More companies failed in 2001 and
are expected to fail in 2002 than in any previous year. A record number of
companies face restructuring or liquidation. A new book offers urgent advice
on how to get a troubled company back on track before it's too late.
Written from the frontlines of restructuring large companies in crisis,
THE PHOENIX EFFECT: 9 Revitalizing Strategies No Business Can Do Without
(John Wiley & Sons; March 8, 2002; hardcover; $27.95) by
PricewaterhouseCoopers restructuring specialist Carter Pate and Northeastern
University professor Harlan D. Platt, gives all managers the tools to
revitalize companies large and small, healthy and troubled.
"This whole country is a metaphor for second chances," say Pate
and Platt. "Built on comebacks, it is the one culture where failures
nearly always get another crack at success, providing they display the savvy
and the spirit needed to get off the canvas and start swinging again."
THE PHOENIX EFFECT will help managers keep their company far from the
"slippery slope to oblivion" and on the right road to perform at
their peak. In THE PHOENIX EFFECT, Pate and Platt show how to overcome
denial and spot potential trouble with a clear eye toward the nuts and bolts
of a company, which are far too often neglected. After showing managers how
to diagnose the health of their company, Pate and Platt offer nine
revitalizing strategies to return any company to growth.
1) Determine the Scope Examine your resources, economic indicators, the
competition, government regulation, and social and technological change to
choose whether your company should enter a new business, withdraw from an
existing business or stay in the same business.
2) Orient the Business Use market data and research and actively set the
value and utility level of your products to aim them at the right market.
And regularly and quickly fine-tune your orientation in response to new
trends or changes.
3) Manage Scale Accurately assess your resources and the demand of the
market to decide if you can grow your company to get an edge with economies
of scale. Choose between mergers or internal growth to accomplish this, and
keep a tight rein on costs to avoid unproductive growth.
4) Handle Debt Restructure, renegotiate or merge to reduce the burden of
your debt with strategies including equity-for-debt swaps, relaxed debt
covenants, and asset exchanges in lieu of debt payments.
5) Get the Most from Assets Carefully scrutinize your working capital to
identify superfluous and underused assets and weigh the short term benefits
and long-term downsides of outsourcing, dismissing employees, reducing
inventories and securing funding from suppliers.
6) Get the Most from Employees Use creative strategies for increasing the
quality and productivity of employees while lowering costs and if layoffs
are imminent, remember to keep your most loyal managers to ensure they will
stay with the company.
7) Get the Most from Products Actively decide which products to sell,
what customers to keep, and how to set prices to make sure your products
satisfy actual customer needs.
8) Produce the Product Consider and analyze alternative ways products can
be created, including owned or leased facilities (domestic or foreign),
plantless production (outsourcing), combining operations with another
company, even a competitor, and just-in-time (JIT) production.
9) Change the Process Evaluate your processes and your competitors to
maximize efficiency. Small but smart changes can increase production, save
time and money, and diminish waste.
From Toys "R" Us, Inc. to BankBoston Corporation to Yahoo!
Inc., THE PHOENIX EFFECT provides scores of real examples offering a range
of fatal mistakes and successful comeback strategies to learn from. These
proven lessons from the frontlines of rescuing big business will help
- identify whether their company needs a tune-up, a turnaround,
or crisis management. · define their company mission and stick to it.
- position their product against competitors with a product/price mix
strategy, a product orientation strategy, and process improvements.
their companies in context, make the right decisions, and choose the right
strategy to suit their company's resources and culture.
- focus attention
on critical trends and real-time data that can minimize their company risk
(working capital, cash flow, inventory, process time, assets and
liabilities, economic indicators, etc.).
- restructure and renegotiate debt
with creditors to get the upper hand.
- handle layoffs elegantly and
ethically when there is no other option.
- conquer denial, get over past
glory, and confront and address flaws and weaknesses.
"The best renewal insurance is leaders who always know exactly how
their companies are doing," say Pate and Platt. "These leaders
never dwell on past glory, the siren call of complacency. They are masters
of today's vital signs, the indicators of tomorrow's success or
# # # #
About the Authors:
Carter Pate is a world-renowned
restructuring expert at PricewaterhouseCoopers with more than twenty years
experience providing strategic consulting and implementation strategies. He
has served as both CEO and Chairman of several public companies and advisor
to companies including Ericsson Corp, Crown Books, K-Mart, and NeoStar
Retail Group, and was a founding partner of Pate, Winters & Stone, a
national consulting firm. Mr. Pate received his B.S. in Accounting from
Greensboro College, Greensboro, N.C., and is a past member of its Board of
Trustees. Mr. Pate is a contributing author to Workouts and Turnarounds II,
published in 1999 by John Wiley & Sons, Inc.
Harlan D. Platt is Professor, Finance and Insurance Group at Northeastern
University. He created and now administers the certification exam for the
Turnaround Management Association. Platt holds a B.A. from Northwestern
University and M.A. and Ph.D. degrees from the University of Michigan. He is
the Associate Editor of Finance for the Journal of Business Research, and is
the author of Why Companies Fail: Strategies for Detecting, Avoiding and
Profiting from Bankruptcy, The First Junk Bond: A Story of Corporate Boom
and Bust, and Principles of Corporate Renewal
About the Book:
THE PHOENIX EFFECT: 9 Revitalizing Strategies No Business Can Do
by Carter Pate and Harlan Platt John Wiley & Sons Publication date:
March 8, 2002 0-471-06262-6 $27.95 US / $43.50 CAN 228 pages