Most business turnarounds fail. Here’s why the best ones cut to strength

Core Insights - Successful corporate turnarounds depend on the speed of actions and leadership commitment, with aligned governance and adequate funding being crucial for avoiding stalled efforts [1] - Many companies experience a gradual decline in performance, often leading to hesitant and superficial changes rather than decisive structural adjustments [2][3] - Less than one in three transformation efforts lead to sustained performance improvement, indicating a need for radical simplification and structural change to achieve sustainable success [4] Focus on Core Strength - Leadership must clearly define the company's core strengths and assess their profitability at scale, eliminating non-supportive elements [5] - Successful turnarounds involve simplifying operations and concentrating on high-margin, high-potential products or services, which can lead to a 0.9% increase in profit margins through product offering reductions [5] Cost Structure Reset - A reset of the cost structure is essential, requiring a shift from traditional budgeting to zero-based budgeting, where every function must justify its existence in relation to the core business [6] - This approach fosters clarity in decision-making, aligning priorities, and reducing political maneuvering in budgeting processes [6] Principles of Transformation - Current corporate transformations across various sectors emphasize the same principles: simplifying offerings, aligning leadership, and acting swiftly [7]