437E: slheureux@rocketmail.com About the Author:

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Copyright 2010 and Updated 2015, Steven L'HeureuxThank You.Questions?Please email thoughts/comments to slheureux@rocketmail.com