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IS YOUR BUSINESS TESTING COVID-19 POSITIVE?

TURNAROUND STRATEGIES FOR BUSINESS IN DISTRESS – GGF AFRICA INSIGHT

Here’s what to do when your Business presents with these typical symptoms of distress!

What to do when your Business presents with symptoms of distress!

1.   Do not panic, focus on timely action.

2.   Engage a corporate rescue practitioner.

3.    Define expectations and deliverables.

4.    Evaluate the rescue approach.

5.    Learn from the restructuring methods and interventions.

6.   Practice patient consistency in implementation.

TURNAROUND INTERVENTIONS FOR BUSINESSES IN DISTRESS – GGF AFRICA INSIGHTS

•    Do not panic, focus on timely action – GGF Africa’s corporate finance and strategy experts deliver business turnaround interventions to businesses in distress. Our analysts expect a global rise in business distress due to the market disruptions related to Covid-19 including extended lockdowns, demand shifts, cash flow constraints, and rapid technology substitution. Typical symptoms of business distress include:

•   Declining sales with a growing book of bad debtors.

•   Revenue streams declining, resulting in cash flow constraints.

•  Creditors and lenders obligations outstanding.

•   Productivity and staff morale declining.

If you find your business in this precarious position, try not to stress (easier said), focus instead on taking timely action.

1. Engage a Corporate Rescue Practitioner (or a Business Rescue Practitioner), to provide management consultancy services, or to take charge of and run the business under Corporate Rescue in terms of the Act.

•  How to select a Practitioner and confirm their capacity – It is our conviction that business rescue practitioners and judicial managers must be appointed primarily on the basis of their experience in business rescue, their proven business acumen, corporate finance and business management skills, with demonstrable capacity to deliver comprehensive business turnaround. GGF Africa’s capacity and pedigree can be measured by our analytical skills, business review experience, and track record, all supported by trade references and institutional accreditation.

•   Independent Business Reviews are an essential tool for business restructuring, and your turnaround specialist should have capacity to deploy an IBR tool kit with such key interventions as:

  • Independent review of the quality of financial projections and the feasibility of your firm’s business plan;
  • Analysis of actual operating cash flows in comparison to their potential variance from projections;
  • Evaluation of organizations operating in unfamiliar industries or markets;
  • Structuring of credit terms and conditions that provide a solid risk hedge for banks or financiers; and
  • Evaluation of the compliance of borrowers with the covenants agreed with the bank.
  • What Accreditation is necessary for the Practitioner – The Practitioner should be a member of the Insolvency Restructuring Association (“IRAZ”) to provide corporate restructuring and turnarounds; and Liquidations; while accreditation by the Council of Estate Administrators and Insolvency Practitioners (CEAIP) is a requirement for both insolvency restructuring and general administration of Deceased Estates (including Estate Planning; Wills, Trusts & Custodial Services).

2. Define expectations and deliverables – The following is a summary of the deliverables expected of the practitioner.

•    Strategic Planning & Implementation Control;

•    Mobilisation of appropriately structured Debt and Equity Capital;

•   Establishment of Internal Control Systems;

•   Management of Human Resources & Performance Management; and

•   Business Development and Brand-Building (Marketing).

3.   Evaluate the Rescue Approach – The turnaround specialist must work with management to answer questions that management has probably never asked itself, including:

•     What is the purpose of this business?

•      Should it be saved, and if so, why?

•      Can the whole business or a core part of it still be saved, and at what cost?

•     What sources of cash flow can be harnessed to support its recovery?

•     What is the capacity of the leadership (board and management) to drive the change?

4. Learn from the restructuring methods and interventions – The GGF Africa tool kit for corporate rescue and restructuring includes the following minimum steps that principals should expect from their turnaround expert.

•  Strategy & Business Plan – refocus the purpose and confirm the vision/ direction and culture of the entity under rescue.

•  Financing of the business – a combination of debt, quasi-equity and/or equity constitute a central part of the balance sheet restructuring. Establish financial feasibility and build illustrative financial models.

•  Liquidity management – an effective financing plan will stabilize the company’s cash position.

