International Turnaround Management Stan

International Turnaround Management Standard

The ITMS is a guided system through a corporate turnaround based on over 1500 references, countless interviews and over 150 turnaround cases. It is applicable to virtually any situation and industry targeting the most common reasons why turnarounds fail while utilizing the success factors and strategies that led to successful turnarounds over the past 30 years.

http://turnaround-society.com/?page_id=136

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The Turnaround Management Society releas

The Turnaround Management Society released the TM Society App today. The App can be installed on Android and iOS devices. Windows Phone is currently not supported but will be soon. The App features the Turnaround Management Journal online version, recent videos from and about members as well as the latest information and updates on the International Turnaround Management Standard.

The Turnaround Management Society is an industry specific organization for Turnaround Management. Its members are turnaround professionals, distressed dept investors and academics.

It is the objective of the Turnaround Management Society to bring together the knowledge of Turnaround Management academics and the experience of Turnaround Management professionals. The TMS provides a link between academics who are engaged in research and the professional community that seeks research outcomes and provides academics with professional insight, guidance and feedback.

Besides supporting academics around the world and providing them with a forum for exchange of information with other academics and practitioners, we are also engaged in research ourselves. Our two ongoing projects are the ITMS and the database of successful turnaround management strategies and cases

You can find the app by typing app.turnaround-society.com
http://ow.ly/i/38fb1 http://ow.ly/oO7YC

Keeping American Airlines up in the air

Keeping American Airlines up in the air

– An appeal to learn from past crisis, competitors and the best

After the attacks of September 11, 2001, airlines got into serious trouble and were forced to cut costs and routes all over the world quickly. Some airlines in the US that did not have enough financial resources went into Chapter 11 protection in order to cut costs faster than would otherwise be possible. One of the companies that survived this difficult time without such protection was American Airlines.

The US airline market has been consolidating for several years, which is a healthy development. Until recently, there were four big US carriers, which is probably too many for the size of the market, as there might only be two that can operate profitably in the long run. This consolidation is an international development, although it will probably take longer in Europe because some airlines are governmentially backed (AirFrance/KLM, Alitalia) and because Europe consits of many countries with different laws, which stretches the merger process. Still, there are signs that, even in Europe, the consolidation process has begun. Hungarian Malev and Spainair are bankrupt, Olympic is almost there, Alitalia has never been very profitable, and Air Berlin survives only because Ethiad is backing it up financially. In the long run, we will see some substanitial consolidation that might end in Lufthansa’s and AirFrance/KLM’s dominating the European market.

Even though all big US airlines seem to run into trouble at one time or another, their management does not seem to learn from the industry’s mistakes. Compared to non-US airlines like Lufthansa, Singapore, and or Emirates, American’s finances are much worse.

Currently, AMR, the group to which American Airlines and American Eagal belong, operates about 900 airplanes, serves more than 250 airports in about 50 countries, and employs about 88,000 employees. In December 2011 alone, the company lost US$ 904 million.

Once a strong airline that survived this serious crisis on its own account, American was forced to file for chapter 11 protection in November 2011. Since it did not use its time and financial power to restructure the company to make it more competitive, its competitors have lower costs and can operate more profitably. What followed had to happen since American didn’t adapt to its competition’s lower cost structure. The fleet is much too old, maintenance costs and labor costs are too high to compete efficiently. Therefore they filed for Chapter 11 at the beginning of 2012.

In this case, leading the company into Chapter 11 made sense, as it will allow management to renegotiate employees’ contracts, which would otherwise be difficult given the traditionally strong unions in the airline industry.

Possible ways out…

US Airways has been looking for a partner for a while because it is at risk of not being able to keep up with other airlines that have merged over the last couple years. A merger could bring significant advantages in terms of providing routes to customers and cost reductions. Currently, US Airways is competing with American on numerous routes, lowering earnings for both of them.

A merger with Delta could be difficult because both American and Delta are (along with United Continental) among the three largest airlines in the US. A merger would probably not be allowed by US Department of Justic (DOJ).

A takeover by TPG would draw the DOJ’s attention, and such a takeover would call for some significant restructuring and a risky turnaround plan. However, if it stays alone, American will not be able to profit from the economies of scale it would if it merged with another airline.

