Why Turnaround Specialists Need Market Invention
TIME TO TURN AROUND
The stakes couldn’t be higher. One wrong move, one misinformed decision, and the business could implode. Fresh ideas? Solutions? Leadership? Analysis? Those were needed months ago.
This is the world of the turnaround specialist—one of the most challenging, unknown, and unsung positions in the business community. These practitioners are typically deployed when an organization is in serious doo-doo, and they’re asked to do a job incumbent executives failed to perform. Their success depends upon, in the immortal words of Liam Neeson, “a very particular set of skills.” A turnaround specialist is expected to expeditiously concoct sure-fire ideas to save a business. They are ultimately lifeguards, and sometimes life preservers, for executives and companies.
THE MARKET INVENTION PARTNERSHIP
Turnaround specialists can be called in at all stages of failure, from decreasing working capital to impending bankruptcy. While the work of a turnaround specialist in these situations is irreplaceable, it can be effectively supplemented by incorporating Merit’s Market Invention strategy. This unique partnership turns a rather dire situation into a net positive by implementing change and inventing a new opportunity for a business to not only survive, but to thrive.
Market Invention, for example, works well for companies with a Z-Score of 1.8 or above. What’s a Z-Score? Formulated in 1968 by Dr. Edward Altman, Z-Score is a metric to determine businesses’ likelihood of bankruptcy. A Z-Score below 1.8 signals a high probability of impending bankruptcy, and there may not be enough time to implement Market Invention in this case.
With a better Z-Score, there is a higher probability that the company, the turnaround specialist, and Merit’s Market Invention team can get the company’s mojo back. All parties can then clearly identify purpose and opportunity and invent a new market to propel growth.
“Bad companies are destroyed by crisis; good companies survive them; great companies are improved by them.” – Andy Grove
A few instances where turnaround specialists and the Market Invention process can seamlessly work together are 1) entrenchment in a viciously competitive market, 2) a declining or radically transforming industry, and 3) a startup failing to bring its exciting vision to life.
DID SOMEONE ORDER A PIZZA?
A classic example of this collaboration is Domino’s. In the recent case of the worldwide pizza company, the turnaround specialist was also the company’s top executive.
Earlier this year, Domino’s CEO Patrick Doyle announced that he would be leaving the company. Doyle took charge of the pizza chain in 2010 when it had just hit rock bottom and shares were toileting around $12. By the time he left, they were trading at $206. Domino’s had gone from being the butt of bad jokes to being the largest pizza chain in the world. How did Doyle and his team do it? A brilliant blend of turnaround leadership, Market Invention, and fresh “cheesy” ideas.
Doyle’s pledge was to analyze the problem, find a smart solution, and work “days, nights, and weekends to get better.” This is the precise DNA needed in a turnaround specialist and a market inventor. He understood that Domino’s had originally gained popularity not just for its pizza, but for its prompt delivery. With this insight, Domino’s was beginning to understand the true value of its business model.
Doyle invested in custom-built Domino’s delivery cars, complete with high-capacity pizza warming ovens. He also staffed dozens of programmers to develop a Domino’s mobile ordering app. Pizza-loving customers could even order on Twitter, or just text a pizza emoji to their nearby Domino’s number. And while having a pizza delivered in a tricked-out pizzamobile is cool, having it delivered by drone is even cooler. Doyle reinvented the pizza delivery market.
Domino’s also significantly improved the quality of its ingredients and the taste of its pizzas. The company added unique creations, like specialty chicken tenders covered in cheese and toppings. A well-orchestrated and frank ad campaign, coupled with international expansion, added to Doyle’s vision for the company.
Had Doyle stuck strictly to some of the stratagems most closely associated with traditional business turnaround, like closing struggling locations and reevaluating financial forecasting, Domino’s would likely never have achieved the monumental growth that it did under Doyle’s leadership.
The turnaround specialist and the market inventor work collaboratively to understand the business, gather insights from other high-performing industries, extensively research, analyze the data, plot a smart course ahead, invent a new market, and iterate and expand the newly created market opportunity.