•  Cost Management & Streamlining – cost-cutting and renegotiating existing financing arrangements to terms the company can live with during the turnaround.

•  Knowledge of the Law of Insolvency – some working knowledge of insolvency and corporate law can be useful, although an independent legal opinion should be considered a must, in order to ensure that the Practitioner’s proposed solutions are compliant.

5.  Practice patient consistency in implementation – Finally, DO NOT expect miracles. As all practitioners should, GGF Africa takes the pragmatic approach to corporate restructuring – no magic involved. Typically, a comprehensive and sustainable business turnaround intervention can take months, if not years of hard work to complete. And after the turnaround specialist is long gone, the primary drivers for sustainable change are the owners, board and management. A delicate balance of interests must be maintained among and between employees, financiers, investors, suppliers and creditors, throughout the turnaround process.

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A QUICK GUIDE TO CONDUCTING BOARD EVALUATIONS.

Board assessment is too often viewed as a necessary evil — a mechanical process of checking off items on a list that ultimately has little real value for the board apart from meeting compliance requirements. However, we believe that an effective board assessment process has the potential to be transformational.

Each organization’s evaluation tools should be customized to the unique needs of their business. Here are some areas to consider including:

  • Identify areas that need improvement;
  • Determine whether the board member’s contribution is in keeping with the needs of the board and organization;
  • Identify issues or areas that need more attention in board meetings;
  • Evaluate the diversity and composition of the board; and
  • Assess the strength of each individual board member and if they need further development.

Investors, regulators, other company stakeholders and governance experts are challenging boards to examine and explain board performance and composition. Boards should address this challenge—first and foremost through a tailored and effective evaluation process. In doing this, boards can work to identify areas for growth and change to improve performance and optimize composition in ways that can enhance long-term value. Boards can also describe evaluation processes and high-level results to investors and other stakeholders in ways that can enhance understanding and trust.

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IT’S TIME TO PUSH THAT “STRATEGY RESET” BUTTON!

As the impact of COVID-19 continues to be felt globally, many (if not all) organisations must rethink their vision, mission, organization structure, the way they deliver services, the products they offer, their relationship with consumers, and their role in the community. This will require pushing the ‘reset button’ as opposed to simply resuming business as usual. It is time for all professionals in the public and private sectors to ask themselves (at the individual level), three simple questions: Am I relevant in the future? Will the institution I serve remain relevant to it stakeholders? And thirdly, an even more useful question must be answered: How do I remain relevant in this fast shifting global operating environment (that will soon have zero space for poor planning, or sloppy performance, or corruption, or digital ignorance).

It really can’t be business as usual anymore – For years, many organisations have built their annual strategic plans by modifying plans made the previous year (yes, you know yourselves). No major changes – more iterations than complete rethinking of what needs to be done in the upcoming year. All of that changed as a result of the COVID-19 crisis. This pandemic has tested every component of the traditional business model. Employees were told to work from home, offices were closed, consumers lost their jobs, and new products and financial solutions were thrust into the ecosystem. This challenged every policy most companies had. And instead of this change happening over a period of years, it happened overnight – literally.Let us help you reset – Now is the time to completely rethink how your organization creates a new path for the future. This will require new strategies, tactics and priorities that will support a new workplace environment, enhanced levels of consumer commitment, increased use of new technologies, commitment to innovation, and a sustainable value proposition that helps the community and the nation. The question becomes: What will it take to get beyond this crisis and be successful going forward? More importantly, what new assumptions and objectives must be put in place now that everything we had assumed only 4-6 months ago is no longer relevant? Call GGF Africa and find out how you can reset to move forward.

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Herald GGF 24-Part Series Part 4_24 – Effective Implementation of Strategy for Sustainable Transformation

Effective strategy implementation for sustainable transformation

(Part 4 of a 24-part weekly series)

 

In part 3 of this series, we introduced the concept of strategy, and undertook to focus on implementation in a subsequent episode. Well, our word is bond.

