Book Review : RISE LIKE A PHOENIX – SCRIPTING CORPORATE TURNAROUNDS
Book : RISE LIKE A PHEONIX — SCRIPTING CORPORATE TURNAROUNDS
Author : PRADIP CHANDA.
PUBLISHER : Sage Publishing.
Pages : 171.
Price : Rs 395
Scripting a company’s turnaround is no child’s play. And the task of a ‘Turnaround Management Consultant’ is no walk in the park. The biggest question to be considered is whether a turnaround effort is worth the blood, sweat and tears. The book — RISE LIKE A PHEONIX : SCRIPTING CORPORATE TURNAROUNDS — is authored by Pradip Chanda, whose corporate career has spanned four decades including twenty years as CEO.
His core competency has been the ability to conceptualise and champion clear business strategies while maintaining focus on achieving operational results. The signs of stress often begin as ripples in nooks and crannies below the senior management’s radars. Alarm bells start ringing when the market share charts keep going south, sales drop and the cash inflows become tighter. Knee jerk reactions follow.
Data based reasoned decision-making becomes the first casualty. Deep discounting destroys carefully nurtured brand positioning. Costs are indiscriminately cut, processes suffer, quality issues multiply and customers cancel orders. Jobs are threatened, good people resign and others begin looking for jobs. Disruption, which everybody has been talking about, seems to have caught the company with its pants down.
The urge to invite strategy consultants to chart out paths for restructuring, revitalising, renewing or reinventing the company, becomes strong. The consultants will focus on strategy reformulation and prescribe a silver bullet to cure all. Most of these solutions are resource hungry. A cash strapped demoralised organisation is rarely ready to fire the silver bullet, no matter how potent it sounds.
Such a company has to first go through a painful turnaround process to restabilise and prepare to launch a renewal programme. It has to find resources from within along with innovative uses of existing (often neglected) assets, use cost management as a strategic tool to enhance competitiveness, embark on short term strategic initiatives to revive the company’s morale and confidence in formulating a viable and sustainable business model.
To the turnaround manager, this internal personality crisis is the biggest challenge. If a company is to revive, a change in its personality is the starting point. The challenge lies in integrating the work force into the mainstream.
Chanda became President and CEO of Gramaphone Company of India Ltd better known as HMV at the end of 1985 when its accumulated losses had completely wiped out its net worth. His priorities pertained to renewal, cost management and funding the renewal.
The renewal process begins with sharp focus on immediate positive, revenue multiplying, activity involving as many people as possible. The company can move beyond a turaround phase only when a sustainable business model is ready for implementation.
A game plan was evolved that gainfully utilised over 90 per cent of the workforce. It was profitable, cash came in before production, the factory became a beehive of activity and large quantities of dead inventory was recycled. The company was back in business. Exploitation of its assets over the years has made it again the number one music company.
Chanda also took up the challenge of turning around the BFT or the Bharat Floorings and Tiles which was started way back in 1922. The next decade from 1930-40 may well have been called the renaissance decade. As WW II gathered momentum, the government diverted cement to defence installations. BFT tiles deprived of their basic raw material had to almost close down.
Almost all turnarounds require an asset utilisation strategy. The critical needs may vary from company to company but will centre around acquiring new technology, upgrading design and research capability, capacity building often requiring additional equipment, revamping the organisation by rightsizing, again at a cost, retraining the existing workforce, hiring new talent and promoting the products and services on offer.
An asset utilisation strategy is the only means available to an under performing company to generate the cash flow in the short term to tackle any of the needs mentioned. The first task at BFT was to audit the assets. The next big task was to get a fix on BFT’s positioning in the market and see if this can be leveraged to sustain a turnaround attempt.
Considering the nature of its manufacturing process, the author believed BFT was destined to be a niche player. The question was which niche? In this business getting an order was a time consuming exercise. It does not need a genius to figure out the more balloons or quotations BFT has in the air, the greater chance of establishing a steady flow of orders.
To begin with BFT needed to define the universe of architects in the Mumbai metropolis, its biggest market. It is now a national brand extending its reach to all the major cities in the country. The company has signed up for ISO certification to ensure quality adherence in all its functions prior to embarking on a ambitious capacity building programme which includes setting up production units in other parts of the country and perhaps one in South East Asia.
The author maintains that the core values of a company are imperative to win with grace. In this context Coca Cola has retained its appeal through half a dozen generations. It emerged as the number one brand of soft drinks once its centre of excellence moved from proprietary ‘cure all’ medicine category at its inception in 1886 — to a strong customer focus. The stable Coca Cola company has more than 400 brands and variants selling in 180 odd countries.
Henry Ford celebrated his 60th birthday in 1923. With sales exceeding two million units, Ford accounted for almost half the sales of motor cars in the world. The author emphasises that businesses do not fail but people do.
In this context the author specifically refers to the ouster of the Ambassador car, dominating the Indian roads till the late 1990s. He has also dwelt on the building blocks particularly unlocking the value of under-utilised assets.
Without growth many a turnaround would end up as an illusion. Chanda’s book is a must read, lucid and gripping for its valuable insight about a disruptive scenario. It seeks to sensitise those striving for a turnaround about the doable action plan and strategies.