Ten tips for leading companies out of crisis 맥킨지 ( McKinsey ) 가 제안 하 는 기업 위기탈출 10 계명 Even good managers can miss the early signs of distress , says McKinsey ’ s Doug Yakola , who ’ s been running recovery programs for 20 years . The first step is to acknowledge there ’ s a problem . 유능 한 경영자 조차 위기 의 예비 징후 를 놓칠 수 있 다 , 20 년 간 경영 정상 화 프로그램 을 운영 하 며 기업 구조 개선 작업 에 참여 했 던 맥킨지 의 더 그 야 콜라 ( Doug Yakola ) 는 문제 가 있 다는 것 을 인정 하 는 것 이 첫 걸음 이 라고 말 한다 . “ I ’ ve seen my share of boiled frogs , ” says Doug Yakola , comparing companies in crisis with the metaphorical frog that doesn ’ t notice the water it ’ s in is warming up until it ’ s too late . As the chief restructuring officer or CFO of more than a dozen turnaround situations over nearly two decades , Yakola has witnessed firsthand how managers back right into a crisis without recognizing that their situation is worsening . “ They ’ re not bad managers , but they ’ re often working under a set of paradigms that no longer apply and letting the power of inertia carry them along . ” And if they don ’ t realize they ’ re facing a crisis , they won ’ t know that they need to undertake a turnaround , either . He ’ s also heard the regrets : sometimes managers underestimated how critical their situation was — or they were looking at the wrong data . Others took advantage of easy access to cheap capital to stay the course in spite of poor performance , believing they could push through it . Still others got so caught up in the pressure for short - term returns that they neglected to ensure their company ’ s long - term health — or even willfully sacrificed it . Rare among them is the executive who stepped back to review his or her own plans objectively , asking “ Is this what I thought would happen when I first started going down this road ? ” That ’ s a problem , Yakola says , because acknowledging that your plan isn ’ t working is a necessary first step . Yakola joined McKinsey ’ s Recovery & Transformation Services as a senior partner in 2011 . Here , he offers ten ways ailing companies can get started on the turnaround work they need . 1 . Throw away your perceptions of a company in distress ( 위기 에 대한 고정 관념 을 버려라 . ) It ’ s next to impossible to come up with one working definition of a company in distress — and dangerous to think that you have one for your own company . Depending on the situation , there are probably 25 different signs of potential distress ( exhibit ) . The problem is seldom made up of just one or two of these things , however . Rather , it is the result of a greater number of them interacting together and with other external factors . 2 . Force yourself to criticize your own plan ( 스스로 자신 의 계획 을 비판 하 도록 하 라 . ) The biggest thing you can do to avoid distress is periodically review your business plans . When you ’ re creating them , whether at the beginning of the year or the start of a three - year cycle , build in some trigger points . A simple explicit reminder can be enough : “ If we don ’ t have this type of performance by this date or we haven ’ t gotten the following 12 things done by this date , we ’ ll step back and decide if we ’ re going down the right path , given what ’ s happened since our last review . ” Such trigger points should be oriented both to operational and market performance as well as to basic financial metrics and cash flow . Look at where you are as a company using basic financial and cash milestones , and then look at where you are with respect to your industry and competitors . If you ’ re not moving with the rest of the industry ( or not outpacing it , if the industry is struggling ) , then your plan may be obsolete . And don ’ t forget to look back at your performance over past cycles to identify any trends . If you keep missing performance targets , ask why . 3 . Expect more from your board ( 당신 의 이사회 에 더 많 은 것 을 요구 하 라 . ) The beauty of a board is that it has enough distance from the company to see the forest for the trees . Managers often treat their board as a necessary evil to placate so they can get on with their business , but that undermines the board ’ s role as an early - warning system when a company is heading for distress . It ’ s also the board ’ s responsibility to look the CEO , the CFO , and the chief operating officer ( COO ) in the eye and say , “ OK , we like your plan . Now let ’ s talk about what it would take to cut costs not just by 3 percent but by 20 . Let ’ s talk about all the things that can go wrong — the risks to the business . ” Sometimes significant events happen that no one could have foreseen , of course . But in a typical distress situation , a company has usually just had 18 to 24 months of poor performance , and the board hasn ’ t been aware or hasn ’ t asked the right questions . Independent board members — truly independent ones — can have a big impact here . The senior team at one company maintains a list of risks to the business , employees , and the plan . They review those risks with the board on a quarterly basis to ensure that they ’ re staying top of mind . It ’ s an excellent way to have conversations that you wouldn ’ t normally otherwise have in a business operation . 