MARKET INVENTED, FORD TOUGH
Another recent mastery of turnaround magic and market invention is the case of Alan Mulally and the Ford turnaround.
Mulally was hired in 2006 to turn the company around, and his success was nothing short of historic, taking Ford from the brink of bankruptcy to American automotive powerhouse in just a few years. His leadership and vision have been the topics of countless articles, books, videos, and speeches.
The Ford Motor Company began as one of the ultimate examples of Market Invention by creating a new method of assembly, a better product, and incredible demand. As the picture below strikingly shows, it only took Ford 13 years to completely transform the way Americans traveled.
How would Mulally take the company from what seemed like the throes of death back to being a market leader and inventor?
Mulally outlined four basic goals, which he called the One Ford Plan:
- Aggressively restructure to operate profitably at the current demand and changing model mix.
- Accelerate development of new products our customers want and value.
- Finance our plan and improve our balance sheet.
- Work together effectively as one team.
You can see from those four goals, which Mulally had laminated on wallet sized cards and distributed to every Ford employee, that he insisted on efficient collaboration. He knew that spontaneity and communication were important, but he also knew that they had to be structured into lean, streamlined processes if they were to result in innovation and productivity. This transformation of stagnant corporate culture into harmonious team culture is a fast-track to Market Invention.
Mulally trimmed off brands like Jaguar and Volvo and recommitted all company resources to developing a lineup of best-in-class vehicles. He stuck to the four points, encouraged incredible levels of transparency, teamwork, and innovation. Suddenly, people wanted Ford cars again. In a few years, he helped Ford become one of the most profitable automakers on the planet. Mulally didn’t personally reinvent the auto market, but he did re-establish Ford’s historical position as a market inventor and industry leader.
TURNAROUND AND INVENT
Turning around a company doesn’t always have to be radical or seismic. Some changes can be subtle, yet positively profound. Regardless, there’s a time and place for a turnaround specialist. We argue that it’s almost always time to invent a new market or at least iterate and expand your position.
Is it time to make a change? Time to fully turnaround? Time to invent? Let’s decide together.
Public Relations and Market Invention
“We need public relations!” We hear this command frequently from big and small organizations across the country. However, we promptly question what exactly they’re seeking. Every organization needs a smart PR strategy, but most don’t know exactly how.
Five Lessons From the Growing Artisan Economy
We hear a lot about the artisan economy. It’s a movement towards personalized, hand-made, small-scale production that has been gaining lots of momentum in the US. So much momentum, in fact, that artisans are taking a measurable chip out of mid-sized manufacturers. According to the Inter-American Development Bank, if the artisan economy were a country, it would have the fourth largest economy in the world. While larger sized businesses obviously cannot compete with some aspects of the artisan economy, they can certainly reflect on some of the principles that are propelling artisan growth and apply them to their own organizations.
Portland, Oregon: A Growing U.S. Market of Invention
Portland, Oregon has promptly become one of America’s most alluring and fastest-growing cities. According to the U.S. Census, the Rose City is growing at clip of 1.36 percent per year. Known for its unmatched lifestyle, food, and drink, the city is also notorious for its creative weirdness. Yes, “Keep Portland Weird” is not only a cute motto, but a way of life.
How A Corporate Crisis Leads To Market Invention
In the past year, several companies have seen their previously respected reputations, staff morale, and overall profits severely dwindle as a result of a damning crisis that hit their business. However, a crisis should be seen as a learning lesson and opportunity to change, improve and invent.
Three Market Invention Trends for the Legal Industry
The traditional operation model for legal services is antiquated. Historically, the market has tolerated rampant inefficiency and low value for price. Lawyers typically don’t score high on the “benefit to society” scoreboard, either. But modern consumers want change: there is a growing demand for legal firms that engage with clients and operate with speed, accuracy, and convenience. And consumers want this efficiency at a much lower cost.