In today’s rapid and volatile economic climate, organizations must find ways to become more agile and recession-proof than their competitors. This is made more difficult when many organizations are still recovering from recent pandemic collateral damage. As financial uncertainty becomes more certain with inflation and interest hikes, many organizations find themselves in a position where they may need to look towards restructuring to ensure long-term viability.
Financial Restructuring is the Most Common Approach
A common turnaround solution for many organizations is to undertake Financial Restructuring. Restructuring of the legal framework to reduce money owed to creditors and continue to operate under insolvency guidelines. This can include steep cost cutting measures across the organization in efforts to lower overhead through asset liquidation and overhead reductions by adjusting headcount or recapitalization. Financial Restructuring is often a reactionary step that organizations take to weather a crisis and buy some time.
How About Operational Turnaround?
Another technique to weather economic storms is to have the organization go through an Operational Turnaround. Operational Turnaround reforms the practices and procedures to be more efficient and proactively addresses the underlying issues within an organization.
Financial Restructuring buys you time, but Operational Turnaround fixes the problem.
The infographic below illustrates the main four areas and some of the impactful tools that an organization may utilize to reduce costs and take advantage of opportunities for improvement. The overall goal of Operation Turnaround is to do more with less. This increases an organization's agility and survivability, an immunization shot for recessions if you will.
Get In, Sit Down, Buckle Up and Hold On…
With the era of real-time communication upon us, organizations have an instantaneous and continuous feedback loop of information. This allows real-time strategic adjustments in response to supply and demand fluctuations or financial mishaps. An organization's ability to respond to real time data reflects their agility. The application of systemic solutions to the organization operations maximizes the long-term viability and sustainability. Lack of preparedness for organizations means they are less agile in the markets and more likely to take reactionary measures after the fact. This lack of agility is what separates the sheep from the goats.
Time to Shine
Operational turnaround is not an effortless process, but it is essential for organizations that want to survive today’s economic storm. By focusing on the underlying problems within the organization, involving all levels of the company, and taking a long-term view of the company's future, operational turnaround can help companies to outlast their competitors during recessionary and inflationary periods.
About Techam: Techam Solutions is an operations and engineering consulting firm working with small to medium-sized manufacturers, private equity firms and their portfolio companies across multiple industries. We provide a wide range of operations management and engineering services to drive operational excellence and implement solutions that deliver reduced cost, increased performance, and enhance the company’s bottom line. We aspire to be a trusted advisor and a reliable partner who brings meaningful and sustainable value to our clients. For more information, call 316.768.1856 or email email@example.com.