What is Turnaround?
Turnaround is a process of radically transforming an ailing organization or business in order to achieve financial and operational stability It involves a combination of financial, operational, and organizational measures to turnaround an organization. It requires a deep understanding of the company's current state and its underlying issues, followed by robust strategies to address them. A successful turnaround also requires extraordinary leadership- someone who is able to guide the organization through the tough times and create new opportunities from the chaos.
The goal of turnaround is to not just restore the organization to its original state, but to make it better than before. It is about creating a new culture and mindset that focuses on agility, stakeholders alignment, customer service, and efficiency. All of this comes together to create sustained profitable growth and an improved competitive advantage.
The following are five of the best examples of successful turnarounds:
1) Apple: Apple Inc. was on the verge of bankruptcy in 1997 when Steve Jobs returned as CEO. He immediately started to make changes in the company’s business model, product line, and operations. He focused on quality and innovation, and released several successful products such as the iMac, iPod, and iPhone. As a result, Apple’s market value skyrocketed 10,100% from 1997 to 2021.
2) Nintendo: In the early 2000s, Nintendo was facing declining sales and stiff competition from Sony’s PlayStation. The company’s then-CEO, Satoru Iwata, took bold steps to revive the company. He shifted the focus from hardware to software, released innovative products such as the Wii and DS, and opened up new revenue streams. As a result, Nintendo’s sales quadrupled from 2003 to 2018.
3) Ford Motor Company: In 2006, Ford Motor Company was in dire straits. The company was losing market share to Japanese rivals and was facing a financial crisis. Then-CEO Alan Mulally implemented a turnaround strategy to reduce costs and streamline operations. He also shifted production to smaller, more fuel-efficient models. The efforts paid off, and the company is now profitable again.
4) Starbucks: In 2008, Starbucks was struggling with declining sales and a tarnished image. The company’s then-CEO, Howard Schultz, implemented a turnaround strategy that focused on improving the in-store experience, innovating new products, and ramping up marketing efforts. As a result, Starbucks’ sales and profits have been consistently growing since then.
5) Dell: In 2008, Dell was facing declining sales, market share, and profit margins. Then-CEO Michael Dell implemented a turnaround strategy that focused on transforming the company from a direct-sales model to a services-based model. This strategy paid off, and Dell is now a leading provider of technology and services.