Why struggling companies should consider hiring outsourced executive support
Part 1 of a 2-part series
When business declines more than your industry average you will be forced to execute a turnaround strategy. It’s a scary place to be because clearly something is not functioning properly within your organization. It’s especially alarming when it catches your executive team off guard and the strategy, or lack thereof, that was in place is no longer relevant in the changing landscape.
I’ve worked for large multi-billion dollar publicly traded companies and have experienced many turnaround situations and have context for how to handle a difficult situation right and have also experienced how not to handle it.
First and foremost, don’t panic. When business is declining rapidly I understand that it’s hard not to panic but that’s what most so called leaders do; they overreact, locking themselves behind closed doors with a few other “trusted” (i.e. self interested) people talking themselves into bad ideas and the first lever they usually pull is firing people. Although this tough decision is sometimes warranted, that is rarely the right move. Sure, the income statement may look healthier and artificially prop up the bottom line but this is not solving the underlying problem.
Instead, executive leaders must remain calm and pull together all the cross functional leaders to dissect where the business is falling short and why customer expectations have shifted. An honest approach such as this is only possible if the company has a growth mindset culture (learn more about a growth mindset here). This should not be a meeting of pointing fingers, in fact, each executive should own up to what they perceive is underperforming within their own area of responsibility. This may not always be clear, however.
A good starting point is to get out of your own way of assuming what the problem is and ask your customers what they think. They will give you the cold hard truth.
Running in place with carbon copy executives
It’s very easy, and frankly, natural, to be blinded by our own bias. It always makes me laugh when a company fires an executive and then hires a carbon copy of that person from a competitor. I’ve recently witnessed two competitors literally swap presidents as if it were a POW (prisoner of war) exchange between two rival countries. Does this hiring approach really unlock new ideas on a path to growth? Unlikely. You get the same old tired ideas with a fresh new coat of lipstick on a pig.
That’s not to say that executives within a certain vertical with decades of experience don’t offer value; of course they do. What I am saying is that if your entire team has the same exact background you’re never going to have a breakthrough in your business. When a job description states that you must have “xyz” experience in a particular space you are closing yourself off to disruptive talent. Just look at any startup unicorn; nearly all of them were started by entrepreneurs who had zero experience in that particular space thus disrupting the “old way of doing things” and creating a much better product, service, or business model.
Sorry, we can’t hire you because you don’t have “toothbrush experience”
One of my favorite consumer product examples is Quip electric toothbrushes, which was started by two industrial designers with zero “toothbrush experience”. Up until this point, the electric toothbrush space was dominated by large corporations who thought that only wealthy consumers appreciated this type of product and manufactured expensive & bulky tooth widgets ($200-$300). The real problem was customers forget to replace the toothbrush heads and after a few months stopped using them. So, these fellas at Quip disrupted a stagnant space by first understanding what the true pain point was. They created a sleekly designed toothbrush, established an entry price point positioning ($25-$40), combined with an innovative subscription model to replace the $5 toothbrush heads (that was the real problem they solved) every 3-months.
Vuori, Bombass & Away all have very similar stories.
The moral of the story is, when companies are struggling and in a turnaround cycle this is a good opportunity to hire outside executive support for a fresh perspective to look at the problems differently and guide the company back to growth.
Questions to ask during a turnaround cycle
- Are we solving a real problem?
- Do we have a product issue that customers are rejecting and preferring (gulp) a competitor’s product?
- If your product is in the CPG (consumer packaged goods) space, is the packaging inferior to the actual product inside or vice versa?
- Is our product being sold in the right distribution channels and are there other channels we should be pursuing?
- Are we over distributed with a partner who is not representing our brand properly?
- Is our pricing strategy (i.e. price-to-value ratio) no longer competitive and do we either need to increase the quality of our product or rethink our supply chain to lower prices (because you have to maintain gross margins)?
- Is our marketing messaging not resonating with the customer and why?
- Are customer acquisition costs (CAC) increasing at an unsustainable rate?
- Are supply chain delays causing us to miss key calendar events in the selling cycle?
- Is customer service properly trained to manage negative customer experiences and convert into positive experiences?
This list could have a very long tail but the point is to have a holistic vantage point. It’s a great idea to have an outside, critically independent, point of view to help you uncover things within your business that you never considered. Oftentimes this doesn’t necessarily require additional investment, rather creating process efficiencies. When capital is required, an experienced executive can provide clear ROI expectations to justify the investment. The result is a combination of increased revenue, improved operating income, and return on investment.
I’ll share one of my positive turnaround experiences with this Calvin Klein case study.
If you are a consumer products company allow me to fill this executive sales, strategy and growth role within your business to help you achieve the next level of revenue for a fraction of the cost of hiring an in-house executive.
But please note, I do not have toothbrush experience and that’s precisely why you should hire my services!
Please reach out and let’s discuss how I can help your business grow revenue.
The second part of this series focuses on Growth Acceleration Strategy on the opposite side of the spectrum.