We were having a conversation with an executive recently who shared about their experience parachuting into a business that was struggling with operational inefficiencies.
This executive, like many interims, kicked off the assignment by meeting face-to-face with the management team and employees to learn how the business functions, what’s working, and what isn’t. Their findings would turn into an operational roadmap of the business, where they would set out and implement a go-forward plan. When meeting with one team member and learning about what they did, the executive pointed to a process they had in place asking “why do you do that?”
The answer: “Because we’ve always done it that way”
Like a good spy movie, turnarounds used to center around a strong central figure making things happen. Turnaround stars and distress experts were born, like Stephen Cooper of Enron and Krispy Kreme fame.
In 1985 the Turnaround Management Association started as a conference of company turnaround specialists in Chapel Hill, ultimately creating a rigorous formal program and exam for Certified Turnaround Professionals.
“Back then the time frame for turnarounds was long,” Richard Lindenmuth, an executive who has completed 23 turnarounds over the years said. “There was bridge financing from banks that would facilitate a turnaround and bankruptcy was really used as a tool for restructuring a company.”
Times have changed. Many of the Fortune 500 companies from those days have merged or disappeared due to outdated technology, products, or services (think RCA, Blackberry, Zenith). At the same time, the way to turn around a struggling business has transformed, being driven by several factors:
My daughter eagerly accepted an internship at the morgue. Wait – how does she put it? The medical examiner’s office. Regardless, all I hear is morgue. Anyway, let’s move past the whole your-daughter-is-around-dead-people issue because here’s the interesting thing. They ask their interns to sign a statement agreeing to work pro re nata.
This was a new phrase for me: pro re nata. It is latin for “in the circumstances” or “as needed” or “as the situation arises.”
I believe the phrase is really a guiding light for the best interim execs around the world, because the best leaders operate as needs demand – pro re nata.
The Olympics are the perfect example of the difference between champions who win gold, silver or bronze, and everyone else who goes home empty handed. The winner could be winning by just one ten thousandths of a second.
Why do you think you or I are any different in our work – if we could improve our performance just a couple percentage points, we’d stand out from the masses clear as day.
Steve Jobs was genius at nuance, the subtle improvement that could cause massively asymmetric outcomes in favor of Apple. Thirty companies had MP3 products delivering hardware, software and content for streaming music. The category was done. Then along came the iPod. Not major changes, but so much better!
Everything seemed to be going well for a public software company. Growing at a rate of 50-100% for three years straight, the company was gaining momentum until one day it all came to a screeching halt. Just weeks before the annual 10-k report was due the board uncovered that the CEO and CFO had been taking a few too many creative liberties with expense reports and were stealing money from the company…yes, they were embezzling funds – a nightmare scenario for a public company.
The board went to work, firing both of the full-time executives for cause. They immediately appointed an Interim CEO and reached out to us at InterimExecs to bring in an Interim CFO to help them navigate through murky waters.
“It was a full-fledged crisis that included issues with culture, staff, investors, analysts, debt holders, Board members, auditors, the SEC and activist shareholders,” said a board member.
Most HR execs have been trained to look for candidates who have a track record sticking with companies for long periods of time. For many companies going through upheaval, rapid growth, or dramatic changes in their markets, that long-term permanent employee mindset may actually be more detrimental. When a company must evolve quickly, an executive hired on full-time may not be the right leader nine months or a year down the road.
The speed at which companies move in today’s world to stay relevant has paved the way for the new specialty of interim management, which includes executives focused on operations to finance, technology, sales and marketing. Interims are skilled operators who run, build, grow, and fix businesses. They take on accountability in C-level roles making decisions, reporting to the board, and being held responsible for the results.
Unlike executives who choose long-term, permanent jobs, interims are wired for transformation and usually are called in when companies need a leadership boost to get them on the right path. Once an interim brings an organization, division, or department to a better state of affairs, that new-found clarity and direction gives the HR team a cleaner slate by which to recruit and hire the next permanent person in the role.
Many private equity funds hear the words “interim executive” and think the only application is turnaround or short-term fill-in. But for PE funds seeking a great return, they look to interims for their unique abilities to build and transform companies.
Here are six major use cases for interim executives in PE-owned portfolio companies:
Interim Executives in Diligence
Most funds hope to spread their wings – work beyond industries where they’ve already had success, by looking at new industries where acquisitions may cost less and produce higher returns. The further afield they go, the more they need expert leadership removed from prior operating teams.
Interim executives, or interims, have recently become an important tool that organizations can use to effectively address a variety of pressing needs. Having said that, many companies are either unaware that interims are even available or appropriate for their current situation. The most common understanding of the role of an interim is to fill an immediate need in the executive team caused by a sudden voluntary or involuntary departure. In this case, a seasoned executive can step right in and allow the company to progress unabated. While much of what an interim does is similar to consulting, successful execution is critical and unique to the role of interims. This blog presents seven case studies to help companies better understand other instances where interims can help. There are certainly more examples, but these are representative. While seven represents everything from the apocalypse to luck in gambling, we’ll stick with seven.
I am amazed how boards, when they are hit with a crisis, look for a fix from the guy who has been in the same industry for the last 15 years. While this might be important for a company on a predictable path to growth in a stable industry (something very rare if not extinct these days), it becomes a liability when the industry is being disrupted by substitutes or by an industry cycle (see recent crude oil price crisis).
In my 20 year career as an interim exec, I have worked across many industries: electronics, software, oil refining and distribution, food packaging, retail and most recently agriculture in the jungles of South East Asia. These industries have been scattered across 12 countries on 3 continents. The problems faced by an interim are never the same, but the basics are always the same. It’s always about (in this order):
In a recent interview with The Philippe Matthews Show, Association of Interim Executives Chairman, Richard Lindenmuth sheds light on the most important component of any company in transition: its people. Lindenmuth, who has been an Interim CEO in a number of industries ranging from high technology to services shows how to gain people’s respect, trust, and engagement.
First-year Change Agent members have access to the Interim Institute’s 4 hour audio program on the Fundamentals of Interim Management, and a one-hour strategy session to help jumpstart their interim career.
*$200 additional charge for Accelerator Program only applies for first-year members. After the first year, membership renews at $485/year.