Keys To Turnaround
- You’ve got to seize the reins in order to be effective, because in our business, you either get to a place of power or you get fired;
- You can’t gain the power to effect the turnaround unless you build stakeholder consensus for your plan.
- Only through a constant drum beat of communication can you be successful.
Late in 2011, we were brought in by the board of directors of Maine Today Media to assist the company to optimize operations, but soon realized that we were in a full-blown crisis. The company only had weeks before it ran out of cash.
It wasn’t news to the stakeholders of Maine Today Media—the board of directors, its lenders, the employee union, vendors and community at large—that the technology shifts in the media world have created strong headwinds for newspapers and related media companies. But management under-communicated the reality of the situation, even to their own board, painting an overly optimistic picture when evidence pointed to the contrary.
The successful recapitalization in February 2013 of Maine Today Media, a newspaper and digital media group that includes the Portland Press Herald, was achieved not only through collaboration, hard work and tough operational decisions, but more importantly by re-establishing stakeholder trust through credible communication. Upon arrival, Deloitte CRG was forced to take charge of increasing communications with various stakeholders and restoring credibility without necessarily having the solution in hand, but bringing community to bear in helping galvanize toward a solution.
Thrust into the position of turnaround manager of a company in crisis, we first seize the reins in order to be effective, because, in our business, you either get to a place of influence quickly or you get run over. During the early days, it became clear that the current CEO should be replaced. In his place, one of Deloitte CRG’s professionals, Neil Heyside, was named interim CEO.
Despite gaining a title that holds power, you can’t gain the power to effectuate a turnaround unless you build stakeholder consensus for your plan. This comes through communication and the first task is to create a foundation upon which stakeholders agree.
Radio silence equals death. Only through a constant drum beat of communication—upto ownership and creditors; across to the labor union and employees, and down to the community at large—can you be successful and that needs to occur regularly throughout the process.
We started, aggressively and honestly, communicating across to employees with the truth. We were able to regain trust with the union, which allowed a new collective bargaining agreement to be established in the span of four weeks. The union could not have been more receptive and helpful.
We then moved on to the creditors. We explained the circumstances, what the plan was—to recapitalize or sell the business—and how we needed their support. “If you believe what we’re telling you, give us the time to do this,” we told them.
Then we dealt with the community at large. There were numerous micro-blogs that spread untrue rumors, which we consistently disputed. This helped because ultimately the recapitalization of the business was by a community leader who believed in the mission of the paper and regarded its success as vital to the community.
Maine Today Media “is transitioning from a legacy newspaper print company to a multi-platform community media company,” Heyside said. “MTM will not only be positioned for sustained growth, but will also be a solid platform for developing other revenue streams. With investment in editorial resources and content creation, it will be strongly positioned to enhance further the quality of its print and online products.”
Don’t let fear drive you away from the truth. We had a credible solution and the stakeholders were strong enough to deal with the truth of the situation and ultimately attract new capital to push the company forward. The stakeholders were big enough to handle it and to embrace the solution we presented them.
Michael Epstein is a principal and COO of Deloitte CRG, which recently acquired CRG Partners.