Looking back on my financial career, given the chance for a do-over, I would have focused on forensic accounting or corporate turnarounds. Turnarounds have the edge. Instead, I focused on intense scale-ups while studying and reading about those in turnaround management. One of those experts is Professor James Shein of the Kellogg School of Management. Reversing the Slide is one of the best books in the turnaround genre I’ve read, our topic on this episode.
- How did you get started with turnarounds?
- What does having a turnaround mindset mean?
- Regarding the 13-week cash flow forecast – what do you mean that the first time is the hardest?
- What happened to Flying J?
- Why the love affair with EBITDA?
- What are the five phases of decline and where do you typically get started on this curve?
- Is it too late to fix a company in crisis mode?
- Is a former CEO the best person to be a CRO (Cheif Restructuring Officer)?
- How does The Turnaround Kid (Steve Miller) go about his business?
- Tell us more about the term, “Rags to riches to rags,” in three generations of a family business and why that is prevalent.
- What is the biggest stumbling block for non-profits?
Also discussed on the show was the great work at the Turnaround Management Association.
Reversing the Slide
Blanket statements can be both dangerous and problematic. But I’m still going to say that every single CEO and CFO should read Reversing the Slide. CEOs, at least read the first chapter and skim the fourth. I’ve read this book on three different occasions, and it’s a mini-MBA for those building a career in corporate finance and the section on cash flow is outstanding.
The following are three of my favorite lines in this book:
According to some authors, GAAP can make men ignorant.
In a turnaround situation, it means cash flow is the only measure of financial performance that matters.”
The longer such problems go unsolved, the harder it is to turn around a company.
The Cynefin Framework
During the course of the conversation with Professor Jim Shein, the Cynefin Framework surfaced as words such as chaos, complexities, and complicated problems popped into my mind in the context of turnarounds. If the turnaround mindset intrigues you, you can learn more about the Cynefin Framework along with red teaming concepts in our show with Bryce Hoffman who is the author of American Icon.