Recession Turnaround Efforts Not Yet Getting Real Traction

This is the second of a six part series, running this week, on why you can expect that the downturn will be deeper and longer than currently expected by most. Each day, I will post about one of the six reasons why I have come to this conclusion. Here is Reason #2.

For 20+ years, I was on the front lines of restructuring companies of all sizes, in a plethora of industries. And, for the last 10+ years, I have counseled leaders in the Restructuring industry as they have worked to restructure companies throughout the country. I have seen 100’s of restructurings, up close and as they say “personal” from all different positions. I have been a lender, represented creditors, assisted trustees, and even been the executive in the hot seat making the operating decisions. And, if there is one thing of which I am certain as a result of all this experience with restructurings is that

turnaround’s are very, very difficult!

The problems facing our economy are many, many times more complex than the largest of my restructuring assignments. And, so I have to conclude that this turnaround will be difficult and protracted.

Turnarounds are difficult for many reasons, not the least of which is the snowball effect. Notwithstanding the best of efforts, more often than not the snowball of problems picks up speed before it can be stopped, or even significantly slowed .

I want to believe the Federal Reserve and the Treasury Department are making progress. And, I am sure they are. But from my vantage point…and that certainly isn’t on the very front lines…it sure seems like the snowball is picking up speed.

Turnarounds call for decisive action, and implementing new processes by the government is almost, by definition, likely to be slow. Treasury won congressional approval for the $700 million rescue plan on October 3. But three weeks later, an asset manager has not yet been put in place. Certainly not slow by government standards. But, in the world of turnarounds, this is glacial speed, even as the snowball just keeps rolling faster downhill.

My pessimism about the likely duration and depth of the economic downturn is, in part, based on my conclusion that to date, the turnaround efforts are not yet getting real traction.

That doesn’t mean that those on the front lines are doing a bad job. Or will not eventually get traction. But, after three months of intensive action, it certainly appears that the snowball is still gathering speed.

Now, I have been on the front lines where adrenalin has you hoping and expecting that your actions will soon take hold. Many a turnaround professional has dreamed of the quick turnaround. But, seldom…very seldom…is that what happens. Turnarounds are tough stuff! And, this may well turn out to be one of the toughest of all time!!

Up Next: The third of the six reasons for pessimism about the duration and depth of the downturn; The 2008 Election Break in Recession Turnaround Efforts . Follow this series all week as I layout one of the six reasons every day. And, remember that although I believe that these are tough times, I believe that…with the right actions…the agile can prosper. Stay tuned to next week when each daily post will address specific ways businesses can prosper in these tough times.