Turnaround Management involves the formulation and implementation of a strategic plan and a set of actions for corporate renewal and restructuring, typically during times of severe corporate financial distress. Often with the help of outside turnaround consultants or strategy consultants, a Root Cause Analysis is made and a turnaround plan is devised and executed, assuming that the firm still offers the potential to return to financial solvency, profitability and strategic viability. ROOT CAUSES OF STRATEGIC DISTRESS There are just a limited number of root causes for corporate strategic distress: "Acts of God" - Certain risks may occur and cause irreparable damage (despite proper anticipation and thorough preparation). Poor Vision / Understanding of the Market Poor Strategy Poor Business Model / Execution MORE IMMEDIATE CAUSES OF STRATEGIC DISTRESS Typically, when these root causes are not dealt with properly, they will cause a range of problems, which can then trigger a corporate crisis: Lack of expertise, experience or education, weak management Market circumstances, weak economy Business economical reasons, earnings crisis Bankruptcy of holding company Board level arguments Fraud, insufficient financial controls Overly optimistic sales projections Financing problems, liquidity crisis, excessive debt burden, undercapitalization Operating cost levels too high Very strong, successful competitor Overinvestment Insufficient resources, underinvestment Often these triggers are interrelated, and several causes are involved. Slywotzky and Drzik have categorized these triggers in 7 Classes of Strategic Risk. STEPS IN A TURNAROUND PROCESS The first step in a turnaround process is often to change the top management or leadership of the business and to appoint an experienced  turnaround manager. Often strong, Commanding Leadership or even Charismatic Leadership is exerted. The turnaround process typically consists out of the following key steps (in approximate chronological order): Assess the situation and future business viability Implement emergency steps ("stop the bleeding") Develop strategic survival plan Implement the plan, restructuring the business. Survive the crisis Return to normal operations, profitability and growth Prepare for departure of turnaround management