4 . Focus on cash ( 현금 에 주목 하 라 . ) A successful turnaround really comes down to one thing , which is a focus on cash and cash returns . That means bringing a business back to its basic element of success . Is it generating cash or burning it ? And , even more specifically , which investments in the business are generating or burning cash ? I like to think about this in the same way one would if running a local hardware store . By that , I mean asking fundamental questions , such as whether there is enough cash in the register to pay the utility bill , for example , or to pay for the pallet of house paint that will arrive next week , or how much more cash I can make by investing in a new delivery truck . When you bring a business back to those basic elements , the actions you need to take to get back on track become pretty clear . In many of the cases I have seen , the management team and board are focused on complex metrics related to earnings before interest and taxes ( EBIT ) and return on investment that exclude major uses of cash . For example , variations on EBIT commonly exclude depreciation and amortization but also exclude things like rents or fuel . These are all fine metrics , but nasty surprises await when no one is focused on cash . Keeping track of cash isn ’ t just about watching your bank balance . To avoid surprises , companies also need a good forecast that keeps a midterm and longer view . For example , failing to pay attention to the cash component of capital investments routinely gets companies in trouble . Project net present values can look the same whether the return begins gradually at year two or jumps up dramatically at year five . But if you ’ re not focusing on the cash that goes out the door while you ’ re waiting for that year - five infusion , you can suddenly find yourself with very little cash left to run the business , sending you into a spiral you may not recover from . 5 . Create a great change story ( 탁월 한 변화 스토리 를 만들 어라 . ) Companies in distress don ’ t focus enough on creating a change story that everyone understands — and that creates some sense of urgency . Here ’ s an example . I recently did a turnaround as chief restructuring officer of a mining company . It was profitable , returned a decent margin , and was cash positive . But the commodity price was dropping , and the board was worried about generating enough free cash flow to drive the capital needs of the business . The change story we created said , “ Yes , we are profitable . But the whole point of profitability is to generate enough cash to expand , grow , and maintain operations . If we can ’ t do that , then we ’ re headed for a long , slow decline where equipment breaks down and lower production becomes the new reality . ” If you can tell that story in a paragraph or less , in a way that means something to the average guy on the front line , then people will get on board . In this case , employees wanted to have their children and their grandchildren work for this company in the same remote mining location , and the change story spurred them to action . The key was a simple message , not fancy metrics . 6 . Treat every turnaround like a crisis ( 모든 기업 구조 개선 에 위기 처럼 대응 하 라 . ) Without a crisis mind - set , you get a stable company ’ s response to change : risk is to be avoided , and incrementalism takes over . Your workers are asked to do a little more ( or the same ) with less . More aggressive ideas will be analyzed ad nauseam , and the implementation will be slow and methodical . In contrast , a crisis demands significant action , now , which is what a distressed company needs . Managers need to use words like crisis and urgency from the first moment they recognize the need for a turnaround . A company that ’ s in true crisis will be willing to try some things that it normally wouldn ’ t consider , and it ’ s those bold actions that change the trajectory of the company . Crisis drives people to action and opens managers up to consider a full range of options . 