The First Step to Health is to Recognise that You are Sick and Need Treatment

by Mike Teng - Date: 2006-12-29 - Word Count: 630 Share This!

The first step to good health is to acknowledge the presence of pain and that all is not well with the body. In many ways, the job of the turnaround manager is akin to that of the physician. The first step is to diagnose the corporate patient's condition before even attempting to prescribe the right medication. For prescription without proper diagnosis is malpractice.

The starting point is crucial to ensure that you have the right footing. To learn any skill, one has to take that first step. If you want to learn to swim, you have to take the first step of plunging into the water. To learn to parachute, you have to take the first step of jumping out of the airplane. One can read about and rehearse all the knowledge about swimming and parachuting or any other skills. However, one will never learn the skills if the first step is not taken to do the 'real' thing. Ironically, it is found that the first step is always one of the most difficult steps to take in any venture, for it entails stepping into unknown territories and unchartered waters. Whether it is taking the first step to recognise that one is unwell or taking the first step to learn a new skill, the first step is also one of the most rewarding.

However, diagnosing the company's health is not as straightforward since many qualitative factors are involved. Oftentimes, the management also plays the game of denial and deception. Usually there are ample warning signs or symptoms of impending trouble such as high attrition of good staff, declining brand value etc. However, the management may be in the state of self-denial or does not wish to let out the knowledge of the company's predicament. Admission of the failure may expose them to criticism by the company's board of directors, shareholders and their peers. Unfortunately, this may result in delays in implementing the vital remedial actions during the early stage of under-performance. Adoption of prompt actions may have significantly improved the company's quandary and chances of survival.

Denial and deception remind us of the former Iraqi Information Minister, Muhammed Saeed al-Sahaf who made comical and untruth remarks about the realities of the outcome of the US-Iraq war: "There are no American infidels in Baghdad. Never.They are coming to surrender or be burned in their tanks.Who are in control, they are not in control of anything. They don't even control themselves. Be assured. Baghdad is safe, protected." These statements were made despite the fact that the American forces have already landed at the Baghdad airport and within days Baghdad was captured by the allied forces.

Some sick companies play another game of 'don't know and 'don't care'. This is ignorance and apathy. Similar to taking care of physical health, these companies fell sick because of not knowing what to do as well as neglect. Their 'cannot be bothered' attitude was perhaps the result of having been distracted by politics, mesmerised by new acquisitions or focused on the wrong strategies. These have misled the management from doing what is right for the company. As a result the company falls into ruins and tatters. After recognising that the sick company needs treatment, sometimes the beleaguered management's vision may be limited by the symptoms and not addressing the cause. At this juncture, it will be useful to probe further with broad questions such as:

Is the company in trouble with the law, bank, creditors, etc?

What is the cash flow position?

Is the company up for sale?

Can the company be turned around?

Should the company be closed?

Once these broad issues are determined, the turnaround manager then ventures into deeper issues relating to finance, marketing, operation, etc before deciding the appropriate treatment.

Proper medicine can only be administered after the acknowledgement that there is pain.

Related Tags: change, board of directors, administration, turnaround manager, beleaguered, shareholders

Dr Mike Teng (DBA, MBA, BEng) is the author of best-selling book, "Corporate Turnaround: Nursing a Sick Company back to Health." He is known as the "Turnaround CEO in Asia" by the media.http://www.corporateturnaroundexpert.com

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