SigmaPro is a full service business transformation (turnaround) consultancy with global headquarters located near Denver, Colorado. Business transformations or turnarounds can be complicated, and you might have some questions. As you consider the trajectory of your business, some commonly asked questions and corresponding answers found below might be useful to you. Please contact us if you have further questions, or if you are ready, please request a complimentary assessment of your transformation needs.
Do I Need Business Transformation/Turnaround Assistance?
There are many reasons to engage a business transformation consultancy, but financial performance is first and foremost. The most direct measure of financial performance is whether your business is adding value each year. Economic Value Added (EVA), developed by Stern Stewart Co., is a measure of financial performance relative to the expectations of the owner or investors. Simply put, EVA compares the net operating profit after tax to a capital charge which is the amount of profit that investors would expect the business to generate in order to remain an attractive investment. Positive EVA means the organization is adding value over time, while negative EVA means that even though your organization may be profitable, its attractiveness as an investment is decreasing over time.
In layman’s terms, EVA is the amount of money left at the end of the year after everyone is paid – suppliers, employees, the government, investors, etc. If money is left over after everyone has been paid, then your organization has added value to the business. If not, then your business may have turned a profit, but someone got shorted, thereby affecting the attractiveness of your business as an investment.
If your organization has a positive EVA, then you will likely have the opportunity to develop a successful strategy, create alignment in the organization with the strategy, and execute on the strategy on your own terms, and SigmaPro can certainly help you accomplish such activities. Even so, a positive EVA does not mean that your organization does not face issues or have pain points that might be addressed by transformation techniques. Every organization has opportunities for improvement in the overall business lifecycle which will add to the bottom line and fund future growth.
If your organization has a negative EVA, it means that value is being destroyed with each year of operation. If so, then time is limited, and you should seriously consider a focused business transformation effort. For negative EVA organizations, the first step is often to alleviate cash flow issues. The easy but problematic methods for raising cash are debt or equity offerings. SigmaPro can help you find and execute a sensible strategy for each line of business that provides significant financial returns in a shorter time period and is sustainable for the forseeable future. If you would like more information on Economic Value Added (EVA), please see our publication entitled "The Right Decision."
What Types of Business Transformations or Turnarounds Should I Consider?
SigmaPro has experience with the two main types of business transformations or turnarounds – consultative transformations and guided transformations:
- Consultative Transformation – In this case SigmaPro consultants act as external advisors to existing management. Implementation of the business transformation plan and the corresponding results are the responsibility of the client organization.
- Guided Transformation – In this case the client hires SigmaPro consultants and places them into key executive roles at the C-level or Senior VP-level to lead the transformation. In this manner, SigmaPro consultants are tightly integrated with the leadership team and can maximize results in a much shorter time period.
In either case, SigmaPro will provide your organization with a business transformation or turnaround plan that addresses structural, operational, internal, and external issues and can be implemented within the resource constraints of the organization. Our consultants use the proven SigmaPro business transformation (turnaround) methodology as the basis to create and customize your plan.
What is the SigmaPro Business Transformation (Turnaround) Methodology?
During our 20+ years of business transformation (turnaround) experience for some of the world’s best companies, SigmaPro has created, practiced, and constantly refined a roadmap for business transformation. While we can’t just put everything on the web, we can certainly share some of the high points as to how we have helped organizations in many different sectors revitalize their businesses.
Business performance begins and ends with financial performance. After gaining a clear understanding of the financial performance for each of your lines of business (LOB’s), we would help you determine the next steps. Our first step might be to help you stabilize your cash flow and put creditors at ease, or it might be to move ahead and examine the strategies that you have put in place in your organization. Having the right strategy for each LOB, such as concentrated growth, market development, product development, innovation, horizontal integration, vertical integration, retrenchment, joint ventures, concentric diversification, diversification, or even divestiture, is key to a successful transformation.
Once the organization’s strategies are optimized, we would look closely at how your organization has created alignment among the functional areas of the business according to the strategic objectives. The process of setting goals throughout the organization is known as policy deployment. A well-done policy deployment system involves making goals, timeframes, owners, metrics, etc. clear at all levels of the organization.