Restructuring management is a process dedicated to corporate renewal. It involves management review, analyzing the root causes of failures, and SWOT analysis to determine why the company is failing. Once the analysis is complete, a long-term strategic plan and a restructuring plan are created. These plans may or may not involve a bankruptcy filing.
Once approved, restructuring professionals begin implementing the plan, continuously reviewing its progress, and making the necessary changes to the plan to ensure that the company returns to solvency. When a business that has experienced a period of underperformance transitions to a period of financial recovery, it is referred to as a change of course. This can also refer to the recovery of a nation's or region's economy after a period of recession or stagnation. Likewise, it can refer to the recovery of an individual whose personal financial situation improves after some time. To move forward in a recovery effort, it is essential to understand the problem down to its core. The best way to do this is by carrying out an accurate diagnosis.
If the situation is serious and a change is imminent, it is not enough to identify and try to fix one or two key indicators that are not on track. This could be just one of many issues, so you need to conduct a full diagnosis of the business. Management must comprehend what are the causes of distress, the current state of affairs and the realistic outlook of the company in an evidence-based way. This may seem obvious, but surprisingly many companies don't perform factual diagnostics. Often, they prefer to rely on their understanding of the company based on many years in business and use it to suggest actions without having a full overview of the situation in an evidence-based way.
This approach sometimes works, but it's a risky approach. When beginning with change management, it is important to recognize that there is an issue and to objectively understand its severity. It can often be the case that the current management has played an important role in getting the company into trouble. Therefore, it can be very difficult and embarrassing to expect current management to have an honest, objective, and comprehensive view of the situation, as this may require them to admit that serious mistakes have been made. Delays in realizing that there is an issue can make the situation even worse.
The sooner you recognize that there is an issue, the more time you have to fix it before it gets worse. Early warnings can come in many forms. It's important to note that these aren't the root causes, but rather warning signs that something is seriously wrong. If one or more of these situations occur, ask yourself if you really know why it happens and if you know the full extent of the problem. Can you honestly say that you are aware of the situation? Making an objective, data-driven diagnosis will help you “control” the situation. If you've ever tried to get rid of dandelions in your garden, you know that it's not enough to act on the symptoms.
You must get down to the root cause of dandelions or else they will keep coming back. When performing root cause analysis for change management, we recommend that you continue until you reach a point where management can improve since leadership is ultimately responsible for managing a company and failures cannot and should not be “blamed” on another party. The diagnoses should provide a preliminary feasibility analysis and a determination of the nature of change: Is change possible and what are the key areas to work on? The more serious the situation, the less time there will be for analysis. However, we don't recommend skipping any of these areas as leadership must own their mistakes for successful changes. In conclusion, it's possible to make changes without diagnosis but you're much more likely to reach your desired destination if you start by assessing where you are now.