Many times CEOs used to protect their management responsibility delaying turnaround with different “strategies”:

  • Arguing that is a conjectural stage
  • Arguing that is a marketplace situation
  • Using “accounting engineering” to cover the problem during some while

Recognizing that a company has important problems is complex because that means that we have to realize that we are doing business in the wrong marketplace and/or time, or we have the wrong people managing that market. So there is a responsible, that took the decision to entry in that market or that choose the current management team. Many decision makers do not want to recognize the problem because means recognizing the responsibility. So they used to wait some time with the hope that “something” is going to happen that change the current bad performance. We have mention that “something is going to happen” because people that create problems do not use to know how to solve those problems.

In many companies bad performance in some quarters is not so “significant”, and they wait until the end of the year in order to review the situation. Be aware that in many cases companies offer a second opportunity to the current management team. This means that because the review process is a yearly basis rather than a semester or quarterly basis that situation could be deteriorated even more, if the current managing team is not able to recover the situation.

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