Tuesday, February 22, 2011

Turnaround Coaching – Oxymoron or Opportunity?

Posted on Tuesday, February 22, 2011 by International Coach Federation

If you talk to a turnaround manager or consultant, the issue of business recovery is all about taking charge, immediate change, cash flow and leadership. The owners or stakeholders are often reduced to instruments the consultant uses and might later discard. To the command and conquer consultant the notion of coaching an owner or management team through a business transformation is as relevant as coaching your neighbor kid’s soccer team. But this is a fallacy.

If the client company happens to be too small for a costly outside turnaround consultant and the owner or principals are sound but uninformed as to the vagaries of turnaround, the creditors and other stakeholders may first want to pursue self-help from within. It is this premise that can become an opportunity for coaches with a unique blend of leadership skills, business turnaround knowledge and overall interpersonal relationship finesse that can be imparted to an individual or small client team.

The key differentiator is that a coach works with individuals and is accountable as such in the coaching agreement whereas the consultant works through individuals for a client organization governed by an engagement agreement. Generally coaching is a voluntary action, while consulting may be involuntary and levered by an outside creditor or stakeholder.

Definition of Turnaround Coach
So what box can the turnaround coach be placed in? Good question, but with a not so straight forward explanation. The answer is more like describing non purebred dogs. A mixed breed canine may be labeled a “Heinz 57” after Heinz’s 57 varieties of products at the end of the 19th century (actually it was more than 60 in reality), and that number became attributed to the description of hundreds of pooch mixes. Now turnaround coaches aren’t dogs and don’t have 57 varieties but the attributes of this type coach require more than 57 skills (some not even coaching). Some key turnaround coaching points:

1. Generally, turnaround coaching is considered facilitative – that is, coaching paves the way to a deeper awareness of the issues at hand, and requisite action or corrections needed in a definite path forward. Turnaround coaching is not indirect or passive with the client in any way, shape or form. The relationship is direct and continuous in collaboration with the individual or principals, achieving common goals in defined, usually short, spans of time.

2. Turnaround coaching is a sub-set of business coaching but with smatterings of the following:

a. Executive coaching – liberates mind numbing, stuck-in-the mud personal orientation of embattled business owners or principals; using continuous feedback and trial-error-adjust-and-act follow through; moves boldly forward with encouragement and backing of the coach that translates to more effective leadership in a troubled environment.

b. Corporate coaching – facilitating organizational change and transformation through the individual or client’s understanding of the parameters to success or failure of the enterprise, where the client ultimately becomes the coach to his or her own organization.

c. Leadership coaching – engaging in personal accountability that translates into effective decision-making and leadership skills in times of extremis that are imparted to the organization through exemplary actions.

d. Operational and financial coaching – this entails identifying root causes with client and supplanting obstacles and roadblocks stemming from either partial illiteracy of tangible knowledge (accounting, financing, asset control, human resources, operations, etc), or a void in which focal point learning was never utilized or learned. The path forward is usually much changed from that in the rearview mirror; remediation is clearly a mandatory part of the coach-client collaboration. But the efforts are focused on the individual client who in turn coaches and directs his or her own organization forward.

3. Turnaround coaching displays both convergent and divergent thinking. In convergent thinking, the coach and client locate the problems at the "center" of the focus and then gather peripheral resources to bear down on the issues. So the collaborative resources "converge" on the problems. In divergent thinking, rather than gathering information and converging it on the central problem, the coach and client branch off (diverge) and shoot for novel ideas, new perspectives and creativity in critical problem solving. Instead of a single correct answer, there may be a whole host of possibilities(1). This is of paramount importance in helping the client re-think and adjust their business plan, course of action or method of managing.

The Coach versus Consultant by Analogy
Taking a step back it helps to understand by simple analogy the difference between the orientation of the turnaround coach and consultant. Imagine if you will, these variables: A car represents a company; the driver represents the individual client; a ditch – well you probably guessed it – the place where the business is sitting, literally. Ergo, the car is now “in the ditch.”

The consultant, at significantly greater expense, shows up with a tow truck (and possibly helpers) where the driverless car is in the ditch. With experience PULLING cars (companies) out of the ditch, irrespective of whether a driver is engaged or not, the consultant applies those skills, experience, and judgment to either succeed or fail getting the car out of the ditch, based upon personal efforts alone; then leaves. There may or not be helpers and a tow job is never considered cheap.

