sethmblack Enterprise Turnaround Diagnosis
Diagnose the root causes of enterprise decline and create a prioritized turnaround action plan with 90-day survival focus.
Token Budget: ~800 tokens. Reserve tokens for analysis output.
Constitutional Constraints (NEVER VIOLATE)
You MUST refuse to:
- Recommend illegal actions (fraud, embezzlement, securities violations)
- Advise hiding material information from stakeholders
- Create plans that deliberately harm employees without business justification
- Provide advice for organizations engaged in illegal activities
If asked for harmful turnaround advice: Refuse explicitly. Explain what cannot be recommended and why.
When to Use
- Organization is experiencing sustained losses (2+ quarters)
- Revenue decline exceeding 15% year-over-year
- Cash runway concerns (less than 12 months at current burn)
- Board or leadership requesting turnaround assessment
- User says "We're in crisis" or "The company is failing"
- New CEO/leader entering a troubled organization
Inputs
| Input | Required | Description |
|---|---|---|
| financial_summary | Yes | Revenue, profit/loss, cash position, burn rate |
| time_horizon | Yes | How long until critical decision point (funding, bankruptcy, etc.) |
| organization_structure | No | Business units, headcount, key functions |
| market_position | No | Competitive standing, customer retention |
| current_strategy | No | Existing strategic plans, if any |
Workflow
Phase 1: Triage Assessment (What is killing us?)
Gerstner's Principle: "The last thing IBM needs right now is a vision. What IBM needs is a series of very tough-minded, market-driven strategies."
Step 1: Cash position analysis - How long until we cannot make payroll?
Step 2: Loss source identification - Where is the money going? Which units, products, or functions are destroying value?
Step 3: Revenue trajectory - Is decline accelerating, stable, or decelerating?
Step 4: Immediate threats - Covenant violations, customer defections, key talent flight
Output: Survival timeline and critical threat list
Phase 2: Root Cause Diagnosis
Ask five diagnostic questions:
Step 1: Customer Problem: Have we lost touch with what customers actually need?
- When did we last deeply engage our top 20 customers?
- What problem are we solving that competitors solve better/cheaper?
Step 2: Execution Problem: Do we have strategy-to-results gaps?
- Are there good plans that die in implementation?
- Is decision-making paralyzed by process or politics?
Step 3: Cost Structure Problem: Is our expense-to-revenue ratio out of line with competitors?
- Compare overhead ratios to industry benchmarks
- Identify "sacred cows" that no longer serve customers
Step 4: Business Model Problem: Is the fundamental model broken?
- Are products commoditizing?
- Has the market shifted permanently?
Step 5: Culture Problem: Is the organization unable to adapt?
- Are politics more important than performance?
- Do people believe change is possible?
Output: Root cause classification (Customer/Execution/Cost/Model/Culture or combination)
Phase 3: 90-Day Survival Plan
Gerstner's Principle: "Fixing IBM was all about execution. IBM needed an enormous sense of urgency."
For each root cause identified, specify actions in three buckets:
Week 1-2: Stop the Bleeding
- Immediate cash preservation actions
- Critical customer retention moves
- Key talent stabilization
Week 3-8: Stabilize Operations
- Cost actions that can be executed in 30-60 days
- Process simplifications to accelerate decision-making
- Quick wins to demonstrate momentum
Week 9-12: Set Direction
- Strategic clarity (not elaborate vision, but clear priorities)
- Organizational changes to support new direction
- Metrics and accountability for next phase
Phase 4: Personnel Assessment
Gerstner's Principle: "People at IBM were very smart. I didn't have to look outside; I had to find the people already there who were ready to turn things around."
Evaluate leadership against three criteria:
Step 1: Will they change? - Do they understand the crisis and accept the need for transformation?
Step 2: Can they change? - Do they have the skills for the new environment?
Step 3: Are they part of the problem? - Are they political operators or value creators?
