Any number of subtle events can retard growth or present opportunity for expansion. Companies underperform when negative human performance and negative operating events combine with negative economic events to affect revenues, costs, and liquidity — and when management fails to mitigate the harm. Companies move — increasingly quickly these days — from health to sickness to death. There are opportunities during the process to stop the deterioration, but frequently they require radical change.
The difficulty is that most people fear and avoid change, even positive change. They don’t like it because it is not comfortable. Yet it is always better to address weaknesses early because losses grow exponentially as problems grow, working capital is depleted, and alternative solutions available to a CEO diminish.
Reprint No. 03401
Jay Alix ([email protected]) is the founder of AlixPartners LLC, a leading turnaround, performance improvement, and financial advisory firm in Southfield, Mich.
Jay Marshall ([email protected]), a former vice president at Booz Allen Hamilton, is a principal with AlixPartners. Based in Dallas, he co-leads its performance improvement practice.