In the early 2010s, Unilever Ghana Ltd was struggling with losses and facing significant business challenges. Their position was precarious, and the outlook was not promising. However, the business landscape dramatically shifted over the next few years. By the end of 2015, Unilever Ghana had managed to navigate its way out of losses to a position of remarkable profitability. Their headline revenues grew by 26.38%, reaching GH¢518.73 million. Furthermore, the company’s operating profit, which was just GH¢4.1 million in 2014, experienced a massive surge. By the end of 2015, it had climbed to an astounding GH¢50.38 million. The transformation was not only a testament to Unilever Ghana’s resilience but also a beacon of hope for other companies in similar situations.
For over a decade, Bulk Oil Storage and Transportation (BOST) was a loss-making entity, struggling with operational and financial issues. In 2020, the state-owned enterprise posted a hefty loss of GH¢291 million. However, the tide turned remarkably in 2021, when the company reported a profit after tax of GH¢160.7 million. Revenue doubled from GH¢632.65 million in 2020 to GH¢1.12 billion in 2021. The financial turnaround at BOST was nothing short of phenomenal.
Once riddled with numerous challenges including illegal lottery operations, falling sales, unpaid wins, and employee discontent, the National Lotteries Authority (NLA) under the leadership of Director-General Mr. Samuel Awuku has seen a dramatic reversal in fortunes. Outstanding winnings of around GH¢14 million, which once caused distress to staff, were almost entirely cleared. Sales began to stabilize instead of declining further, and staff morale improved noticeably. The stark transformation of the NLA, from a problematic entity to a stabilizing organization, is indeed an impressive feat that is worthy of note and merits our attention for study.
The corporate landscape is replete with tales of struggle and resurgence; the Phoenix-like rebirths that exemplify corporate turnarounds. These challenging but potentially rewarding exercises in corporate revitalisation can shape the destinies of companies teetering on the edge of survival.
These three remarkable examples of corporate transformations underscore the fact that when organisations face seemingly impossible odds, a turnaround is possible; if Leadership knows when to turnaround and how to turnaround.
Understanding the Imperatives of Corporate Turnarounds
The need for a corporate turnaround often emerges from deep-seated issues within a company’s operational or financial structure. This often occurs after a prolonged period of poor financial performance, such as declining sales, low profitability, or increasing debt levels. Other times, the need for a turnaround is triggered by external pressures, such as changing market dynamics, a new competitor, or a shift in customer preferences. These often make the prospect of a turnaround not just desirable but crucial. It’s at this stage where the tools highlighted in Jim Collins’ renowned book, “Good to Great”, come in handy. His concept of confronting the “brutal facts” is a crucial element of this diagnostic phase.
This phase is however the trickiest. Management are often reluctant to accept and call for a turnaround strategy because that admission concludes that what they have been doing till date hasn’t yielded the desired results and there is a need for change. Sometimes the reluctance is borne out of an unwavering belief that investments of effort thus far exerted will yield result soon; if only given enough time. Sometimes it works; other times it doesn’t. The answer is often found after an analysis of the trends and trajectory of key performance indicators. A number of consecutive years of a poor performance is enough evidence that something far more drastic than a 3 day end of year off-site strategy session is required.
Faced with a litany of issues ranging from illegal lottery activities and dwindling sales to hostile internal relations, the NLA reached a point where business as usual was simply untenable. The story of BOST, however, is one of escalating financial losses threatening the viability of the enterprise. Both examples underline the why of turnarounds. An unchecked downward trajectory, whether caused by operational inefficiencies, a hostile working environment, or consistent financial loss, inevitably calls for a strategic intervention. The key is recognising the urgency and acting decisively and promptly.
Strategy and Execution: How are Turnarounds Carried Out?
Once the necessity for change is established, the next questions become what to do and how to do it. The modus operandi of a turnaround strategy can be nuanced, depending on each organization’s unique challenges. However, common threads of thorough assessment, strategic planning, and effective implementation can be observed in all three cases.
BOST, under the stewardship of CEO Edwin Provencal, refocused on operational efficiency, enhancing asset utilisation, reducing costs, and improving customer satisfaction. Expansion into landlocked countries, a shorter client turnaround time, and the implementation of a performance management system were integral to BOST’s revival strategy.
Plagued by financial loss, Unilever Ghana found itself at the crossroads a few years ago. Recognizing the need for drastic change, the company embarked on a strategy centered on cost reduction and market performance. Cost control initiatives effectively kept sales costs in check, and further controls on distribution, branding, marketing, administrative, and other costs led to a dramatic 1,122% increase in the company’s operating profit.
How to Execute a Successful Corporate Turnaround
Effective corporate turnarounds don’t just happen by accident; they require a strategically designed process that integrates the understanding of the problems at hand, the readiness of the team to change, and the implementation of solutions that effectively address the challenges
Step 1: Diagnosis
The first step is to fully comprehend the gravity of the situation. This involves a comprehensive assessment of the company’s current status, which includes an examination of the financial position, market standing, operational efficiency, and organisational culture.
Step 2: Planning
Once the diagnosis is complete, the next step is to craft a turnaround strategy. The turnaround plan should encompass a clear mission, a vision for the future, and a set of strategic objectives designed to transform the company. The turnaround plan should also outline key performance indicators to monitor the company’s progress.
Step 3: Implementation
The implementation phase involves the execution of the turnaround plan. This phase is often the most challenging, as it requires consistent effort and resilience. Crucial elements of this phase include the establishment of a quick win, rigorous execution of the strategy, and continuous communication with stakeholders.
Step 4: Consolidation
The final phase of the turnaround process is the consolidation of the gains made during the implementation phase. The changes made during the turnaround process need to be embedded into the company’s culture to ensure long-term sustainability. Kotter stresses the importance of this in his change model, pointing out that new behaviours and practices need to be institutionalised to prevent regression.
Conclusion
In the final analysis, the tales of Unilever Ghana, BOST, and NLA underscore the power of strategic thinking, swift action, and unwavering commitment to change. Each entity, through its distinct turnaround journey, paints a vibrant picture of resilience, innovation, and corporate rejuvenation.
These organizations stand as beacons of hope and exemplars of transformation, reaffirming the potential of well-executed corporate turnarounds. The essence of their stories lie not just in their triumphant revivals, but in the potent reminder that even amidst the harshest of storms, with astute leadership, strategic intervention, and robust execution, businesses can not only survive but thrive.
Jourade Quartey ACMA, CGMA, ICA, EMBA (LBS)
Jourade Quartey is the Executive Chairman of Quartsons Business Solutions a boutique consulting firm specializing in accounting, finance, consulting, and corporate training. Previously, he served as Country Director for Crown Agents Ghana Ltd and Crown Agents Investments Ghana Limited, where he played a pivotal role in managing and expanding the company’s operations.
