Corporate Turnaround: Lessons we can learn from D-Day.

With the 80th anniversary of D-Day taking place this month, I wondered what could practitioners of Corporate Turnarounds learn from the planning and execution of the invasion of Normandy (Operation Overlord) in June 1944. So, this is my take on the continuing relevance of one of the most famous operations of the Second World War.

Planning and Preparation

Meticulous planning went into the invasion of Normandy. Those plans began over a year before the invasion took place. Typically, of course, a distressed Corporate Turnaround simply does not have the luxury of such time. Granted, this is often true, but understanding how the D-Day plans evolved highlights to us that the earlier an issue is spotted, the more time that is available to prepare, and the more time that is available to prepare, increases the likelihood of a successful outcome.

Understanding that the original plans of Operation Overlord were peer reviewed, constructively criticised and significantly altered before being finalised shows the benefit of consultation, analysis and finessing any plan with the input from all affected parties (well, okay, in D-Day’s case maybe not the Germans).

Contingency Planning

The planners of D-Day, considered various different contingencies. These ranged from placing the invasion anywhere from Norway to Holland, the Pas de Calais to Brittany and even the South of France before settling on Normandy. In a Corporate Turnaround a similar exercise has to be taken so all options are fully considered. These options might range from business improvement plans to additional equity investment or a refinancing. Beyond those options, maybe a solvent sale or merger process has to be run alongside preparing for an accelerated sale and insolvency or, as a final resort, a realisation of assets and break-up of the business. And, just as in 1944, those plans need to be run alongside each other, gradually being whittled down until it becomes clear which of option is most capable of being successfully executed.

Appointing the Right Leadership Team

Success, as the saying goes, has many fathers (and mothers) and there is much truth in that. If we look at the leadership team on the Allied side, we can see a structure which paid respect to the various interested parties – the Allied nations. It also played to the strengths of its key individuals.

The overall commander, General Eisenhower, set the tone. He appointed his immediate deputies, three British commanders of Land, Sea and Air forces. They were then empowered to appoint a team of experts from the different branches and nationalities involved in the invasion to develop and implement the plans. A team of all the talents, precisely what is also needed to achieve a successful Corporate Turnaround where our team should include:

·       A motivated and committed management team with strong but flexible leadership;

·       Advisors with the necessary accounting and legal skills to advise on all options and contingencies;

·       Access to corporate finance expertise to ensure the business can fund its turnaround plan;

·       Employees who are bought into the plan and willing to make the extra effort needed to bring about its success.

Taking Responsibility 1 –Advisors.

A key aspect of D-Day’s success was timing: the weather, the tides and the full moon had to coincide to maximise the chances of success. In this respect, Eisenhower and his senior team were advised by a team of meteorologists.

The invasion day had been set for 5 June for some time. However, it fell to the chief meteorologist, Group Captain James Stagg, to deliver two pieces of critical advice. First, early on 4 June, after analysing weather reports, he advised the Generals to postpone the invasion from 5 June, even though some ships had already set sail for France. The weather would be so bad that landing craft filled with men would be swamped and the low cloud would neutralise the Allies’ overwhelming air superiority. A huge call. But even more critically, on the following day, Stagg concluded there would be a break in the weather and so he advised the Generals that there was just sufficient time to begin the invasion if it took place on 6 June. Eisenhower consulted and said “Go”.

This is a brilliant example of an advisor clearly giving more than just advice. Stagg gave his client a well-thought-out rationale and, on each occasion, a clear recommendation to follow a specific route. In short, he took responsibility, a quality which every advisor has to demonstrate. Advisors add no value if all they do is provide a series of options. Management, and other stakeholders, are entitled to expect their advisors to provide clear and strong advice so that a course can be charted through the critical issues affecting the business.

Taking Responsibility 2 - Leaders

When faced with the forecasters’ advice, Eisenhower took soundings from his chief of staff, Air Chief Marshall Tedder and the commanders of each arm of service: General Montgomery for the land forces, Admiral Ramsay for the naval forces and Sir Trafford Leigh-Mallory for the Air forces. But Eisenhower did not hide behind the views of his senior team or those of his advisors once he, and he alone, had decided the invasion would happen on 6 June.

Famously, Eisenhower prepared a message to be given if the landings had not been successful. In that message, Eisenhower was prepared to take full responsibility in the event of the failure of the operation and his team knew that. His statement concluded with: “If any blame or fault attaches to the attempt, it is mine alone.”

Fortunately, that second message did not have to be delivered. But, it demonstrates his willingness to take responsibility. This is a lesson that many leaders could take to heart. Ultimately, the buck has to stop with someone and if the team sense that they are not going to be “thrown under the bus” by those higher up, they will be more willing to contribute, push boundaries and take calculated risks.

Be Present and Available

There are also lessons to be learned from defeat. When D-Day took place, Field Marshall Rommel, the man in charge of the German defences, was not in Normandy. He had left Normandy to visit his wife, precisely as Eisenhower made his first decision to postpone the landings on 4 June. On 6 June he was hundreds of miles away in Germany. Naturally the time it took for him to travel back caused delay, uncertainty and a lack of strategic leadership.

