In the course of a crisis, waiting is no longer an option. Action must be taken and as quickly as possible. Only this can stop the outflow of liquidity and the destruction of value and the organisation can be sustainably realigned. This often means significant structural adjustments that should be made together with the staff. It is crucial to use the crisis as an opportunity. In practice, this ideally means freeing up resources through structural adjustments, digitalisation and standardisation of processes in order to significantly increase turnover in parallel, for example through an efficient E-Commerce organisation. If this path is consistently followed together with the staff, the stakeholders and employees can be shown a perspective for the company and the company can be strategically realigned.
The actual process of a digital turnaround consists of four phases, as shown in Figure 1. A diagnostic phase in which the causes and disruptive factors that led to the crisis are analysed. Based on this, potentials and KPIs can be defined in a second phase and a target structure can be set. In the event of a liquidity bottleneck, emergency measures must also be developed in parallel and implemented immediately. This allows the company to be stabilised.
The company is now stabilised and a strategy and target structure have been developed and agreed upon. Based on this, a concrete implementation plan is defined. The level of detail is increased step by step in a multi-stage process. Systems, tools and incentive systems are planned and recorded in an implementation roadmap.
Now the plan is in place and it is time for consistent implementation. Many turnarounds fail at this point. Therefore, consistent tracking is indispensable. The board of directors must be consistently involved so that the urgency and importance of consistent implementation is seen by everyone involved.
The basis for a successful digital turnaround is a competent and strong implementation team. In addition to professional competence, communication with all stakeholders is critical to success. Therefore, a lean and yet robust governance is set up for the implementation of a successful turnaround, through which the actual analysis and transformation process is controlled, implemented and communicated.
Figure 1: Implementing a successful digital turnaround
Thus, the governance structure is a crucial component of a successful turnaround. Roles and responsibilities are clarified and cooperation with stakeholders is coordinated. In the course of this, a well thought-out communication strategy is of crucial importance. It is also essential to create a sense of urgency. The board and investors have a crucial role to play here. Only with their backing and visibility is a successful digital turnaround even possible. This backing also forms the backbone for successful change management, which should always see the employee as part of the process.
If the given process is implemented consistently, the company can be stabilised and aligned to the online markets. Especially in the environment characterised by COVID-19, this is often the only way to grow sustainably and to hold one’s own against the competition.
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Markus Fost, MBA, is an expert in e-commerce, online business models and digital transformation, with broad experience in the fields of strategy, organisation, corporate finance and operational restructuring.Learn more