The art of special situations

This article is the third post of the fifth series. It elaborates on the core principles introduced by "Transforming Financial Institutions" while applying them more broadly to enterprise ecosystems.

Special situations refer to distinct corporate circumstances that fall outside a company’s normal operating environment. These scenarios are often triggered by financial challenges or disruptions such as macroeconomic shifts or the loss of product-market fit. Events that significantly impact the viability of the existing business model.

Effectively responding to such challenges requires the rapid establishment of a clearly defined change and growth agenda, underpinned by a disciplined execution plan aimed at achieving a defined target state. This target state may include stabilising operations to avert financial distress or insolvency, restoring profitability, or preparing the business for sale if an independent future is no longer feasible.

By nature, special situations are complex and multifaceted. Successfully managing them demands a diverse skill set that spans corporate strategy, operational excellence, and structured well executed problem-solving. These capabilities must be aligned with a dedicated transformation programme designed to guide the organization through uncertainty and toward a viable future.

This article outlines the key pillars essential for effectively navigating special situations and delivering meaningful and sustainable outcomes.

Outright challenge

Large-scale transformation programs often fall short of their set objectives. Common pitfalls include limited engagement from management and staff, weak or absent cross-functional collaboration, and a lack of clear accountability for delivering the change and growth agenda. Achieving meaningful, lasting change requires more than just strategic initiatives. It demands a fundamental reset in mindsets and behaviours across the organization.

In many cases, denial, inertia, and internal and stakeholder politics hinder the ability to take bold, necessary action, even in the face of mounting urgency. For companies in financial distress, transformation efforts typically centre on immediate and radical cost reductions, often accompanied by the recapitalization of the business. In less critical situations, the focus tends to shift toward unlocking the full potential of the business or responding to specific external challenges or opportunities.

Effective transformation takes root when leadership embraces change holistically with the objective to rethink how the business operates across all value drivers. This includes optimising both revenues and the cost structures, re-evaluating capital expenditures, and improving working capital efficiency. A common misstep is to overemphasise the impact of isolated initiatives, rather than focusing on how the broader operating model must evolve. Two critical dimensions must be managed in parallel to mitigate this. The first is the actions that underpin the change and growth agenda and drive the transformation programme. Change management is often perceived as abstract and elusive, yet essential to aligning people and culture with the new direction of the target state. While it needs to be transformative in its objective and ambitions, it requires a growth mindset in its execution. The second is performance management, enabled by robust infrastructure and governance mechanisms that track progress, enforce accountability, and accelerates momentum.

Change and growth agenda

The first phase of an effective transformation program focuses on defining the change and growth agenda, followed by its disciplined execution. This agenda is shaped into an actionable execution plan designed to align the organisation with its strategic and operational objectives. The process begins with an independent due diligence effort, aimed at aligning leadership, employees, and stakeholders around a shared vision of the desired future state. This stage also addresses potential resistance and lays the groundwork for sustainable adoption during execution.

Typically led by a mandated executive or an external third party, the independent assessment brings a fresh, objective perspective. The findings must then be translated into a clear, actionable plan anchored to a well-defined target state. Ongoing progress should be closely monitored through a robust governance structure and supported by a comprehensive communication strategy to ensure transparency, alignment, and accountability throughout the transformation journey.

Governance

A successful transformation program is defined by united and committed leadership that stands behind the execution plan. Before execution begins, the company’s leadership team must be fully aligned – not only around the specific initiatives to be implemented, but also around the broader shifts in how the organisation will operate. Leadership serves as the central function for driving the workstreams and initiatives of the transformation programme. It is instrumental in its success.

To ensure effective execution across each workstream – defined as a distinct area of activities, organisations must establish a robust governance structure. Each workstream drives and tracks a set of actionable initiatives which sits at the core of the execution strategy. This structure ensures timely decision-making and helps keep the change and growth agenda on track. At its core, this governance mechanism is supported by a performance infrastructure comprising of the tools and systems used to monitor progress, resolve issues, and maintain momentum.

In large organizations, the infrastructure is often formalized by the Transformation or Change Management Office (usually abbreviated as TMO). It provides the operational backbone of the transformation program with its execution plan, utilising tools such as benchmarking and value-capture methodologies, organisational assessments, and dashboards as well other forms of managerial visualisation. These tools are designed to identify obstacles early, track trends, assess impact, and deliver actionable reports. Establishing such an infrastructure is essential to the success and sustainability of the transformation programme, and the change and growth agenda. 

