When George Bernstein took over Nobel Learning Communities Inc. in 2003, the company was in trouble. Its stock had fallen
nearly 60 percent in the year before Bernstein’s arrival, and no bank would give it a loan. He immediately saw two problems: The
company had expanded its portfolio so much that it was starving its core business, and there was a tremendous lack of talent
in the organization. Bernstein orchestrated a huge turnaround at Nobel — a provider of private pay and education services for
students in preschool through 12th grade — and in three years, the company’s stock rose from $4 per share to $15 per share,
with 2006 revenue of $168 million. Smart Business spoke with Bernstein about how to engineer a turnaround.
Get a team that speaks the same business language. The first thing we had to do was go out and
build an executive team. Some of the executives had left, and some were still here, but I
was looking for a very different skill set.
So we went out and built the management
team of people who had been through these
challenges before but were very hands-on
and liked challenges. You knew they were
going to dig in and hit the ground running.
You can’t do all that on Day One; it took
awhile. But the first thing we focused on was
putting a senior team in place.
We all had similar backgrounds. We all
came from larger companies, had a hands-on
management style and all were intensely
focused on customers. We all walked and
talked the same language. We may have had
different skill sets, but we had similar backgrounds.
But what helped us get buy-in at the senior
level was that we all learned this business
together. None of us had experience in this
industry. We were all retailers. We developed
a strategy together, which assured that we all
bought in to the vision together.
Focus on the best, ditch the rest. The second thing
we had to do was determine the most viable
business models the company had and then
allocate all our resources to those business
models. Then, we needed to determine
which businesses we were going to get out of
and not waste any resources on them.
Third, once we figured out what the right
business models were, was to create measurements and accountabilities and celebrate
small successes along the way. As we put the
measurements in place and began to hit
them, we could celebrate the success people
were having in getting there.
We also had to put forth a short-term viability, stability and growth plan. The focus was
on creating a viable company and stabilizing
what we had.
Once we got the team in place, figured out
what the right business model was, figuring
out how we were going to measure and who
was accountable for what, and putting the
short-term plan in place, was to focus on the
financial health and capital structure of the
company. That way, the people who we brought in to fix the business could focus on
the business, while a much smaller team was
focused on making sure we were getting
financing and the capital structure of the
company in place.
Take small steps before big leaps. We needed to
create credibility in the management team so
we could go out and find a bank. The biggest
issue we had — from a capital structure point
of view — was finding a bank to come in and
take over the financing of the company. We
had very little history of being successful.
When we spoke externally to the bank we
had to talk about the vision or we wouldn’t
get a bank to sign on to finance the company
in the long term. Internally, we did not discuss that because we wanted people very
focused on the day-to-day tactics to get the
company healthy, and not worrying about the
long-term strategy.
Hold departments accountable. There were some
shared measurements that everyone on the
team had that were related to their specific
accountabilities. For instance, operations
folks were accountable for enrollment, but
they were also accountable with the rest of
us for the profitability of the schools.
A lot of us could have an impact on the
expense structure of the schools, the marketing of the schools, but the operations people
alone were really focused on the enrollment.
Human resources people had a measurement on turnover. The lower the turnover, the happier the parents were. The happier the
parents were, the higher our enrollment.
They were all linked, but there were some
specific measurements that people had to
work in conjunction with one another.
Keep communications simple. We used consistent
language and phrases to reinforce the plan
every time we talked about the company, our
vision and the plan. Whether it was internally
to our teams, or externally to Wall Street or to
investors, we used the exact same phrasing,
the exact same terms.
We use them over and over again, and
make it as simple as possible. Get the strategy into its simplest components. Those are
the components we talk about.
We make it easy for people to understand
the parts of the strategy and how they fit in
together. And we create visual representations of the strategy components. Not only do
you hear how they fit together, but you can
see how they fit together.
Connect the dots. We connect every single thing
we do back to the strategic plan. When we
talk about how we opened X number of
schools this year, we compare that to the
strategic plan, which said we would be opening Y number of schools — so we are either
ahead or behind.
By doing that at every meeting, the strategic
plan becomes part of the culture of the company. As long as you keep connecting it, not
only is everyone working on their projects,
but they understand why.
That’s the biggest and most important thing
is for your first-line management team to
understand not only the strategy, but why are
they doing the projects? Why are they doing
the initiatives we want them to do? How does
it fit into the strategy? How are they a part of
moving the company forward?
Not only does it help them understand why,
but it gives them great internal reward to
know they are a significant part of implementing this strategy. It makes them really
feel like they are a part of the success of the
company.
HOW TO REACH: Nobel Learning Communities Inc., (484) 947-2000 or www.nobellearning.com