It’s easier – and harder – than it looks
Meet the Fixer
Ken Yager is a fixer, a rescue operation, the Olivia Pope you call when your company is in some deep sh*t. As founder of Newpoint Advisors, he’s gotten many of these calls over the course of his career.
The one he got a few years ago was … different.
A friend had called, an investment banker he’s known for a long time. An hour later Ken was on the phone, but his friend wasn’t the only one on the phone – there was a veritable cacophony of voices, and it wouldn’t have taken Ken’s experience to hear the distinct sounds of a company in serious distress.
It was a manufacturing company – let’s call them Fab Inc – with $16 million in annual revenue and 172 employees; their customers supplied Department of Defense contracts. And yet they were six months behind delivering to their customers.
Those customers were on that call, too. And they were, understandably, furious.
Ken stepped in the next day as chief restructuring officer, and began asking questions.
Communication is everything
“Often I get brought in only when a company is in serious financial trouble,” Ken says. “In those cases, it tends to be because the P&L has exposed serious operational confusion.”
Or, in other words: The right hand doesn’t know what the left is up to.
In the case of Fab Inc, it came down to a key smelting manager. He was really good at his job – but nobody was prioritizing projects, and he wasn’t empowered to say no. As a result, he had a constant backlog – and this manager or that manager was constantly trying to get their project to the front of the line. In any given day, he kept stopping to take account of conflicting directions and priorities that were dependent on who had been in his office last.
As a result, millions of dollars in projects were held up. Customers were furious. And the bank had pulled their line of credit – making it exponentially harder to fulfill the promised orders. Rumors and gossip flew around; management was stressed; 172 jobs were on the line.
Once that smelting manager’s schedule was locked down, and projects properly prioritized, things began to turn around.
It took 60 days, and then they posted the most profitable month in company history.
Don’t leave a vacuum
You know how the kids always know when Mommy and Daddy are going to divorce, but the parents don’t think the kids know?
It’s the same with companies in trouble, Ken says. “Management may think nobody knows what’s going on – but there’s something innate about human beings that knows relationships. We know when something is being withheld from us.”
That information vacuum will get filled without management’s help – but the results are likely to exacerbate the tailspin that brings a company to Ken’s door.
“When you go back to (Fab Inc) and think about what they were doing, you see that everyone had good intentions – from management on down. They all had spreadsheets, and goals, and experience. They all knew the right thing to do, individually. But all that perfect information collided, and nobody was prioritizing.”
The worse it got, the harder it was to hear each other.”
It’s rarely this simple
Ken loves the story of Fab Inc – it’s a good illustration of a big problem caused by one key process hangup.
Turnarounds aren’t always that simple. But they often come down to a bottleneck like that – a place where communication has broken down.
Ken is joining us on our live Dare Capital Dialogs this week to talk about his turnaround process – and what to do if your company is showing danger signs. Register here – and shoot me an email if you’d like Ken to discuss your situation. (Anonymously, of course.)
It’s gonna be a heck of a discussion.