HISTORICAL BACKGROUND
Organizations were traditionally structured for stable market conditions and steady growth. Beginning in the early 1970's:
1. Offshore competition intensified
2. The rate of technological change accelerated, organizations could not easily adapt to the new business environment in their structured format, had difficulty mobilizing resources to compete; this called for a survival strategy
STRATEGY/ACTION FOR TURNAROUND
I Cash Management
Develop reliable information about the company's cash position by asking questions of employees and middle managers:
1. Are sales on plan?
2. Where are costs out of line with budget and by how much?
3. Are purchase orders being given out or contracts signed that are not reflected in the operations and capital budget?
Impose stringent controls on capital and operating expenditures.
Squeeze cash out of accounts receivable, inventory and accounts payable i.e., reduce working capital, reliance on banks through hands-on receivables control.
Install bottom-up budgeting to give more people opportunities for input as well as feedback.
Prepare worst case/best case budgets using microcomputer spreadsheets; manipulate variables that affect cash, develop contingency plans for the various scenarios.
II Information Development
Develop information bridges directly with suppliers, employees, customers, competitors, bankers, the investment community, government agencies, regulators and the media:
1. To determine what is really going on in the market
2. To identify what the competitors are doing
3. To determine whether new products or technologies are making the product line obsolete
4. To facilitate reality checks on analyses and summaries performed by others
5. To determine which aspects of the management process (policies, practices, values) need to be changed.
III Organization Structure
Review organization structure, flatten organization chart to:
1. Remove layers, cut costs, streamline decision-making, improve mobility
2. See, hear and feel morale, pride of accomplishment, eagerness to succeed, creativity, energy levels, commitment to organizational goals
3. Develop an understanding of the work being done
4. Evaluate whether the work is necessary to achieve the company's objectives
5. Redefine the work to eliminate, simplify, modify and combine tasks

Use teams, task forces and special purpose committees with cross organization membership to accomplish specific tasks and to legitimize communication channels other than those prescribed by the chain of command.
IV Strategy Development
Crisis Stage:
1. Develop an action plan to focus survival efforts
2. Identify a sense of mission that pulls the enterprise along without prescribing its every action or course correction
Post-Crisis Stage:
1. Develop a strategic plan that matches opportunities with the company's resources and reflects management's priorities
2. Develop an operating plan that reflects the strategy and prescribes who is to do what and by when
V Reorganization
The first new organization chart should be zero-based with every cluster of activities reporting to the CEO
In the second chart, one management layer is introduced and reporting relationships are assigned
A third chart with another management layer replaces the second chart
VI Post-Reorganization
In functioning as a leader rather than a follower, the company's best insurance for continued leadership is to employ the methods from the successful turnaround:
1. A finely tuned sensitivity to opportunities and problems in the business environment
2. Comprehensive surveillance of the competition
3. Daily attention to cash and operations details
4. A streamlined organization in close contact with its workforce, suppliers and customers
5. A measurement system that supports the new organization structure and the company's goals