Cell C seem to have made an incredible turnaround, both in terms of profitability.....
Mobile operator Cell C has just reported R2.36 billion in profit before tax, a huge turnaround in fortunes from the R10.69 billion loss it reported a year ago - Moneyweb
...and access to sorely needed capital.
After more than two years, Blue Label Telecoms says it has secured funding from various banks to recapitalise mobile operator Cell C - Businesslive
But how did they do it?
As part of the iOCO Inspire Series, I asked Zafar Mahomed, Cell C's CFO, to share his thoughts on how to lead corporate turnarounds, especially in situations which look at first glance to be mission impossibles.
1. Purpose is Key.
If you don’t have a common understanding of what you are trying to achieve, you’ll never get there. It’s therefore incredibly important you are clear about your purpose and that it’s supported by all of your critical stakeholders.
2. Don’t be in denial.
A lot of leaders in South Africa are in denial about the very real disruptive threats to their businesses.
Denialism is very much a corporate disease, as leaders are cocooned from the real world.
Leaders must believe their businesses will be disrupted and take definitive actions to mitigate this threat if they want to survive.
3. Always speak the truth.
Speaking the truth, no matter how difficult, is the fastest way to build trust and support across your stakeholders.
This is especially so when you are in a distressed scenario because at that point, you lack credibility.
Banks for example aren't going to believe you if you say everything is fine. If you want them to support you, give them the truth.
4. Keep it simple.
If you want your stakeholders to support your vision, then it’s got to be compelling and easy to understand.
For example, Zaf says he can explain Cell C’s 4-pillar strategy to his financiers and shareholders in 30 seconds or less.
5. Manage your cash-flow, not your income statement.
Income statements for turnarounds are not relevant!
All that matters is cash-flow.
If you don’t know where your cash is, you don’t have a business.
6. Get the best advisors you can afford.
You cannot do turnarounds by yourself. You need advisors to help you and guide your thinking.
They are expensive, but if you choose the right ones, they are vital.
7. Don’t be afraid to make mistakes.
You are going to make mistakes. It’s guaranteed.
In fact, if you are not making mistakes, you are doing something wrong.
(Just remember when they happen, to make sure you fix them quickly!)
8. Don’t rely on the people that got you in to trouble, to get you out of it.
You have to bring in fresh thinkers to turn-around a business.
Like with advisors, they might be expensive and they might be temporary.
But they are vital.
This is why for example, everyone on Cell C’s ExCo is brand new.
9. Be ruthless on cost cutting
For example, do you really need that business day subscription?
So be ruthless when cutting costs.
The worst that can happen is someone will write you a nasty letter!
10. Governance is critical
Make sure there is oversight for the decisions you make.
If a governance structure don’t exist, create one.
Taking tough decisions without appropriate governance makes you a cowboy, whereas taking tough decisions with good governance builds credibility quickly.
11. Look After your mental and physical wellbeing
It's vital you allocate time to exercise, to sleep, to eat properly and to spend time with your friends and family.
Transformation projects are always particularly stressful, so you really have to be very deliberate here.
If you cannot keep yourself physically and mentally fit, you are not going to be able to nurse a company back into profit.
Spending time with friends and family is also incredibly important, not only because you want to, but because they are the people that will support and revitalise you when you need it most.
12. Active Stakeholder Management
It’s absolutely critical to continually communicate with your key stakeholders.
Roadshows, personal letters, calls, messages, webinars...whatever.
It’s amazing the goodwill you get when you communicate regularly and your communications are honest.
13. Forget about spreadsheets
You can’t trust a complex spreadsheet to run your business.
Keep your forecasts simple and focus on cash-flow.
As a CFO you have to be in the business of understanding what’s really happening, not understanding excel.
14. Failure isn't an option. It's mandatory.
Leaders who were born in the seventy's or before, had to be blemish-free to get the top jobs.
Luckily for Cell C, Zaf has a lot of scars on his CV.
And this works in their favour as your best problem solvers are typically individuals who've failed alot.