Donald Muir talks a lot about vision and resolve. “You need the vision to see what is possible and the resolve to drive it through, particularly when people are continually trying to block you,” he says.
A Scottish and Canadian chartered accountant, Mr Muir is an independent turnround professional. He got into the business through a long corporate career with Alcatel Alsthom, then a fast-growing telecommunications, power and transportation systems group.
“It was buying, merging, expanding and disposing of a lot of businesses,” he says. “I was doing change management from the start, so I became a turnround expert while still in corporate life.”
His next challenge was Telspec, a UK-based telecommunications systems supplier, initially as chief financial officer and then as chief executive. It was a rising star that had “crashed and burned” into intensive care with a £10m ($17.7m) loss. This was turned into a £4m profit in only a year.
This was followed by the role of European chief financial officer at Global Crossing, a telecommunications network operator, and then Cable & Wireless Global, part of the Cable & Wireless telecommunications group, which delivered three-quarters of its revenue and most of its problems.
“It was burning cash at an alarming rate and we had to put the brake on,” he says. “We took £500m out of the ‘cash burn’ in seven months and rapidly went from losing £600m a year towards break-even.”
This was followed by turnround assistance to two ailing National Health Service trusts and Northern Rock, the bank that was badly hit by the credit crunch and was rescued last year by the UK government. Mr Muir has also worked as an interim director to provide change management for a government department and BT Retail.
He believes that a turnround specialist must be a natural leader with personal integrity, strong business ethics, a good intellect, very high energy and drive and excellent people skills. The first priority is usually to build a new management team, preferably from internal candidates.
“Very often we inherit a ‘train crash’, so the key is to find signs of life in the form of committed people, so you can turn the bits back into something healthy,” he says.
“You must show people the way forward by focusing on the outcomes, getting them to buy in and motivating them to deliver. No turnround professional can succeed on their own, but you must be very disciplined and rigid in how you drive things through.”
Mr Muir’s approach is the same, whatever the nature of the organisation. He creates a strong programme management office, mainly staffed part-time by existing employees, with a big finance input. It is tasked with standardising all change programmes, savings and management controls.
The office designs management reports to give clarity and visibility, which produces the individual accountability that is essential for delivery.
Mr Muir ties everything closely back to cash in the bank, so he will not accept a plan unless it is tied to a budget or forecast and will not accept a savings claim unless its delivery is recorded in the company’s books.
“People often say that they have been in the organisation for 25 years and I cannot possibly understand the business,” he says. “I tell them that a pound note is the same in any sector and we need to generate cash.
“If you tried to understand all the detailed complexities of every troubled business your head would blow up,” says Mr Muir. “I distil everything down to half a dozen points and use my experience to maximum effect.”
He knows all the large accounting firms relatively well, but his best source of opportunities has been the PwC turnround panel, of which he is a member. The firm will not recommend a turnround specialist to a distressed client, but will introduce several available turnround professionals with the right skills.
In conclusion, Mr Muir says that turnround specialists have to react very quickly, because the organisation is on the edge of a cliff with little room for manoeuvre.
Successful sustainable turnrounds are not about “slash and burn”, but a lot of deep thinking, listening focus, commitment and drive to create an ongoing cash-generative and sustainable business. He wants to see his turnround successes thriving two or three years later.
“We have to put leadership and discipline quickly back into an ailing organisation and instil logical and commercial thinking,” he says. “We nurse it back to strong financial performance as soon as conveniently possible, but it takes a major infusion of energy to make it happen!”
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