 

If you are actively following our series then perhaps you have just come back from a successful company strategy retreat, everyone must still be excited, so we must quickly move from conceptual thinking to executing the strategy and realising organisational goals. Implementing your strategic plan is as important, or even more important, than crafting your strategy. Erica Olsen, the COO and co-founder of On-Strategy, writes eloquently about the importance of STRATEGY IMPLEMENTATION and describes it as the process that turns strategies and plans into actions in order to accomplish strategic objectives and goals.

 

Sadly, the majority of companies who have strategic plans fail to implement them. Too often leaders pour their energy and resources into formulating strategy and spend too little time figuring out how to implement that strategy throughout the organisation and statistics in the recent Fortune Magazine seem to support that view. Nine out of ten organizations fail to implement their strategic plans. At least 60% of institutional strategic plans are not linked to budgeting; nor to employee incentives. Approximately 86% of business leaders spend less than one hour per month discussing strategy, according to the same study.

 

In our article last week, we pointed out how strategic plans provide direction towards the vision. Olsen emphasizes, however, that a plan is just a plan, and it does not guarantee success any more than having a roadmap guarantees the traveler arrives at the desired destination. A journey must actually take place first.

The strategic plan addresses the what and why of activities, but implementation addresses the whowherewhen, and how. Because of the large proportion of institutions that fail at implementation, it is clear that building strong implementation capacity in your institution can be a source of competitive advantage. 

So that we can avoid them in our own institutions, let us note some of the most common reasons why strategic plans fail:

  • Lack of ownership, and employee buy-in;
  • Poor internal communication of the strategy and induction;
  • Leaders getting mired in the day-to-day activities and losing sight of long-term goals; 
  • Inadequate integration of the strategy into businessprocesses;
  • Overwhelming plans and performance management systems that are too complex;
  • Failure to incorporate implementation into the strategic planning process;
  • Failure to track implementation and provide systemized progress report;
  • Lack of accountability for the implementation of the plan by assigning each measure, objective, data source, and initiative must have an owner; and
  • Inadequate empowerment of team members through training, resources and authority to carry out strategic initiatives. 

 

There are five key factors necessary to support implementation: people, resources, structure, systems, and culture. All components must be in place in order to move from creating the plan to activating the plan.

People– Make sure to have the right people on board. Build a team with capacity to drive the strategy. Invest in the development of employee skills through training, recruitment, or new recruits.

Resources– Mobilise adequate funding and provide enough time to support each initiative realistically.

Structure – Review the organisational structure to ensure that all key strategic initiatives are assigned to a well resourced driver, and design clear, open lines of communication with all employees.

Systems– Review and install automated and manual systems to help track implementation progress. In Zimbabwe, the Balanced Scorecard (BSC) or the Integrated Results Based Management system (IRBM) are the most widely used tools for tracking and performance management.

Culture– Create an environment that connects employees to the organization’s mission and that makes them feel comfortable. To reinforce the importance of focusing on strategy and vision, reward success. Develop some creative positive and negative consequences for achieving or not achieving the strategy.  The rewards may be big or small, as long as they lift the strategy above the day-to-day so people make it a priority.

Once the planning process is complete, transformational leaders must proceed to:

  • Communicate the strategic plan to all stakeholders, especially those responsible for its implementation.
  • Align the budget to annual goals.
  • Cascade the strategy by building annual operational plans for all departments (with emphasis on their respective components).
  • Train users on the effective use of the BSC or IRBM system for performance management.
  • Establish a performance-linked reward system.
  • Review implementation regularly by establishing such platforms as strategy monitoring meetings.

In our next article, we will discuss performance management and how you can use this to ensure that your implementation process is effective.

This article was compiled by Felix Kumirai, a transformational strategist and resource mobilisation consultant at GENESIS GLOBAL FINANCE. The contents herein are for information purposes only, and GGF does not accept responsibility for any loss arising from the use of materials or opinions contained in this article.

TO CONTACT GENESIS GLOBAL FINANCE:

  • Call us on: +2638644131515 or +263777352828;
  • Like us facebook: genesisglobalfinance/privatelimited
  • Follow us on Twitter: @ggfafrica
  • LinkedIn: /in/genesis-global-finance-166908a3/

 

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Herald GGF 24-Part Series Part 3_24 – Strategic Planning for Sustainable Transformation

Strategic planning for sustainable organisational transformation

(Part 3 of a 24-part weekly series)

 

Strategic Planning is the buzz word of this century. Everyone does it, and knows a little bit about it. But does this annual ritual produce a plan; and if so, is the plan strategic? If you are the captain of one of Zimbabwe’s many ships, whether in industry or the public sector, today we ask the question: Is your ship sailing in the right direction, at the right speed, and with the right crew & cargo on board? If so, your strategy is working. Keep at it.

