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Published: May 29, 2007

 
 

Why Wait for Trouble?

Then I asked for a copy of their personal objectives. And they looked at the floor: “Uh, we don’t have any personal objectives.” There is no accountability in a culture where there are no objectives and there is no communication. In this case, it was obvious we were in Stage One: bleeding on all counts.

Once an executive team has gone through the three questions and we have gained an understanding of the company’s position, it is time to create a targeted improvement plan, or blueprint, to focus everyone’s energies. It typically fits on one piece of paper and clearly outlines the game plan in a form that can be shared openly with everyone. This is the first step toward turning around, and it provides a consistent means to communicate the company’s vision to customers and employees. This blueprint includes:

  1. The company values: behaviors that, once established, will ideally be in place forever.
  2. The vision and mission: two simple, memorable sentences that describe, respectively, where we expect the company to be in five to 10 years, and in three to five years.
  3. A few strategic goals to be achieved in the next couple of years.
  4. Specific actions to achieve each of the strategic goals, with clear metrics and accountabilities.

In Japan, where I learned to do this, it is called hoshin planning. The effort doesn’t stop with putting words on paper. Ongoing communication of the game plan with every employee and with customers and suppliers provides the guidance to take the climb from bleeding to stability to gradual improvement, and in the end, to rapid improvement.

In a turnaround, I create the one-page blueprint with input from across the company and deploy it to every employee through town meetings, facility visits, and update calls. Thanks to the blueprint, everyone at every level has a common view of the world. They all know what the company stands for, what we are going to do, and how each of them fits in.

But that’s not what matters most. The company truly begins to turn around when the blueprint exists in the hearts and minds of the people. I have seen this sign of health emerge in the aftermath of a turnaround, when the company takes this diagnostic — the three vital questions — seriously. You need not wait for a turnaround, however: If you lay out the game plan when your company is performing well, then your travels through the business stages to rapid improvement may be so brief and mild that you’ll never need someone like me to help pull you out of crisis. 

Reprint No. 07202

Author Profile:


Kenneth W. Freeman ([email protected]) is a managing director at Kohlberg Kravis Roberts & Co. He is also the founding and former chairman and CEO of Quest Diagnostics Inc.
 
 
 
 
 
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