Meanwhile, once the invasion began, the armoured divisions which the Germans would have needed to throw against the forces on the beaches could not be released without the personal permission of Hitler. As his subordinates had been commanded by their leader not to wake him, Hitler, a notorious late sleeper, was not disturbed, despite the gravity of events, for many crucial hours.

What this demonstrates is that in critical situations, key Individuals need to make themselves available and accessible whenever they may be needed. This might mean being physically present but, in an age of digital communications, there is no excuse for not communicating, not checking in or not participating in the important and crucial conversations. In a world where we now try and respect the value of holidays and non-working time, the failure to appoint a deputy with sufficient authority to make the big calls, is at best, reckless and at worst, negligent.

Prepare for the Worst

Although casualty numbers on D-Day were significant and, in the subsequent Normandy campaign, exceeded First World War levels of attrition, the Allies had actually expected and prepared themselves for far higher losses. I mentioned previously the need for contingency planning to cover a wide range of outcomes, from the best to the worst, and the Allies certainly prepared for the worst case.

This is a critical mindset to any Corporate Turnaround. Once one accepts that a less favourable outcome is a possibility, it is easier to face up to the challenges which that might bring. Notably, those involved in a Corporate Turnaround constantly have to manage expectations. Messages to all parties involved in a turnaround, for example, employees, shareholders, financiers, suppliers or customers, have to be clear and honest. There is no room for half-truths nor for flowery optimism. Most experienced turnaround practitioners will attest to the fact that consistent reports, even ones delivering bad news, are more likely to win over the trust of critical stakeholders.

Manage Essential Supplies

The D-Day planners were acutely aware that landing armies in Normandy in itself was insufficient. They had to make sure that ongoing supplies could be delivered to drive the invading armies forward.

The Allies laid PLUTO, the Pipe Line Under The Ocean, which enabled supplies of fuel to be pumped from refineries in Southern England directly to the Normandy coast. They also manufactured two floating harbours, towed them across the Channel and enabled millions of tons of supplies to be delivered directly to the front line.

A trading business has to know that, even once a re-finance, sale or restructuring has taken place, it can secure ongoing supplies. In this case, difficult discussions with essential suppliers must take place before the company’s own D-Day. Recalcitrant suppliers have to be persuaded, ransom payments may need to be paid or alternative suppliers sourced. All this has to be done before the big day so that the transition to a new beginning can be as smooth as possible.

Be flexible.

The oft-quoted military saying is that “No plan survives contact with the enemy”. The same can be true in a Corporate Turnaround, where events move rapidly and the reaction of other parties can impact plans and projections.

The Allied plans for D-Day involved securing a number of objectives. Famously, the eastern objective was to secure the city of Caen on D-Day itself. In fact, Caen was not liberated until many weeks later. However, whilst this has (controversially) been considered a failure on the part of the British commanders, the liberation of Caen was just one of several objectives. The others included securing the beaches, linking up with airborne forces to secure river and canal crossings, liberating Bayeux and resisting German counter attacks. These were all achieved on or shortly after D-Day.

We can translate this into our experiences of a Corporate Turnaround where another saying: “Good enough is better than perfect” often applies. For example, in a distressed situation, a company’s collateral may be insufficient to secure enough funding or investment to complete a restructuring deal. However, if a temporary facility or bridging finance can buy time for other solutions to be progressed then that may ultimately be enough to lead to a successful result in the future. Similarly, closing down or selling off loss-making parts of a business may not have been in the original survival plan, but if it stems cash losses or enables the wider business to reduce its debt burden, then the good clearly outweighs the bad.

In the subsequent Battle of Normandy, the British and Canadians battered German forces defending Caen, inflicting huge losses on them and tying down their armour. In doing so, they enabled the Americans to break out in the west and ultimately encircle German forces in Normandy.

Similarly, when we are addressing the problems of a distressed company, we know that the effort put in to achieving one goal need not be considered as wasted if, in doing so, it allows focus to shift to the pursuit of another, more achievable, outcome. How often do we see efforts to market and negotiate a solvent sale of a business fail, with all the disappointment that entails. But in those circumstances, the knowledge of the sale process, the familiarity which advisors gain of the business and the potential willingness of buyers to re-consider an acquisition under a different deal structure often plays into a successful outcome.

Summing up

We can look at the events of 80 years ago and clearly see the difficult decisions taken at that time. Those planners of 1944 were, quite literally, making decisions which would impact life and death. Our work does not compare in that respect, but failure to carry it out thoughtfully and effectively can have considerable impact on all those people involved - employees, directors, funders, investors, customers and suppliers, not to mention the wider local communities in which these businesses operate. And when looked at that way, wouldn’t it be wrong not to learn from the greatest and most successful planning exercise of modern times.

June 2024.