Thought Piece

If these tensions and fault lines have a starting point they can often be traced back to a merger, acquisition or reorganisation, where differences in operational approach are never reconciled. Often, though, there is no obvious catalyst.

It is usually possible to change the culture and behaviours of an organisation. But change programmes sometimes fail and are always expensive. Many organisations are filled with clever people but some difficulties remain intractable. The existing way of working seems to be ingrained within the institution. A client said, "I have never been unable to implement improvements before but I am flummoxed and frustrated this time." Everyone had a good reason for their actions but with unhappy results.

The idea that the best intended actions by individuals can inflict damage on their environment was dubbed, 'The Tragedy of the Commons', by Ecologist Garrett Hardin. His example was where everyone has the right to graze their sheep on the commons then eventually all the good grazing disappears.

But work has to carry on and the outcome of these intractable problems is workarounds. Anyone who has worked in an organisation has come across these kinds of workarounds. Although they consume resources, they do not look like workarounds where they are being done. At this level, they look like work tasks.

The key to fixing the underlying fault lines and reapplying the resources consumed by workarounds is in understanding the nature of the misunderstanding and the nature of the pressures acting on the fault line.
Mending these fault lines is not easy but it can be done. It takes determination and often some detective work. When a fault is found, the temptation is to think of an easy fix (sometimes called a 'Quick Win') such as changing a routine in a system. The risk, of course, is that the change is another workaround. Unless you ensure you have tackled the root cause of any difficulties - understanding the systemic implications of recommended changes - then issues or costs often reappear.

Banks are not charities. But they do calculate the lifetime value of the customer and they understand the reputational risk to themselves of the slash and burn exercises they are sometimes accused of.

That brings us to the role of the banks, so often the largest creditor and certainly the one with the most intimate knowledge of how a company is faring. We all love a stereotype and the heartless, faceless bank pulling the plug on sound businesses over a minor blip sits deep in the business consciousness. But not all banks fit this caricature. "We want to work with management of a business facing difficulties to help identify the issues and provide solutions to get them back on track," says a senior manager with a leading retail bank. "We can make the most impact when the problems are identified early. We are keen for management to be open with us."

Banks are not charities. But they do calculate the lifetime value of the customer and they understand the reputational risk to themselves of the slash and burn exercises they are sometimes accused of. Most solutions to business difficulties involve access to more funds and/or different products (hedging, leasing, factoring) and that all adds up to continued and profitable involvement for the bank.

A Repositioning Turnaround may mean divestment of a troublesome subsidiary. It may mean embarking on (yet another) cost-cutting exercise, including turning away revenue opportunities if they are not of a sufficiently high margin. It most certainly involves a first step of getting an impartial and pragmatic overview of what the problem actually is, from Turnaround Professionals who also know the kind of language with which to talk to banks. The moment you take this kind of decisive action, you're likely to discover that there's no crisis, no drama, only urgent action that must start now.

Peter Charles 2010