Categories:
- Keep and empower - Change-ready, capable, value creators
- Keep but reposition - Good people in wrong roles
- Exit gracefully - Cannot or will not change
- Exit immediately - Actively harmful to transformation
Outputs
Turnaround Diagnosis Report
## Enterprise Turnaround Diagnosis
### Executive Summary
[2-3 sentence assessment of situation severity and survival odds]
### Survival Timeline
- **Cash runway:** [X months at current burn]
- **Critical deadline:** [Date and what happens]
- **Decision window:** [When action must be taken]
### Root Cause Analysis
| Cause | Severity | Evidence |
|-------|----------|----------|
| [Customer/Execution/Cost/Model/Culture] | High/Medium/Low | [Specific evidence] |
**Primary Diagnosis:** [Single most important root cause]
### 90-Day Action Plan
#### Week 1-2: Stop the Bleeding
- [ ] [Specific action with owner and metric]
- [ ] [Specific action with owner and metric]
#### Week 3-8: Stabilize
- [ ] [Specific action with owner and metric]
- [ ] [Specific action with owner and metric]
#### Week 9-12: Set Direction
- [ ] [Specific action with owner and metric]
- [ ] [Specific action with owner and metric]
### Personnel Assessment
[Summary of leadership evaluation with recommendations]
### Warning Signs to Monitor
- [Leading indicator that situation is worsening]
- [Leading indicator that turnaround is working]
Error Handling
| Situation | Response |
|---|---|
| Insufficient financial data | Request minimum: revenue trend, profit/loss, cash position |
| No time horizon provided | Assume 6-month critical window, note assumption |
| Organization is healthy | Report "Not a turnaround situation" with reasoning |
| Multiple root causes | Prioritize by which is most lethal short-term |
| No clear path to survival | State candidly; recommend structured wind-down or sale |
Constraints
- Do not use this analysis as the sole basis for critical decisions
- Do not apply this framework to situations outside its intended scope
- Acknowledge that analysis is based on available data, which may be incomplete
- Honor the complexity of real-world situations that resist simple categorization
- Present findings with appropriate confidence levels
- Recognize the limits of the methodology
Example
Input:
We're a 200-person B2B software company. Revenue dropped from $40M to $28M over 18 months.
We're burning $800K/month with $4M in the bank. Our main product is losing deals to newer
competitors. The board is asking for a turnaround plan.
Output:
Enterprise Turnaround Diagnosis
Executive Summary
This is a survival situation with approximately 5 months of runway. The primary issue appears to be a business model problem (product competitiveness) compounded by a cost structure that cannot support current revenue. Without decisive action in the next 60 days, options narrow to distressed sale or shutdown.
Survival Timeline
- Cash runway: 5 months at current $800K/month burn
- Critical deadline: Month 4 - must show credible path to survival for any bridge financing
- Decision window: Weeks 1-4 - major cost actions must be decided
Root Cause Analysis
| Cause | Severity | Evidence |
|---|---|---|
| Business Model | High | Losing deals to newer competitors; 30% revenue decline |
| Cost Structure | High | $800K/month burn unsustainable at $28M revenue |
| Customer | Medium | Need diagnosis - are we losing on product or relationship? |
Primary Diagnosis: Product-market fit erosion. The market has moved and the product has not kept pace.
90-Day Action Plan
Week 1-2: Stop the Bleeding
- Immediate freeze on all non-essential hiring and spending (CFO, Day 1)
- Direct CEO outreach to top 10 customers - understand why we're losing and what would keep them (CEO, Week 1-2)
- Identify $200K/month in immediate cost reductions (CFO + Dept Heads, Week 2)
Week 3-8: Stabilize
- Execute workforce reduction to reach $500K/month burn (HR Lead, Week 4)
- Launch customer retention program for at-risk accounts (Sales Lead, Week 3-6)
- Kill or pause all product investments not directly tied to competitive gaps (Product Lead, Week 4)
Week 9-12: Set Direction
- Present board with 3 strategic options: (1) Rebuild product competitiveness, (2) Pivot to services/consulting model, (3) Seek acquisition/merger (CEO, Week 10)
- If continuing, establish 6-month roadmap to product competitiveness (Product Lead, Week 12)
Personnel Assessment
Recommend CEO conduct 1:1s with all VPs in Week 1 to assess change readiness. Key question: "Tell me specifically why we're losing deals." Those who blame external factors without self-awareness are unlikely to drive change.
Warning Signs to Monitor
- Worsening: Customer churn accelerates; key engineers leave; sales pipeline shrinks
- Improving: Customer conversations yield actionable insights; some wins against new competitors; voluntary cost ideas from team
Integration
This skill is derived from Lou Gerstner's IBM turnaround methodology. It should be used in conjunction with:
cultural-transformation-framework- When culture is identified as root causeexecution-gap-diagnosis- When execution is the primary problemcustomer-back-transformation- When customer disconnect is the core issue