7 . Build traction for change with quick wins ( 작 은 성과 들 을 통해 변화 를 위한 공감대 를 형성 하 라 . ) The tendency of most managers is to put all of their focus and resources into three or four big bets to turn a company around . That can be a high - risk approach . Even if big bets are sometimes necessary , they take a lot of time and effort — and they don ’ t always pay off . For example , say you decide to change suppliers of raw materials so you can source from a low - cost country , expecting 30 percent lower direct costs . If you realize six months later that the material specifications don ’ t meet your needs , you ’ ll have spent time you don ’ t have , perhaps interrupted your whole production schedule , and probably burned a bunch of cash on something that didn ’ t pay off . In addition to going after big bets , managers should focus on getting a series of quick wins to gain traction within the organization . Such quick wins can be cost focused , cutting off demand for some external service they don ’ t need . Or it could be policy focused , such as introducing a more stringent policy on travel expense . Not only do such moves improve the bottom line , they also generate support among employees . In any given company , you ’ re likely to find that a fifth of employees across the organization are almost always supportive . They work hard . And they will change what they ’ re doing if you just ask them . These are the people you ’ ll want to spend most of your time with , and they ’ re the ones you ’ ll promote — but you ’ ll probably spend too much time with the bottom fifth of employees . These are the underachieving ones who actively resist change , look for ways to avoid it , or are simply high maintenance . What often gets ignored is the remaining 60 percent of the organization . These are the fence - sitters , and they are tuned into action , not just talk . They see the changes going on , and if you proactively work with them , then 80 percent of the organization will be behind you . But if you don ’ t give them a reason to stand up and be positive about the company , they ’ ll go negative . That ’ s the importance of quick wins . When you quickly take real action , and when those actions affect the management team as well , you send a powerful message . 8 . Throw out your old incentive plans ( 낡 은 인센티브 계획 을 폐기 하 라 . ) Management incentives are often the most overlooked tool in a turnaround . In stable companies , short - term incentive plans can be a complex assortment of goals related to safety , financial and operational performance , and personal development . Many are so complex that when you ask managers what they need to do to earn their bonus , many just shrug their shoulders and say , “ Someone will tell me at the end of the year . ” In a turnaround , take a lesson from the private - equity industry and throw out your old plans . Instead , offer managers incentives tied specifically to what you want them to do . Do you need $ 10 million of improvement from pricing ? Then make it a big part of your sales staff ’ s incentive plan . Need $ 150 million from procurement ? Give your chief purchasing officer a meet - or - beat target . Be willing to forgo bonus payments for those that don ’ t achieve 100 percent of their target — and to pay out handsomely for those whose results are beyond expectations . 9 . Replace a top - team member — or two ( 팀 의 지도부 를 교체 하 라 . ) Experience tells me that most successful turnarounds involve changing out one or two top - team members . This isn ’ t about “ bad ” managers . In my 20 years of doing this , I ’ ve only seen a small handful of managers I thought were truly incompetent . But it ’ s a practical reality that there are managers who must own the decline . And more often than not , they are incapable of the shift in mind - set needed to make fundamental changes to the operating philosophy they ’ ve believed in for years . Whether they realize it or not , they block that change because they ’ re bent on defending what they believe to be true . Although it ’ s difficult , removing those people sends another signal to your stakeholders that there will be changes and you ’ re not afraid to make tough moves . 10 . Find and retain talented people ( 유능 한 인재 를 발굴 하 고 붙잡 아 둬라 . ) Beyond the leadership team , there are two types of people I look for immediately . First are those that have the institutional knowledge . They may not be your top performers , but they know all the ins and outs of the company — and are vital to understanding the impact of potential changes on the business . Many times they are the disgruntled ones , unhappy with the company ’ s performance . But you need people who are willing to point out the uncomfortable truths . A turnaround is also a real opportunity to find the next level of talent in an organization . I ’ ve been through multiple crises where the people who added the most value and impact weren ’ t the ones sitting around the table at the beginning . I have often found great leaders two and three levels down who are just waiting for an opportunity — and the fact that they can be part of something bigger than themselves , saving a company , is often enough to attract and retain them . For both groups , it ’ s important to realize that retention isn ’ t always about money and bonuses . It ’ s also about figuring out the individual ’ s needs . Good turnaround managers actively look for those people and find a way to get them involved .