Professor Joost de Haas’s program Managing Corporate Turnaround at Amsterdam Institute of Finance will help you turn around or avoid corporate failure.
“If you can sail a ship through a true storm, you will be a better captain,” says Professor Joost de Haas. “If you put pressure on the system or the company, then you see where the weak spots are and you learn to be a better manager.”
Could Saab Automobile have been saved? That’s one of the questions Joost hopes to answer in his Managing Corporate Turnaround class, which he will present at Amsterdam Institute of Finance from 6 to 9 September 2021. Using a six-round web-based simulation of the Swedish automotive manufacturer’s failure, complete with real-world data provided by Saab itself, participants work in groups to try to reach a better outcome for the company.
The course is presented with various case studies and lectures to gain a deeper understanding of turnarounds. By working through the various stages of a turnaround process, participants gain a practical understanding of the connection between financial and operational processes, and the trade-offs between short-term survival and long-term recovery. A set of lecture notes provides useful reflection material for future use.
Wisdom born of experience
Joost has plenty of personal experience to back-up the theory of corporate turnarounds. He joined a telecommunications company in 2001 as its managing director and just two months later, its multinational parent company went bankrupt. “I had to keep the Dutch entity afloat, which was essentially the holding company for all European activities, and that was quite stressful,” he remembers. “I had seven court injunctions in nine weeks of the incumbent against me, trying to shut us down. Large creditors were demanding their money. There were very strong winds, and we had to keep the ship afloat. And I thought it was the most incredible and exciting thing I’ve ever done in management. I absolutely loved it. I love the thrill; I love the tension and pressure. I thought, ‘This is what I want to do with the rest of my life.’ So that’s what I’ve been doing for the past 20 years, essentially, managing companies in distress, close to bankruptcy, trying to avoid bankruptcy, but also companies that are just doing average and can really be improved. It’s not always a hopeless situation.”
Joost holds a Master’s degree in Quantitative Business Economics and a Bachelor’s degree in Law from the Erasmus University Rotterdam and an MBA from INSEAD. In 2008, he decided to contact his alma mater about the possibility of teaching some of the management skills he had learned. INSEAD was looking to create a course on corporate management turnaround, and Joost joined them to help compile and then teach the course. Since 2009, he has been an Adjunct-Professor of Entrepreneurship at INSEAD, where he teaches ‘Managing Corporate Turnarounds’ in both the MBA and EMBA programs. He is also a Visiting Professor at the University of Stellenbosch Business School and the Rotterdam School of Management.
“I wanted to teach others what I’ve learned over the past 30 years, because sometimes they’ve been very expensive lessons,” he says. “What I’m trying to do is to prevent people from making the same mistakes; to give them a prospect of how, if they ever end up in a distressed situation, they can manage themselves out of it; but also to prevent them from getting into a rough spot in the first place. Even if you never end up in a turnaround situation, you will benefit from the management insights and will be better equipped to optimise your business. I teach people about how they can sail sharper to the wind, how they can get more performance out of their ship. Managing Corporate Turnarounds is essentially about cutting-edge management.”
Distressed businesses require a different approach
While most management courses focus on “blue oceans” for plain sailing (when companies are functioning well and delivering profits), Joost says it’s important to recognize that distressed businesses require a completely different approach.
“For instance, in terms of valuation of a business, valuing a going concern is different to how you value a distressed business. How you communicate and the management decisions you will take – everything is different: the dynamics, the actions that need to be taken. But if you know how to handle the stress situation, you will also handle a steady-state situation better.”
It’s important to understand how to assess individual situations (e.g. is the business in slow decline or is it already distressed?) and what the causes of decline are.
“The first thing you want to do on a ship is to get your bearings. Where are we? So, we spend a fair amount on diagnosing the causes of decline. What is wrong? Is the ship taking on water? Do we have enough time to reach the next harbour or should we all just run for the lifeboats now? Is my crew with me or against me? Are the sails damaged? We start by taking inventory regarding the status and the cause of the problem. You need to know how critical that situation is – how much time you have left to actually execute the turnaround. And then you can turn to developing solutions. To do that, you must understand what the position of the different stakeholders is. What is the position of the bank? Would they lend you more money, or would they rather let you go bankrupt because they can sell off your assets? What’s the position of your trade creditors – do they have an alternative; would they start dealing with your competitor? They all need to be analysed as they all form part of the solution.”
In the post-pandemic business landscape, understanding corporate turnarounds is arguably more important than ever before. “As soon as Covid government subsidies stop, that’s when the real problem will start,” says Joost. “Here, you can prepare.”
Prof. Joost de Haas teaches the Managing Corporate Turnarounds program at Amsterdam Institute of Finance.