Trust-First Turnaround Sequence
Win the first year by setting a plan people can beat, then move all three horizons at once
- Difficulty
- Advanced
- Time to result
- ~months to results
- Steps
- 6
- Confidence
- 80%
The sequence treats trust as the first deliverable. Weber arrived as the fourth CEO at a company losing five million dollars a year, thirty million dollars in debt, a week from missing payroll, with employees running a pool on how long he would last. Six weeks in he rebuilt the plan and took profit down to a number the team could actually hit while keeping it a profit plan, then went after cash by shrinking the mix. Ten million dollars came out of the balance sheet in nine months. The team hit the plan and earned a bonus for the first time in four years, which converted scepticism into belief. In parallel he refused the board's advice to cut his ten priorities to four, because a shoe company has to deliver product, brand, channel, and balance sheet in the same season. Horizon one, two, and three move together or the next season shrinks.
Origin
Jim Weber developed the pattern across turnarounds at a Coleman division in Phoenix, O'Brien Water Sports, and a snowboard company, then ran it at Brooks Running from 2001. Extracted from Acquired.
Core principles
- 01In year one the scarce resource is trust, not ideas
- 02A plan nobody can hit destroys credibility faster than a lower plan does
- 03Cash pulled out of the balance sheet buys the time strategy needs
- 04Companies with issues get sold; companies with opportunity attract investors
- 05You cannot sequence the horizons one at a time; the whole model has to move together
How to run it
- 1
Map who has to believe you
Identify every stakeholder the turnaround depends on: the lender, the owner, the leadership team, and the employees. Decide which relationships can be repaired and which have to be replaced.
Pro tip Replace the lender who has already decided the story is over rather than spending months persuading them.
Watch out Assuming the owner will fund the plan without being asked is how turnarounds run out of runway.
- 2
Rebuild the plan in the first six to eight weeks
Reset the operating plan to a number the organisation can genuinely beat while keeping it profitable. The reset has to be fast enough that it is still your plan and not an excuse for a later miss.
Pro tip Do the intensive diagnostic in weeks, not quarters; you will know enough to set the number.
Watch out Leaving the inherited stretch plan in place guarantees another miss and a fourth failed CEO.
- 3
Go after cash on the balance sheet
Shrink the mix and pull working capital out of inventory and receivables. This is the fastest source of funding available and it comes without dilution or new debt.
Pro tip Treat each product line exit as a cash event and report it that way internally.
Watch out Cutting cost without shrinking the mix leaves the capital trapped where it was.
- 4
Move all three horizons in parallel
Keep the near-term fixes, the next-season product, and the long-term brand build all moving. A seasonal business that pauses horizon two or three arrives at market with a weak line and shrinks.
Pro tip Think of it as moving a wall of bricks forward and pushing up whichever section falls behind.
Watch out Advice to pick four priorities is usually about the board's comfort, not the business model's needs.
- 5
Get the one critical product right
Identify the single product the company cannot afford to get wrong and finish it a full cycle ahead so it lands in the following season regardless of everything else happening.
Pro tip Protect the critical product's timeline from the cost programme running alongside it.
Watch out In long lead-time businesses a missed cycle cannot be recovered inside the same year.
- 6
Deliver the plan and let the payout speak
Hitting the number you set nine months earlier, and paying the bonus it triggers, converts stakeholders far more effectively than any presentation about the strategy.
Pro tip Say out loud in advance that hitting this plan is what earns the right to the next one.
Watch out Moving the goalposts mid-year forfeits the entire trust dividend the reset was designed to buy.
In the wild
Six weeks after arriving, Weber redid the plan and took profits down by millions to a number the company could beat, while keeping it a profit plan. He shrank the mix and went after cash flow, generating ten million dollars in the first nine months purely by shrinking the balance sheet. The team hit the plan and earned a bonus for the first time in four years. Simultaneously he insisted on ten priorities against the board's advice to pick four, because the Adrenaline had to be refined in 2001 to ship in 2002 and the fourth Adrenaline arrived as a balanced multi-density stability shoe just as a competitor's supply faltered.
→ Trust restored with the owner and the team, ten million dollars of cash generated, and a franchise shoe that Weber says saved the company.
Weber knew the private equity owner had to liquefy and that employees assumed he was there only to sell the company. Rather than deny it, he told the team that companies with issues get sold while companies with opportunity attract investors, so the job was to be worth buying. The line he wrote on his board came from Benjamin Disraeli: the secret of success is constancy of purpose.
→ A team aligned around building value through the sale rather than bracing for it, and a CEO who stayed through four successive owners.
Common mistakes
Inheriting the previous plan
Keeping a number the team has no prayer of hitting guarantees another miss and confirms every stakeholder's belief that this leader will fail like the last three.
Reducing the list to look focused
Cutting ten necessary workstreams to four because the board finds it more comfortable leaves parts of the business model stalled, and in a seasonal business a stalled horizon shows up as a shrinking year.
Announcing strategy before delivering a number
Trust in a distressed business is bought with a delivered result and a paid bonus. Strategy presentations before the first hit plan land as more of what the previous three CEOs offered.
Is it for you?
Best for
Incoming CEOs and turnaround operators taking over a loss-making business with an impatient board, a nervous lender, and a demoralised team.
Not ideal for
Healthy businesses where an aggressive stretch plan is the right forcing function, or situations with no cash left to buy time.
From the transcript
“the real puzzle in that first year was gaining trust from everybody that mattered”
“six weeks in we redid the plan took profits down”
“you have to do horizon one horizon two horizon three right you've gotta you gotta solve it all”
From the episode
Arena Show Part II: Brooks Running (with CEO Jim Weber)