 

For the rest of us, let’s discuss what strategy is, what it takes to plan effectively, and hopefully begin to address how your investment in strategic planning can yield returns. Most people are familiar with the key steps in strategic planning. These include: research; collection of baseline evidence; broad-based stakeholder consultations; use of appropriate planning tools for budgeting, scenario planning, environmental analysis, internal situational analysis, as well as post implementation monitoring & evaluation.

 

There are so many misconceptions about what strategy is. So much so, that it has become easier to explain what strategy is by outlining WHAT IT IS NOT. Strategy may involve the following components, but it is not: a collection of projects(“launch a new product”); a list of activities(“advertise the product on radio twice a week”); a description of processes(undertake regular reconciliations); nor is it even a set of goals or objectives(“achieve $20 million in revenue this year”).

 

While it is essential to consider these components as part of the planning process, our view is that strategy is really all about your position in the eyes of stakeholders. Strategy can therefore be simplified to two basic questions: (a) how do we effectively deliver on our stakeholders’ needs and expectations from us; (b) what does our organisation require from each stakeholders in order to succeed. It is the integrated institution-wide and systems-driven response to the most pertinent needs and expectations of your key stakeholders in relation to your mission (or purpose). Meeting stakeholder expectations is what gives relevance to your institution. In return, satisfied stakeholders will support your mission: customers will consume the product and accept higher price-points; vendors will supply inputs consistently, and on favourable terms; regulators will renew your license; bankers and investors will compete for your patronage; and employees will work happily and produce high-quality products, etc. This is how, eventually, the objective of generating $20 million will be reached and how, ultimately, this culture of consistent strategic planning and implementation, will deliver the vision.

 

For instance, your baker’s goal is probably todeliver high quality, fresh bread, at the most competitive price-point, to the door-step of all target customers, before any other baker, every morning. Strategy then, is the sum of actions that the baker must take to build positive stakeholder attitudes and prevail over market forces:

  • Firstly, who is the target customer (market segmentation, research) and what kind of bread do they want (product design & innovation); what price can they afford (product costing, income surveys); what time do they have breakfast; what alternative sources of carbs might they access from elsewhere?
  • Second, what capacity does our management and staff have to bake and deliver the bread at the standards promised to the customer (resource-needs assessments, technical capacity needs assessments). What internal procedures and processes do we need to guarantee consistent production quality?
  • Thirdly, what is the most consistent source of flour, salt and other inputs? How can we promote the development of several strong suppliers for sustainability and to keep the cost of inputs low?
  • Finally, understanding other industry forces like what competitors are doing to win the affection of the customer (competitor analysis, business intelligence); and how can we beat them to the customer’s doorstep and heart, every morning (logistics, communications, branding).

 

So, there we have it – a synopsis of what strategy entails in practice, and the key steps that our leaders must take towards crafting a solid plan. We will focus on implementation monitoring and evaluation in the next episode, but for now, our hope is that every institution will be ceased with the work of crafting new strategies for this completely new operating environment. This episode is a call to action for all organisations, (big and small, private or public), whose leaders recognize the wisdom in the old and perhaps over-used adage that “by failing to prepare, you prepare to fail”.

 

This article was compiled by Felix Kumirai, a transformational strategist and resource mobilisation consultant at GENESIS GLOBAL FINANCE. The contents herein are for information purposes only, and GGF does not accept responsibility for any loss arising from the use of materials or opinions contained in this article.

