Taking Charge: Management Guide to Troubled Companies and Turnarounds Taking Charge: Management Guide to Troubled Companies and Turnarounds
By John O. Whitney
1998/01 - Beard Books
1893122034 - Paperback - Reprint -  244 pp.

A management survival guide for and about troubled companies and the challenges of turnarounds.

Publisher Comments

Category: Bankruptcy & Restructuring

This title is part of the Turnarounds list.

Of Interest:

Corporate Recovery: Managing Companies in Distress

Corporate Turnaround: How Managers Turn Losers Into Winners!

Hospital Turnarounds: Lessons in Leadership

Small Business Bankruptcy Reorganizations 

The Turnaround Manager's Handbook

The Executive Guide to Corporate Bankruptcy

Strained financial resources, demoralized executives, fearful employees, unhappy customers, tense bankers, angry investors, and competitors waiting to pounce -- these are the classic challenges of turnarounds and troubled companies. Taking Charge is a management survival guide that explores the dynamics of troubled companies from the perspective of a turnaround pro, providing a step-by-step plan for success that is punctuated with real-world examples.

Topics include cash control, banking relationships, leadership style, entrepreneurship, equity versus debt, and downsizing and reorganization -- must reading not only for managers of troubled companies, but also for those in relatively stable companies anxious to avoid turnaround status. The principles first set forth in the original edition published in 1987 are still valid in this 1999 reprint edition.

Review by Susan Pannell
From Turnarounds and Workouts, May 15, 1999

Remember when Lee Iacocca was practically a national hero? He won celebrity status by taking charge at a company so universally known as troubled tht humor columnist joked their kids grew up thinking the corporate name was "Ayling Chrysler." Whatever else Iacocca may have been, he was a leader, and leadership is crucial to a successful turnaround, maintains the author.

Mediagenic names merit only passing references in Whitney's book, however. The author's own considerable experience as a turnaround pro has given him more than sufficient perspective and acumen to guide managers through successful turnarounds without resorting to name-dropping. While Whitney states that he "share(s) no personal war stories" in this book, it was nonetheless, written from inside the "shoes, skin and skull of a turnaround leader." That sense of immediacy, of urgency and intensity, makes Taking Charge compelling reading even for the executive who feels he or she has already mastered the literature of turnarounds.

Whitney divides the work into two parts. Part I is succinctly entitled "Survival," and sets out the rules for taking charge within the crucial first 120 days. "The leader rarely succeeds who is not clearly in charge by the end of his fourth month," Whitney notes. Cash budgeting, the mainstay of a successful turnaround, is given attention in almost every chapter. Woe to the inexperience manager who views accounts receivable management as "an arcane activity 'handled over in accounting.'" Whitney sets out 50 questions concerning AR that the leader must deal with -- not academic exercises, but requirements for survival.

Other internal sources for cash, including judiciously managed accounts payable and inventory, asset restructuring, and expense cuts, are discussed. External sources of cash, among them banks, asset lenders, and venture capital funds; factoring receivables; and the use of trust receipts and field warehousing, are handled in detail. Although cash, cash, and more cash is the drumbeat of Part I, Whitney does not slight other subjects requiring attention. Two chapters, for example, help the turnaround manager assess how the company got into the mess in the first place, and develop strategies for getting out of it.

The critical subject of cash continues to resonate throughout Part II, "Profit and Growth," although here the turnaround leader consolidates his gains and looks ahead as the turnaround matures. New financial, new organizational and new marketing arrangements are laid out in detail. Whitney also provides a checklist for the leader t o use in brainstorming strategic options for the future.

Whitney's underlying theme -- that a successful business requires personal leadership as well as bricks and mortar, money and machinery -- is summed up in a concluding chapter that analyzes the qualities that make a leader. His advice is as relevant in this 1999 reprint edition as it was in 1987 when first published.

James D. Miller, Managing Partner, Arthur Andersen & Co.

A step-by-step how-to book that discusses turnarounds in a straightfoward, no-nonsense manner.

Columbia University

(The books is) a bible for the turnaround business.

This book is about turnarounds, my background.  Turnarounds and start-ups have many similarities.  Find this book.  It is excellent. 

John O. WhitneyJohn O. Whitney is Professor of Management and Executive Director of the Deming Center for Quality Management at Columbia Business School. He is a member of the board of Directors of several companies, including Turner Corp., Church and Dwight Corp., and Atchison Castings Corp., and on the advisory board at Newsbank Corp. Recent consulting assignments include Alcoa Corp., Wickes Lumber, Rodale Press, Sunstar, Inc., the Zimmer Division of Bristol-Myers Squibb, the Lab Glass Division of Corning, inc., Merck & Co., W.R. Grace, Nashua Corporation, and IBM. His speaking engagements include an even larger number of companies, and he has written for numerous leading business publications.

