Tuesday, June 26, 2007

The Stages and Measures of Corporate Decline

Here is the illustration showing the phases, stages and the different measures of the decline process, excerpted from our e-book. Brief descriptions follow underneath the illustration.

Click here to view full screen from our website.

When a company falters and eventually dies, it goes through three distinct phases of decline.

Phase I, the Hidden Phase, can not be seen from outside the company. It is also frequently, and needlessly, missed from within. However in this phase fully one third of the competitive value is lost. Recovery from this phase is termed Preemptive Turnaround.

Phase II Decline, the Subtle Phase, is visible from outside, to those who know what to look for. This is measured in professional due diligence audits. Another third of the competitive value is lost in this phase. Recovery from Phase II is termed Business Correction.

Phase III Decline, the Overt Phase, can be seen by all. Recovery from here is classic Turnaround.

Each phase has its unique attributes and unique measures. Working backwards:

  • The Overt Phase is measured by the Financials - though the other measures are ringing alarms very loudly.

  • The Subtle Phase is measured by the Parametrics. The Financials show nothing - though the Drivers loudly proclaim problems.

  • The Hidden Phase is measurable only by the Drivers of Performance - here, the other measures show nothing.


Post a Comment

<< Home