TO CONTACT GENESIS GLOBAL FINANCE:

  • Call us on: +2638644131515 or +263777352828;
  • Like us facebook: genesisglobalfinance/privatelimited
  • Follow us on Twitter: @ggfafrica
  • LinkedIn: /in/genesis-global-finance-166908a3/

 

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Herald GGF 24-Part Series Part 2_24 – Organisational Culture 19 April 2018

 Organisational transformation imperatives in pre-election Zimbabwe: Organisational Culture Change (Part 2 of a 24-part weekly series) 

As we continue in the transformation journey, this week we focus on Organisational Culture Change as a key ingredient in building a winning institution. Most of us have experienced poor service from a service provider before…arriving at their office just before tea time to find them closing up for the break and telling you that whatever you need will have to wait until the time of their return. Remember how you felt as the customer? That employee was merely just showing you what their organisational culture was. 

Certain cultures drive away customers. They affect every aspect of your company, from the public’s perception of your brand to your employees’ job satisfaction to your bottom line. Because there’s so much at stake, it’s important that your corporate culture is adaptable and open to improvement – which starts with being able to articulate just what kind of culture your company has. Think about your organisation…what is your organisational culture? How do your employees interact with the clients or with each other? What are your corporate values and does your team know them and fully live them out? Is your culture enabling performance or holding back your team? If it is the latter, fear not… culture can be reoriented. 

Organisational Culture has become one of the most important words in many Zimbabwean corporate boardrooms, yet when it comes to shaping an organisation’s culture to achieve enduring advantage, many companies fall woefully short. Organisational culture affects how we, as individuals feel, behave and perform. More recently, sound science and corporate numbers show that culture drives performance…and leadership drives culture. Interestingly, the leaders define culture at the very top as can be seen with global megabrands like Apple. Apple’s organisational culture is a key factor in the company’s success. In Apple’s case, employees are effectively developed and integrated into an organisational culture that facilitates rapid innovation. Such innovation is observable in terms of products like the iPhone, iPad, and Apple Watch. As a leader, what culture do you live out? 

Given the shifts in the operating environment (globally and locally), market leading institutions are dealing with the need for urgent, dramatic, and fast-moving changes in strategies for leadership, talent, and organisational performance. Lately we have seen an increase in Zimbabwean institutions undertaking culture surveys and reorientation programmes, aimed at clinching competitive advantage in their various sectors. Culture is the facilitator for achieving the broad strategic goals, but it is too often overlooked. 

Understanding that the way an institution goes about its business can be transformed, has seen the Government taking a firm stance on non-performing parastatals and state enterprises who have been advised to shape up and conform to the “business unusual” way of things or risk being dissolved. So what is it that you must do to transform your organisational culture so that it drives your strategy? 

You need to get your team on board – secure employee buy in. It is important that everyone understands that their current culture needs to transform to support the organization’s success and progress, change can occur. But change is not easy. By its very nature, changing your organisational culture is messy and challenging but is possible. 

Only 26% of organisational culture change efforts are successful according to a recent Global Survey. The rest of them fail not because the fundamentals were not done right, but because it was treated as an event and not as a process. As such, you need an organisational culture expert to guide you in navigating the tumultuous waters of change. You can change your organisational culture to support the accomplishment of your business goals. It only requires time, commitment, planning and proper execution—but you can do it. Yes, you can. 

This article was compiled by Lisa-Rufaro Marowa, a transformational strategist and resource mobilisation consultant at GENESIS GLOBAL FINANCE. The contents herein are for information purposes only. 

TO CONTACT GENESIS GLOBAL FINANCE: 

Call us on: +2638644131515 or +263777352828; 

Email: consultancy@ggfafrica.com 

Like us on facebook: genesisglobalfinance/privatelimited 

Follow us on Twitter: @ggfafrica 

LinkedIn: /in/genesis-global-finance-166908a3/ 

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    Genesis Global Finance (Private) Limited (“GGF”), is a regional financial advisory and strategy consultancy services firm with business interests in Botswana, Zambia and Zimbabwe. GGF is a member of the Botswana International Financial Services Centre (“IFSC”). GGF focuses on providing specialist management consultancy and strategic planning consultancy services to private and public companies as well as government ministries and parastatals. GGF is accredited by the Office of the President and Cabinet as one of the experts for the Provision of Consultancy Services for Results Based Strategic Planning for public agencies vide State Procurement Board resolution PBR-1384 of September 29 2011.