A key leadership role is the Chief Transformation Officer (CTO). The CTO is responsible for driving rapid, measurable, and lasting business improvement. An aligned approach, defined by frequent, transparent, and consistent communication, is essential to support the execution of the change and growth agenda and to foster alignment throughout the organisation. The CTO leads the TMO and should be part of the executive leadership team, usually reporting to the Chief Executive Officer (CEO). In circumstances when the CEO is loosening the confidence of major shareholders, the CTO may report directly to the Board of Directors (BoD). While the CEO continues to lead the overall business, the CTO is entrusted with leading the change and growth agenda and its execution plan. Their close partnership is instrumental. The CTO highlights critical issues and presents key decisions for resolution in close collaboration with the CEO.

The ideal CTO brings a strong track record in leading large-scale restructurings, combining a visionary understanding of best-in-class performance with a pragmatic grasp of the organisation’s current capabilities and shortfalls. They must be able to drive alignment and action across diverse teams, inspiring confidence even in the face of resistance or uncertainty. The CTO must possess both the authority and the credibility to influence decisions on personnel, operations, and investment priorities. Their responsibilities include building the team, identifying and empowering key change agents, and making decisions regarding leadership appointments. Many organisations lack an internal candidate with the right mix of experience, objectivity, and leadership presence. In such cases, appointing an external CTO can be advantageous. While bringing in an outsider may initially be met with hesitation, an external leader offers a fresh, unbiased perspective and is not encumbered by existing internal dynamics or politics.

Sense of urgency

In special situations, speed of essence. A slow-moving transformation program is often an ineffective one. To maintain momentum and embed a high-performance culture, a disciplined cadence of weekly transformation meetings is instrumental. These meetings, led by the CTO, serve as a critical pillar of the performance infrastructure, enabling the team to track progress, remove roadblocks, and accelerate execution. Their cadence must be rigorously focused, relentless by nature, and infused with a strong sense of urgency. It reinforces accountability and ensures that each workstream with its initiatives are on track. These meetings are not intended to be consensus-driven or comfortable. They should foster honest, transparent dialogue. This allows the organisation to clearly diagnose challenges and align on practical solutions. A high level of transparency is key to the decision-making processes and helping the organisation to understand its priorities.

Weekly meeting schedules provide a structured forum for evaluating trade-offs, such as balancing cost reduction with revenue-growth opportunities. They allow for the continual refinement of individual initiative plans and enable the CTO to mediate competing priorities, ensuring that cross-functional decisions are made swiftly and effectively. These meetings identify and evaluate talent as a wider organisational purpose. They help surface emerging leaders, identify high-potential contributors for key initiatives, and match talent to opportunities for their highest organisational impact.

To reinforce this execution-focused culture, the weekly rhythm should be supplemented by consistent performance-management check-ins. Regular check-ins help embed accountability and agility into routine operations, ensuring that strategic priorities drive real-time implementation. The outcomes of these meetings should roll up into a long-term value creation plan, guiding the organisational journey toward its target state and beyond. Progress and challenges should be communicated consistently, and key stakeholders engaged transparently.

The author used ChatGPT for editing and researching this article. While driven by direct operational experience, it took inspiration from several publications in the field of transformation.

Notes and further reading:

• BRADLEY, CHRIS ET AL: Why your next transformation should be all in; McKinsey Quarterly, 2019

• BUCY, MICHAEL ET AL: Transformation with a capital T; McKinsey Quarterly, 2016

• BUCY, MICHAEL ET AL: Sustaining the momentum of a transformation; McKinsey & Company, 2016

• COUTO, VINAY, PLANSKY, JOHN AND CAGLAR, DENIZ:. Fit for Growth: A Guide to Strategic Cost Cutting, Restructuring and Renewal; Wiley, 2016

• DEPAMPHILIS, DONALD M.: Mergers, Acquisitions and Other Restructuring Activities; Elsevier, 2005

• HERBERT, FRED: Business Turnaround Blueprint: Take back control of your business and turnaround any area of poor performance; 2017

• SANDS, JEFF: Corporate Turnaround Artistry: Fix Any Business in 100 Days; Wiley 2020

• SLATTER STUART and LOVETT, DAVID: Corporate Turnaround; Penguin, 1999

For a deeper exploration of topics such as the roles of the CTO, TMO, and other key areas, McKinsey’s Insights on Transformation serves as a valuable resource and reference.