Igniting a turnaround. (CEO Journal).

A troubling fact of economic life is that the question on the lips of many foundry CEOs these days is "How do I save my business?" How should CEOs respond when their companies are in trouble? Assuming that bankruptcy is not imminent, the answer I give is to ignite a turnaround.

As I see it, a turnaround is an across-the-board rethinking and, ultimately, restructuring of each major business function, every process, and every employee's attitude and behavior so that a predetermined end is achieved. Such an "end" typically is a revitalized business with more revenue and greater profitability (in both dollars and percentage terms) than the existing one.

This definition of turnaround is markedly different than the approach that gets all the press, which is when a "turnaround manager" is brought in to cut costs, fire people and otherwise immediately bring expenses in line with revenue. That approach is advisable (or necessary) only when the wolf is not outside the door, but over the threshold and actually inside the building.

The approach I advocate is for troubled businesses that have some time--at least six months--to turn the company around. But make no mistake, the approach I advocate will result in no less of an organizational firestorm. And, believe it or not, that firestorm is ignited by a mission statement.

Now I know what you're thinking-- mission statements are not worth the paper they're written on, right? You're thinking that mission statements have no real utility, that they are merely a collection of flowery words with no power to change anything. Considering the vast majority of mission statements I've seen, you'd be absolutely right.

But I'm not referring to "the vast majority of mission statements." I'm talking about the mission statements that have real power because they are the cornerstones of legitimate business turnaround programs directed by executives who are committed to positive change in themselves and their organizations. In these circumstances, mission statements have incredible power because every decision, action and thought that goes into the turnaround process flows from and is linked to the mission statement.

Making a Mission Statement Powerful

First, mission statements only can be effective as opening salvos in a real turnaround process. Such processes are characterized by sincere and dedicated participation by the entire leadership team (especially the CEO) as well as faithful, structured and organizationwide implementation of results.

Second, the mission statement must have utility--it cannot be a brief collection of high sounding, yet empty, words like the typical foundry's mission statement. Instead, the mission statements I have in mind concretely communicate the kind of business companies need to become. The key words here are "concretely" and "need to become" because the best mission statements are both qualitative (strategic) and quantitative (with measurable objectives) in nature, and specifically focus on the way the business needs to operate in order to be successful. Finally, mission statements need to be written by the board and top management team, not by anyone else or for any other reason than to ignite the turnaround process.

In other words, the leadership team must articulate a fact-based vision for the company, and it must communicate that vision repeatedly and at every level of the organization. Moreover, it must demand buy-in by ensuring that the mission statement is translated into concrete management systems, departmental objectives, and employee job descriptions and performance evaluations-- all linked directly back to the mission statement. This circularity and linkage practice is the heart and soul of effective business planning as well as the backbone of successful turnarounds.

Mission statements also need to evolve. The company's qualitative or strategic vision (like the most well-known part of Federal Express's mission statement: "When it absolutely positively has to be there overnight") should remain consistent. On the other hand, the quantitative objectives of the mission statements should change over time so that they continually raise the bar on performance as well as provide a steady impetus for continuous business improvement.

Legitimate mission statements can be the proverbial shots heard around the world and can open a well-worn and highly success-prone pathway in front of CEOs who need to know how to save their foundries.

But CEOs beware! Surviving a real turnaround, which begins with a seemingly simple mission statement, often is a more difficult journey than the road to bankruptcy. But the outcome is immeasurably more worthwhile.