CHAPTER 1. Style and Substance 3
Style Is Substance 4
The First 120 Days 5
The Urgent Need to Centralize Control 6
   Developing Information 6
   Reinforcing the New Regime 7
Preparing for Change 9
Leadership -- Powers and Pitfalls 11
   Sharing Power 12
Participative Management -- Not Now 14
Delegation -- What? To Whom? 15
Meetings -- Absolutely 16
Fine-Tuning the Process 20
Entrepreneurship -- The Essence of Turnarounds 21
   Managing Uncertainty 22
   Managing Risk 23
CHAPTER 2. Marketing in the Turnaround's Early Stages 25
CHAPTER 3. Cash Cash Cash -- Internal Sources 35
Forgiveness, Conversion, and Extended Terms for Payables and Debt 36
Cash Projections 36
Deterioration of Receivables -- Acceleration of Payable 38
Early Reviews 45
   Analysis of Receivables 45
   Accounts Payable Review 49
Early Actions 50
   Turning Receivables into Cash 50
   Receivables Factoring 55
   Management of Payables 56
   Old-Fashioned Stretching 59
   Conversion to a Note Payable 60
   Conversion from Purchase to Consignment 60
   Returns for Credit 61
Other Internal Sources of Cash 61
Inventory Management 61
   Additions to Inventory 62
Converting Assets to Leases -- Sale and Leaseback 64
Other Asset Restructuring 65
Defensive Auctions 65
   Expense Cuts 66
   Peering over the Edge 66
   Liquidation 67
   Creditor Committees and  Out-of-Court Settlements 68
   Chapter 11 Analysis 69
CHAPTER 4. More Cash -- External Sources 71
External Sources and the Business Plan 72
Banks in General -- Banks in Turnarounds 73
Asset Lenders 76
Factoring, Trust Receipts, Field Warehousing 77
Intermediate Debt Financing 77
Public Issues 78
Venture Capital 79
Special Sources 84
Senator Alken's Solution --  An Orderly Retreat 85
Mergers -- Sellouts 86
Using the Loss Carryforward 88
CHAPTER 5. Striking the Financial Bargain -- A Better Idea 89
Due Diligence 91
   Personnel Data 91
   The Business Plan 92
The Decision 93
The Process 94
Impediments -- Shall We Overcome 95
CHAPTER 6. How Did We Get in This Mess? How Do We Get Out of It? 99
  Internal Sources of Information 100
   Senior Managers 102
   Frontline Manager 104
   Employees 105
   The Informal Organization 106
   Personnel Actions 106
External Sources of Information 107
   Customer Interviews 107
   Vendor Interviews 108
   Marketplace in General 108
   Product 109
   Product Positioning 109
   Pricing 109
   Service 109
Report Reviews 110
Accounting and MIS Reviews 110
   Cash 111
   Accounts Receivable System 111
   Accounts Payable Systems 113
   Other Accounting Reports 114
   Management Information Systems 115
CHAPTER 7. Composing the Marching Song -- The Survival Plan 117
Information Gathering and Analysis 121
Decision and Implementation 123
The Plan 126
The Organization 127
Appointments, Pay and Performance 129
The Budget 129
Implications and Consequences 129
Marching and Singing 133
CHAPTER 8. New Marketing Strategies 139
The Planning Process 142
   Niches, Nooks and Crannies -- Target Markets 142
   Platforms, Ramps, and Springboards 144
Salience, Dominance, Segments, Differentiation, and Risk 145
   Salience 146
   Dominance 147
   Segmentation, Differentiation and Risk Assessment 148
      Present Products in Existing markets 150
      Present Products in New Markets 150
   Levels of Differentiation 151
      Perceptual Differentiation 151
      Applied Differentiation 152
      Palpable Differentiation 156
Imponderables, Intangibles, and Intuition 157
The Advertising Dilemma 160
   The Medium 161
   The Message 161
   Quicker Payback from Sales Promotion 162
   Advertising as a Marching Song 164
Direct Marketing 164
Market Shares and Channels 165
The Marketing Portfolio 165
   The Portfolio Decision 169
   Product Portfolio Weighting Table 171
Rewards, Risks and Pitfalls -- Two Case Histories 171
CHAPTER 9. New Organizational Requirements 178
The Need for the Flat Organization Chart 179
   Avoiding Disaster 179
   Exploiting Opportunity 180
   Reducing Expenses 180
The Flat Organization Chart -- Centralizing while Decentralizing 181
   Design and Implementation 182
      Understanding and Evaluating the Work 184
      Redefining the Work 185
      Reorganizing the Work 186
      Measurement and Control 188
Process and Structure 190
People 191
Performance Appraisals 192
Participative Management Revisited 194
Training and Development 198
The Budget as a Training Tool 201
Intrinsic Productivity Gains through Overhead Value Analysis (OVA) 203
CHAPTER 10. Organizational Issues Unique to the Turnaround 207
Manufacturing 207
The Chief Financial Officer 209
Management Accounting and Management Information 213
Electronic Data Processing 215
The Personnel Function 217
Outside Services -- Auditors, Advertising Agencies, Lawyers 219
Consultants 220
CHAPTER 11. New Financial Strategies 222
Internal Resources 223
   Cash Flow 223
   Profits 224
   Divestitures and Acknowledged Liquidations 227
External Sources 231
   Debt or Equity 232
   Cost of Equity versus Cost of Debt 234
   Private versus Public Placement 235
   Equity and Near Equity 237
      Common Stock 237
      Convertible Preferred 237
      Warrants 241
   Debt and Near Debt 241
      Convertible Debentures 242
      Intermediate-Term Loans 243
      Revolving Credit Line 244
      Short-Term Loans 244
   Selling Royalty Streams 246
   Acquisitions 246
CHAPTER 12. Strategic Options 248
Strategy Formulation 249
Checklist for Strategy Development 253
Strategic Alternatives 259
   Divestments 259
   Acquisitions 260
   Sale of Assets or Company 261
   Steady Growth 261
   Rapid Growth 262
   New Products -- New Markets 263
   Visions of Grandeur 264
Turnarounds and Self-Esteem 270

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