American’s current CEO, Tom Horton, does not believe that a merger with another airline would benefit American or its shareholders, but I tend to disagree. The stakeholders would certainly profit from a merger if it lifts the airline into first or second place in the list of the largest…

The TMS Creativity Matrix

Part of the Turnaround Management Society research program

Dr. Christoph Lymbersky

The Turnaround Management Society Creativity Matrix is part of the research activities undertaken at the Turnaround Management Society. Other products of the study are the Social Workplace Model and suggestions about increasing creativity and innovation in line with productivity in order to stay competitive. The purpose of the study was to find out what companies can do to stay ahead in the war for talent and to adapt to lower market-entry barriers and shorter cycles of technological change and innovation.

 

In the coming decades corporations will need to develop new products and services faster and in shorter cycles. The time between major innovations decreases every year, lifecycles are shortening, and the possibility of creating new companies and conquering markets is becoming easier and less expensive. Today, a small three-person startup like whatsapp can cost big telecommunications companies around the world millions within a few months. Not even worldwide corporations are safe from companies born in someone’s garage.

Anyone with a great idea can take on Google, eBay, AT&T, or Deutsche Telekom, so a constant eye to competitiveness is essential. The basis for competitiveness is creativity; if Apple wants to remain the most valuable company in the world, tomorrow’s most innovative and popular phone will need to come from Apple. Tomorrow’s competition may be sitting behind a dusty workbench in his grandma’s garage, so everyone is a potential competitor. The only way to keep up is to provide employees with the best possible environment in which to be both productive and creative.

Companies need this dual focus on productivity and creativity in order to survive in the long term. The level of productivity, creativity, and innovation must be continuously higher than the competition’s level of productivity, creativity, and innovation. If a company fails to innovate, its products become old and reach the end of their life cycles. Only continuous Innovation can ensure that the company will stay ahead of its competition.

Companies can be divided into four broad categories in the creativity matrix, based on their approach to creativity and innovation. Firms that can keep up by continuously developing and marketing successful products are called Survivors. These companies have established a culture that ensures constant idea generation by their employees while remaining highly efficient and productive. Companies that are creative for only a short time, that develop a great product and sell it successfully but fail to continue to develop products, are called One-Hit Wonders. Other companies that are not able to market their products well but that produce them efficiently at a competitive price are stuck in the Start-up Syndrome quadrant. The name derives from the many start-ups that are unable to capture a sufficient market share because, while the founders may be are highly creative and have great ideas and products, they are not able to grow the company. The No-Goes are companies that are not very productive and that have failed to come up with new, successful products. It is easy for companies in this group to slip into insolvency if management does not take dramatic measures to increase creativity, innovate, and optimize their sales, distribution, and production processes.

The matrix is a living model in that companies usually don’t stay permanently in one quadrant or another. Survivors can become One-Hit Wonders, and vice versa. When companies are about to die, they have a tendency to move toward the No-Goes section. Depending on how strong the tendency is and where their position in the other quadrants was, it can take years to enter the No-Goes quadrant, but a slide toward it should indicate the need for change. One exception to this rule is the Start-up Syndrome quadrant: our study has not found companies that moved from the Survivors or One-Hit Wonders to the Start-Up Syndrome quadrant. Therefore, no company that was once productive ends up not being productive at all. However, no company is immune to the tendency to slide toward that sector.

TMS Creativity Matrix pic 1

One-Hit Wonders

One-Hit Wonders are found in the upper left quadrant of the TMS Creativity Matrix. Companies like mySpace that fall into this quadrant  were once highly creative and gained a big market share, but they did not keep evolving and eventually slipped down to the No-Goes sector.  Deutsche Telekom and Nokia are also in that quadrant because both companies are under pressure to adapt to a changing market. Deutsche Telekom is less likely to slip into the No-Goes because it has a reliable source of income and is successfully diversifying into more markets and heavily investing in innovative ideas. Nokia, on the other hand, has  not come up with very innovative products, so it has a tendency to enter the No-Goes sector. Similarly, RIM has had a great product and an extremely high level of productivity, but it has failed to come up with truly innovative products in the last five years, which is an eternity in the headset industry.

Survivors

Google and Apple have become very big because they have had many highly innovative products and great sales strategies and a lot of funds at their disposal. However, Survivors are not only market leaders; they can also be smaller companies that have found a niche market and successfully defended their position.

Apple is probably the best known of the Survivor companies, even though if was in the Start-Up Syndrome quadrant for a long time when it was highly innovative but too expensive for the mass market. During the last four years it has been in the far upper corner of the Survivors quadrant, but more recently it has failed to surprise its customers or live up to expectations. Google, on the other hand, continues to grow and innovate, which is why Google is a prime example in the TMS Creativity Matrix.