Why most corporate turnarounds fail before they begin

Facing the fear of transformation

Corporate turnarounds have been a rare occurrence, affecting companies that have allowed themselves to fall behind over many years. Instead, one major disruption created a clarion call that spurred leaders to take radical measures to turn around the company’s fortunes.

But today, the turmoil has accelerated. Innovation is relentless, with information flowing faster and technology becoming increasingly intelligent; Businesses have to compete in an environment that changes under their feet.

So, instead of a clear call to change, executives hear a series of low-quality, constantly sounding alarms that are impossible to completely escape. In the midst of market noise, it is easy to write off poor performance as an excusable side effect of uncontrollable variables (“performance was reduced by tariffs” or “profit targets were missed due to market cycles”).

The truth is that leaders, whether consciously or not, avoid transformations because they fear turning the status quo upside down. Transformations have become more than just a performance issue for the company’s leadership, but rather a psychological problem. You can’t lose a race you never started, and you can’t fail a transformation that never happened.

“Transformation” is taboo among some leadership teams: announcing the need for transformation starts the clock for executives and puts a target on their backs. It’s a bold declaration (and admission) that things are off the rails. In today’s executive leadership landscape, that can be intimidating; The turnover rate of executives is at Highest level everand became active investors Increasingly capable In practicing change.

When marginal gains fail, leaders must step forward and embody the “art of the possible.” But the spotlight is harsh, and the weight of expectations is often unbearable.

The result: timid, low-ambition “false transformations” that fail to achieve the necessary level of improvement.

Overcoming psychological transformation

Just like any recovery, the first step for hesitant leaders is to admit that their company has a problem or ambition, and admit to themselves that there is a shift. He could Helping their company – if only they were brave enough to pursue it.

This impact was evident in airlines, an industry hit hard by the pandemic. Some airlines quickly recognized the crisis, moving from denial to acceptance within a month or two, and taking bold steps to cut costs and conserve cash. Others remained in denial for four, six or even nine months, taking only limited measures – such as negotiating short-term payment delays with suppliers rather than avoiding payments altogether or cutting prices.

Acknowledging that change is necessary through a simple mental exercise reframes the risks associated with taking action. Too often, executives overestimate the risks they face in creating change, while ignoring the opportunity cost of inaction.

By honestly distinguishing between real and perceived risks, the benefits of taking action – even if you fail – become clearer. A company that tries to cut costs by 20% and fails to do so will, at least, be no worse off than before.

Hence, overcoming psychological barriers is no longer an individual task, but rather a collective duty, requiring the active participation of the board of directors and executives alike. Success depends on unity and the adoption of common behaviours, that is, shifting attention towards opportunities rather than guilt through a combination of psychological tricks and re-tools of communication. In practice, it might look like this:

• Determine the transformation sequence to maximize benefits and minimize risks: Thematic shifts carry risks, but with the right approach and sequencing the benefit/risk equation can become very attractive. Achieve a known uptrend that can be “easily” achieved early on; diversification of risks; Avoid “betting” on the company on one initiative; Postpone critical risks until the organization is adequately prepared; Simplify so that attention is directed to a few basic necessities. Mergers, while not transformational in themselves, often involve radical change and clearly demonstrate how sequential actions can reduce risk. In one case, two well-known power tool manufacturers in the home improvement sector chose M&A first for SG&A and operational synergies, as customer and brand risks were minimal. They completed this phase in two years, then deliberately delayed product and brand integration for another two years, allowing time for careful work on customers, product and brand before high-risk moves.
• Change the language and tone to make the change palatable. “Transformation” can seem fraught with connotations of instability. The simple, positive rebranding—called “renewal” or “embracing the future”—shifts the narrative to one of opportunity and optimism.
• Overinvesting in board alignment. Aligning goals, challenges, and accomplishments builds confidence and prevents blame when goals fail. All board members and executive leaders should sit on the same side of the table. Clear and frequent communication turns partial gains into progress rather than failure. Experienced CEOs often spend months aligning with the board before announcing a management program, where the critical task is to secure the support and buy-in of the most oppositional board members.
• A framework that implements transformation as a “team sport”The most successful transformations require behavioral change at all levels, from the board of directors to leaders, to middle management, and the front lines. Engage the organization broadly. Develop a shared narrative, known milestones, and clear, simple goals. Create transparency of actions and consequences across departments to address interdependencies. Aim for collective results, not isolated results.
• Accept some uncertainty. Leaders don’t have all the answers at first, but fostering a culture that embraces uncertainty gives them the freedom to explore opportunities. Regularly reinforcing desired behaviors — such as rewarding innovation, admitting mistakes, and recalibrating assumptions — creates a culture in which teams can adapt and solve on the go, and gives leaders more flexibility when it comes to taking on more complex challenges.

These practices create a culture that not only helps improve the effectiveness of transformation processes, but also helps companies respond more easily to a rapidly evolving landscape.

Instead of being a scary prospect for businesses, transformation and change become a palatable and ongoing reality for business, one that motivates and unites rather than divides, so businesses can not only start the race, they can win it.

The biggest obstacle to transformation is not the market, but its mindset. The moment leaders find the courage to face reality and start the race, they have already done the hardest part. Because in business, as in life, momentum starts the moment you dare to start.

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