Corporate Renewal Solutions
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Overview of the corporate renewal concept

Corporate Renewal

Corporate renewal is about rejuvenating a business through the execution of an integrated, business-wide programme aimed at ensuring an improved future.

Corporate renewal is integrated and business-wide

Corporate renewal rejuvenates a business' leadership, strategy, finances, organisation and operations in an integrated fashion rather then addressing these individually on an ad hoc basis.  Additionally, it integrates existing projects and initiatives under an umbrella of rigorous central project management.

Being integrated, it ensures alignment and internal consistency by reshaping the strategy, organisation and operations of businesses as a whole.

Being business-wide, it touches all people and departments in the organisation.

Change management

Corporate renewal does not only focus on what to change.  More importantly, it also focuses on how to manage such change through transformational change management.

Change management aligns and commits leadership, and make them accountable.

Change management also creates buy-in and ownership of all stakeholders through communication, and mobilises employees by involving them in designing and implementing change.

Corporate renewal levels and levels of corporate health

Corporate renewal is applicable to companies at all levels of corporate health:

Business rescue of financially distressed companies in terms of Chapter 6 of the Companies Act No. 71 of 2008..

Turnaround of severely under-performing companies.

Remedial business transformation of moderately under-performing companies.

Proactive business transformation (continual corporate renewal) of healthy companies.

For an explanation of these corporate renewal levels, which overlap to some extent with regard to different stages of corporate health, see Turnaround and Business transformation.

Corporate renewal at different levels of corporate health is illustrated in the diagram below.

 

Restoration and sustaining of corporate value

Click on the thumbnail image to view the restoration of corporate value at different levels of corporate health.

 

 

Business transformation

Business transformation characteristics

Business transformation (also called corporate transformation) further advances a healthy or moderately under-performing business, and is an enriching activity.  Unlike turnarounds, it is proactively driven by a will to adjust or improve in the competitive market-place rather than by financial pressure.

Business transformation occurs when a business, even a healthy one, deals with emerging problems and acts on early warning signals of decline by giving effect to two questions:  What are we doing wrong?  How can we improve?

Business transformation is characterised by the need to create a burning platform (in the absence of financial pressure, which is a characteristic of turnaround) and leadership alignment rather than leadership changes

Compared to turnaround, business transformation is conducted at a more measured pace and the approach is more participative.

In business transformation, stakeholder management tends to be directed internally towards management, employees and unions.

Proactive business transformation

To remain successful, healthy companies have to continually transform themselves in response to market-place events of a political, economic, social, technological, political and environmental nature, through proactive business transformation (also known as continual corporate renewal).

Remedial business transformation

Under-performing companies, under-performing due to lack of response to market-place events in the past or due to internal problems, have to transform themselves to improve results through remedial business transformation to avoid the necessity of a turnaround.

For a comprehensive discussion, please go to the CRS Business Transformation web site.

Turnaround

Turnaround characteristics

Turnaround is characterised by emergency management, the need for funding and financial restructuring, possible leadership changes rather than mere leadership alignment

Compared to business transformation, turnaround is associated with more rapid and incisive action and a more assertive and directive approach.

In turnaround, stakeholder management is extended from business transformation's internal stakeholders (management, employees and unions) to financial and external stakeholders such as investors, lenders, suppliers and customers.

Following the recognition of the need, a turnaround follows a number of critical stages namely management change, situation assessment, emergency management, restructuring and recovery.

Management change includes leadership issues, turnaround project management and stakeholder management.

Restructuring includes funding and restructuring in financial, strategic, organisational and operational terms.

Turnaround of under-performing companies

Turnaround of under-performing companies applies to companies with one or several acute and worsening problems, but having the time and resources to find solutions.

Turnaround rehabilitates such a troubled business and sets the stage for future achievement.

Normally the full range of turnaround strategies applies, including strategic repositioning, reorganisation and operational turnaround (revenue enhancement, and cut-back action such as cost and asset reduction).

Turnaround of distressed companies

Distressed situation turnaround applies to companies in crisis due to profitability, liquidity or solvency problems.

Such companies are near formal insolvency or insolvency legislation has already taken effect, but possibly viable.

Distressed situation turnaround is an agonising process geared to seek survival.

It follows triage principles to treat an emergency.

Due to lack of cash and time, turnaround strategies may have to focus on cut-back action such as cost and asset reduction, accompanied by reorganisation, to raise and conserve cash.

Cash-consuming revenue enhancement and strategic repositioning strategies may have to be delayed until survival and a more stable situation has been achieved.

For a comprehensive discussion of turnaround and turnaround situations, please go to the CRS Turnaround Management web site.


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