What is a Chief Restructuring Officer (CRO)?
Restructuring a business is hard. There are a huge number of components to it and few people will have any experience of undertaking that sort of project. In addition the world doesn’t stop turning whilst the restructuring takes place and therefore the existing Senior Management Team are likely to be fully engaged in their current roles.
A CRO can solve both these issues, they are an additional resource at board director level and will have spent a significant amount of their careers dealing with businesses in stressed situations.
They role is to focus on bringing about the changes needed to change the business and keep that project on track, often they will also lead the debate about what that change should be and the manner in which it should be implemented.
A CRO does not bring about the change on their own, such changes are most likely to be fundamental to the business and will impact most if not all functions but what they do is manage that process and keep the business on track while the change is implemented.
How does it work?
When carrying out this sort of role it can often be split in to 5 stages.
Steady the ship
Almost certainly there has been a period of turmoil leading up to an appointment. After all, if everything were going swimmingly there would be no need to restructure.
The first stage on the part of the SMT is to admit that there is a problem and “own” it. The CRO does not have a magic wand and is not going to be there long-term so the SMT need to recognise why the problems arose and that they need to make changes (albeit with some help).
There will be a number of stakeholders who will be in some level of discomfort, this might be staff worried about the future of the business and their roles within it, lenders looking at their exposure, suppliers concerned about credit limits or customers considering their security of supply. Often it is all of these.
The CRO can help satisfy these parties that the issues are being taken seriously and will have a wealth of experience in dealing with stakeholders in such situations.
There is always a challenge of timing and It can be difficult to admit to third-parties that there is a problem if the answer isn’t fully formed. However, the worst that can happen is silence and therefore, if the engagement has been left too late in the cycle there may not be any choice.
Clearly building a plan of the way out is crucial. We often recommend starting with building a view of what the end result should look like. Once you have this it is then possible to start building a strategy for how you might get there.
Whilst it is necessary to plot the steps you need to take on this journey, a sense of realism is crucial. Much of what you need to achieve will not be in your sole control and therefore the CRO will help you develop multiple strategies and keep the plan agile enough that you can adapt as circumstances change. The one thing you can be certain of is that the scenario will not play out the way you first planned it.
As part of that planning you will need to work out what resources you need (and who from) and who the key stakeholders are going to be, this helps build a hierarchy of those that the CRO will need to keep on board through the process.
Time to set to work. In so far as you are able try to build your strategy around some quick wins. They need to be more than a token milestone but they don’t need to be huge in scope. However, by setting out that you are going to achieve something and doing so you will build confidence in your stakeholders that you can deliver and give yourself a boost as well. Even with an external CRO this process is hard work and the positive lift from ticking something off the list early shouldn’t be understated.
This is often happening in tandem with your implementation. Those stakeholders from whom we identified we needed resources (money, goods, services) need to be brought on board with the plan.
This is often seen as the hardest part of the process and is certainly an area where an external CRO can add huge value.
In our experience a key value here is honesty. You don’t want to terrify the other party with how bleak the world currently is but if you don’t act open and honestly they won’t appreciate the need for their input. Can this sometime scare the other party? Yes but if handled properly, and planned at the outset your plan should provide an upside to them which you believe should be sufficient, if it isn’t then this will be one of those times when your plan will need to adapt.
In your planning phase don’t be afraid to think laterally about how to deliver for that stakeholder. Money, whilst making the world go around, is not the only solution, especially when it is in short supply.
If you are able to deal honestly with these stakeholders then in most cases that will engender trust and you will need that in order to complete your implementation. It has often been in decline in the relationship on the lead up to the restructuring and again this is where a “new face” can really help.
The plan should be challenging (it inevitably will be) but should not be unachievable. If at all possible build in scope to over-achieve. Often most critical is over-achieving on timescale. IF a deadline is missed then stakeholders will start to worry that it will never be achieved but hit it early and all of a sudden the plan looks almost done.
Delivery on a restructuring plan is not an overnight occurrence, it will be months or years in the making and keeping the momentum going can be tough. Keep the milestones and goals in the short to medium term to allow people to see progress (or if it is not working lack thereof) and keep talking.
All to often we see projects fail in the middle as there is great communication and engagement in the initial stages but this wains over time and people forget what they are working towards. Keep up the engagement, remind yourselves and others what the goal is and where you are on the trajectory.
Probably not. The truism that change is ever present has never been more accurate so “business as usual” is never straight-forward. Also be conscious not to slip back in to any habits which brought about the problems in the first place. Hopefully the plan will have dealt with this but human nature is a curious beast and bad habits have a tendency to resurface.
Do I need one?
Only you can answer that but if you believe you need to make some fundamental changes to your business then it might be worth looking at whether some outside help might make the journey smoother and ultimately more successful.