On the other hand, our hapless driver and his car are both in the ditch attempting to drive out but not quite successful at the task. The coach goes into the ditch, assesses what is needed, and determines that with a significant effort the car and its driver together can be PUSHED out of the ditch.

Consulting is about PULLING, and coaching is about PUSHING the client. Not all cars can be pushed or pulled out of ditch if the conditions are such that the car is wrecked or otherwise inoperable.

Characteristics of Turnaround Coaching
Coaching will use specific reality-based, transformational decision making; personal accountability rules; organizational and financial restructuring skill-sets; interpersonal communications; goal setting that can be channeled through the client, with continuous empowerment, encouragement, adjustment and feedback by the coach.

Clearly, not all clients are coachable, nor are all situations conducive to a coaching alternative. But for many small businesses laid threadbare in uncertain economic times (with little financing), the relationship with a competent coach can be life changing for a business that might otherwise perish, with little fanfare or headlines to follow its demise. But getting to that point has its distinct stages, each an obstacle or “milepost” to overcome.

Stages of a Turnaround
As the case with turnaround consulting, coaching focuses on analysis, planning, negotiation, restructuring and remediation which entails getting to the root causes and then weighing the practical realities of whether a business can be transformed by change, or must be liquidated to memorialize value that will ultimately erode if the status quo is maintained.

Coaching also assists the individual to be positive in the face of adversity and use challenges and mistakes as facts that serve to prime change even when confidence has been eroded.

The coach relies on personal skills to enable, empower, encourage and remediate in collaboration with the client. The stages of the turnaround process are…..(2)

1. The Evaluation and Assessment Stage situational and viability analysis
2. The Acute Needs Stage usually relates to elimination of expense and raising of liquidity.
3. The Restructuring Stage usually when client and coach re-order the assets and liabilities to workable levels including the change in business plan and workforce. It is also a determining factor whether the company can be fixed outside or inside bankruptcy or liquidated.
4. The Stabilization Stage usually expressed in curtailment of “burn” or consumption of cash yielding breakeven results and reversal of key negative trends. A second factor is that outside stakeholders accept the practical realities that their investment in company is altered and there is agreement to move forward under revised terms.
5. The Revitalization Stage The Company has renewed its business plan as evidenced by a return to modest growth and perception that the company would no longer be classified as troubled or lacking in viability.

The smallest troubled companies and those with competent but uninformed owners or managers may represent an opportunity for specialized turnaround coaches possessing many skills including technical knowledge and multiple coaching styles. Key determinates are clients who are “coachable” and can collaborate effectively to achieve a turnaround with decisive, timely follow through. The coach PUSHES where the consultant PULLS the client through the five stages of turnaround: Evaluation, Acute Needs, Restructuring, Stabilization and Revitalization. The argument consultants post that turnaround coaching is an oxymoron or a self-canceling statement may not be true. There are, in fact, a certain number of cases where solid coaching and attentive, collaborative clients can work through a difficult process together. Coaching is a viable and cheaper alternative to consulting teams that are largely levered into situations when creditors have lost confidence in management, whether factual or not. To coaches with the mettle and qualifications to enter the fray, turnaround can represent an opportunity that can be a significant challenge and immensely interesting work.

(1) http://www.ehow.com/how_2158036_convergent-thinking-versus-divergent-thinking.html. How to Understand Convergent Thinking versus Divergent Thinking, by Michael Motta, 2010

(2) ''The Process and Players in a Turnaround'', by Jim Mayer, Bankruptcy Law Review, Turnaround column, Falkner and Gray, Volume 1 num 3, Fall 1989 (as updated by author 1/2011) see: http://en.wikipedia.org/wiki/Turnaround_management

About the Author
Jim Mayer is Managing Member of DiversiCorp LLC, a revival of a firm he originally founded in 1985 devoted to consulting, coaching, advising and financing services delivered to small companies both public and private. Mayer wrote extensively during the 1990’s on various topics including: turnaround, cross border asset based lending, collateral management and topics about small business. Since 1985 he has advised or coached more than 150 companies directly and several times that number indirectly, through advisory teams he has managed or directed. At present he is facilitating a keener understanding of turnaround brought into the world of coaching. He is a member of the Turnaround Management Association, The International Coach Federation and The Institute of Management Consulting. Mayer lives in the western suburbs of Chicago.

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