I was reading today about a current management buyout where a failing manufacturer in the leisure equipment industry was undergoing a management buyout. One can surmise that recently well publicised poor quality issues and ensuing warranty work has come home to roost. It seems that the existing management team are proposing a buyout which is interesting, if not somewhat worrying.
Management buy outs often fail because the reason they happen is to maintain the jobs of the managers and the workforce. The “new” management team then take a previously failed business model often made worse with an over leveraged balance sheet and just repeat the same model all over again with the same results reappearing after a short period. Minor tweaks and changes are not enough.
Often it an emotional conveyor belt that carries these things forward; very difficult to have true objectivity if one is drawn into the demise of the organisation you work for. On the other hand the emotional ownership and commitment can be beneficial in drive and leadership but the earlier issues still remain behind the scenes.
Institutionalised management teams have great difficult in making the step changes to turn a business round as they are often set in their ways; their original lack of skills creating the situation “as is” so making any real beneficial change is very unlikely.
What is needed to turn a failing business around is a fresh approach a different mind-set that gets rid of all the myths, legends and group think within the old business: a different business model a different strategy and a new target operating model.
Attributed to Einstein. Insanity: doing the same thing over and over again and expecting different results.